City cannot be held liable

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"Since the jury found Keller liable, he is primarily liable and consequently, the City may not be held to pay the remaining amount of the jury award. Since Keller was dismissed from the action, no judgment can be rendered against Keller, and no execution can issue and be returned unsatisfied." Justice N. Patrick Crooks Wisconsin Supreme Court

When both a municipality and a private party are liable for a highway defect that causes injury, and the plaintiff executes a Pierringer release with the private party, the municipality is not responsible for any damages, the Wisconsin Supreme Court held on Jan. 3.

In 1998, Renee VanCleve tripped and fell on a recently constructed curb and gutter in the City of Marinette. She sued the City and Kenneth Keller, a private contractor, alleging negligence in the construction and maintenance of the curb and gutter.

VanCleve subsequently settled with Keller, signing a release from liability pursuant to Pierringer v. Hoger, 21 Wis.2d 182, 124 N.W.2d 106 (1963), but expressly reserving VanCleve’s claims against the City. The City joined in a stipulation to dismiss Keller from the action.

After a jury trial, negligence was apportioned as follows: the City, 90 percent; Keller, 9 percent; and VanCleve, 1 percent.

The City then moved to dismiss VanCleve’s claim, based on sec. 81.17. Under the statute, if both a municipality and a contractor are found liable, the contractor is primarily responsible for damages, and the municipality is only liable if the plaintiff is unable to collect from the contractor, and the judgment against the contractor is returned unsatisfied.

Marinette County Circuit Court Judge Tim A. Duket denied the motion, concluding that sec. 81.17 was inapplicable because of the Pierringer release and the City’s stipulation to Keller’s dismissal.

The City appealed, and the Court of Appeals reversed in a published decision, VanCleve v. City of Marinette, 2002 WI App 10, 250 Wis.2d 121, 639 N.W.2d 792. The Supreme Court granted review, and affirmed the court of appeals in a unanimous decision by Justice N. Patrick Crooks.

The Statute

The court began by determining, as a threshold issue, that sec. 81.17 does apply to the case. The court found that the curb defect falls within the definition of "highway defects" or defects on "other public grounds." Because Keller was found 9 percent causally negligent, the court concluded Keller was primarily liable under the statute, and the city only secondarily so.

The court then undertook a brief examination of the statute’s history. The court found that the statute, which is in substantially the same form as it was when revised in 1898, was enacted to create an exception to what was then total governmental immunity from tort claims.

In 1962, the Supreme Court abrogated that immunity in the case of Holytz v. City of Milwaukee, 17 Wis. 2d 26, 115 N.W.2d 618 (1962).

The court found Holytz irrelevant to VanCleve’s claim, however, stating, "it is clear that Wis. Stat. sec. 81.17 is a successive liability statute, rather than a government immunity statute. Accordingly, we find Holytz is not helpful in interpreting sec. 81.17 in the present case because it does not directly address sec. 81.17."

Application

Addressing the effect of the statute and the Pierringer release, the court held as follows:

"When the jury found Keller liable, his liability became primary pursuant to Wis. Stat. sec. 81.17. So under the statute, Keller would have been responsible for all the damages and the municipality would have been responsible only for the damages Keller was not able to pay. In this case, the Pierringer agreement represents what Keller was willing to pay, not what he was able to pay upon an execution issued on a judgment. By entering into the Pierringer release, VanCleve was essentially agreeing to accept a lesser amount in damages by releasing the individual that turned out to be primarily liable under the statute. Therefore, since VanCleve did not obtain a judgment against Keller, and chose instead, to settle through a Pierringer release, VanCleve cannot recover against the City pursuant to sec. 81.17. The consequence of entering into the Pierringer release with Keller is that VanCleve, in essence, indirectly waived any right to hold the City secondarily liable (emphases in original)."

The court added, "Since the jury found Keller liable, he is primarily liable and consequently, the City may not be held to pay the remaining amount of the jury award. … Since Keller was dismissed from the action, no judgment can be rendered against Keller, and no execution can issue and be returned unsatisfied."

Waiver

The court then rejected VanCleve’s argument that the City waived this defense by consenting to the Pierringer release between Keller and VanCleve.

The court noted that a non-settling tortfeasor has no control over a claimant’s decision to settle with another tortfeasor, and the city could not have successfully objected to the Pierringer release, even if it wanted to. Therefore, the court concluded that the city could not have waived any defenses by failing to object to the release.

Public Policy

Finally, the court turned to the public policy arguments raised by VanCleve, and rejected them, as well. VanCleve argued that application of sec. 81.17 in cases such as this would "stifle" settlement of personal injury claims, and is contrary to Wisconsin’s abrogation of governmental immunity in Holytz.

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The court refused to consider the arguments, however, because sec. 81.17 is unambiguous. The court reasoned, "Only when statutory language is ambiguous may we examine other construction aids such as legislative history, context, and subject matter."

Quoting the court of appeals with approval, the court iterated, "[c]onsiderations of public policy cannot trump an unambiguous statute." VanCleve v. City of Marinette, 2002 WI App 10, 250 Wis. 2d 121, 639 N.W.2d 792 (citing Kelly Co. v. Marquardt, 172 Wis. 2d 234, 247, 493 N.W.2d 68 (1992)).

Before concluding, however, the court did briefly touch on whether its decision would "stifle" settlements, and concluded it would not, stating, "The application of Wis. Stat. sec. 81.17 should not stifle future settlement agreements, because parties have adequate notice of the risks involved in entering into such settlements. Given the clear statutory language of sec. 81.17 and our previous decisions, it is incumbent upon the party entering into a Pierringer release to be aware of the risks associated with such an agreement and make settlement decisions accordingly."

Accordingly, the court affirmed the court of appeals’ conclusion that the City cannot be held liable for any of the damages.

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David Ziemer can be reached by email.