The court declined to resolve the ambiguity in the meaning of property for which [the local governmental unit] may be liable, in sec. 605.02. However, when this issue is ultimately decided, it should presumed that the Fund is not actually liable in a case such as this.
The court notes, The Commissioner does not tie the construction of the insurance contract provisions in the [federal cases discussing similar language] to the principles of statutory construction that we employ in Wisconsin.
Later, the court states, Again, the Commissioner does not tie its discussion of [the legislative notes] to principles of statutory construction We therefore do not know if the commissioner views them as extrinsic sources or not, and, if viewed as extrinsic sources, whether the commissioner views them as reinforcing a plain meaning or, instead as resolving an ambiguity.
The Commissioners failure to do so is understandable, when one considers that, from the time the Wisconsin Supreme Court decided Hubbard v. Messer, 2003 WI 145, 267 Wis.2d 92, 673 N.W.2d 676, on Nov. 20, 2003, until it decided State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, 271 Wis.2d 633, 681 N.W.2d 110, on May 25, 2004, nobody really knew for certain what the applicable principles of statutory construction were in Wisconsin.
So, should this issue arise again, the Fund should argue using the principles of statutory construction set out in Kalal. Under that holding, the committee notes are extrinsic evidence.
The Fund would also be wise to rely more heavily on sec. 605.24(3), as well. The statute provides, The property fund may name other persons as additional persons protected under s. 605.02, but unless it does so the fund shall have any right of recovery by subrogation or otherwise against such persons that a private insurer would have and shall not lose such right because the governmental unit protected has after commencement of the coverage waived any right of recovery it would otherwise have had, or has thereafter contracted to assume the risk that general law would have placed elsewhere.
Even accepting that these statutes could be clearer, the Committee Notes, the most valuable extrinsic source in construing ambiguous statutes, make clear what the purpose of the statutes are:
The expression may be liable does not imply that there is coverage for the private owners of the property. Governmental units are protected by this fund but private interests are not, except indirectly to the extent that they are able to establish a right against the governmental unit for damages to or destruction of their property.
Note, 1973, Wis. Stat. sec. 605.02.
The fact that the property fund has no option but to cover public property on request, and in fact to do it at extremely favorable rates, should lead the legislature to protect the fund against unwise contractual assumption of risks that would normally lie elsewhere, such as on a builder… The property fund has no option but to insure and should not be subject to having private persons thrust upon it as insureds, without its consent. Note, 1973, Wis. Stat. sec. 605.24(3).
The only reasonable construction of these notes is that their purpose is to avoid the Fund having a private person thrust upon it as an insured, without its consent. Yet, that is exactly what has happened to the Fund in this case, notwithstanding the clear legislative intent to disallow that result.
General law would not have placed any risk upon the County in this case, but upon Fiber Recovery, Inc. The county is free, of course, to assume that risk, but it may not then transfer that risk to the Fund, without the Funds consent. If the county wishes to assume the obligation to insure the property, it must do so with a private insurer.
The court acknowledged that this was a reasonable construction of the statutes, but says it is not the only reasonable interpretation or the more reasonable interpretation.
Discussing the comment to sec. 605.24(3), the court states, it does not support the view that the Fund many not choose to insure a private person, but appears to suggest that it may. That is reasonable, but there is nothing in the record to suggest that, prior to the fire, the Fund actually did consent to insure private property.
It is clear that the Fund can be held liable to private parties if they are able to establish a right against the governmental unit for damages or destruction of the property, as the ALJ found. However, the only reasonable interpretation is that it only can be if the governmental unit is liable in tort, and not where the governmental units liability rests solely on an unwise contractual assumption of risks that would normally lie elsewhere. Note, sec. 605.24(3).
The courts opinion can be searched in vain for any explanation of how any other interpretation could plausibly be considered reasonable.
Nor is it clear what the relevance is of the Fund having stipulated that Fiber elected to have Marathon County maintain insurance on the building. Even if Fiber did elect so, and Marathon County went along, the Funds stipulation does nothing to show that th
e Fund consented to insuring private property prior to the fire.
– David Ziemer
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David Ziemer can be reached by email.