Appeal from a judgment of the Circuit Court for Door County: Robert J. Parins, Judge of Brown County, Presiding. On by-pass from Court of Appeals.
The opinion of the court was delivered by: Steinmetz
The issue presented is whether as a matter of law the City of Sturgeon Bay complied with its statutory responsibility under sec. 895.46(1) (a), Stats., *fn1 to provide legal counsel to defend plaintiffs-police officers when they were sued civilly in federal court. A second issue is whether equitable estoppel is available to the plaintiffs under the circumstances of this case.
On January 14, 1982, plaintiffs filed a four-count amended complaint against defendant-City of Sturgeon Bay seeking indemnification for legal expenses incurred in the defense of a civil rights action. In the amended complaint, the first count set forth a theory of recovery labeled statutory duty alleging defendant's obligation to pay the legal expenses pursuant to sec. 895.46(1) (a), Stats. The other counts were of public policy, unjust enrichment and implied contract. The trial court granted the city's motion for summary judgment dismissing the plaintiffs' cause of action to recover the attorney fees.
On October 3, 1979, the plaintiffs, while on duty as police officers and employees of the City of Sturgeon Bay Police Department, arrested Robert Vogel. One month later, Vogel commenced an action in the United States District Court for the Eastern District of Wisconsin against the plaintiffs, John J. Ditewig and Thomas W. Beane, individually and in their official capacity, for their actions arising out of the arrest. He sought monetary damages in the amount of $1 million alleging assault, battery, false arrest, conspiracy and violations of civil rights.
Four days after being served with Vogel's complaint, the plaintiffs gave notice to their department head, Howard A. Larson, Chief of Sturgeon Bay Police Department, of the commencement of the action. Shortly thereafter, the officers met with the city's mayor, Dan Nielson, and its city attorney, Sven Kirkegaard, and requested that the city provide legal counsel to represent them. At the meeting, the city attorney informed the plaintiffs that the defense of the above action would be tendered to the city's insurer, Employers of Wausau. He further told them that the insurer might provide legal representation for those causes of action covered by the defendant's insurance policy. Regarding the causes of action not covered by the policy, he informed them that neither the insurer nor the city would provide legal representation. The city attorney also explained to the plaintiffs that for the causes of action covered by insurance, the plaintiffs would be personally liable for the amounts deductible in the policy and for the amount of any judgment recovered in excess of the policy limit. Furthermore, the city attorney informed the plaintiffs that if it was determined in the above action that they had acted outside the scope of their employment as police officers, the insurer would not provide indemnification for any judgment amount. Finally, the city attorney told the plaintiffs that the allegations of the federal action were so serious that the city might have to take a position adverse to the plaintiffs. For all of these reasons, the city attorney advised the police officers to retain private counsel.
In reliance on the representations of the city attorney, the plaintiffs retained Attorney Albert H. Beaver of Sturgeon Bay to represent them and notified the city that they had done so. The city then tendered the defense of the Vogel action to its insurer which in turn retained Attorney Rodney Charnholm to represent the two officers.
On March 13, 1980, all of Vogel's claims against the plaintiffs in federal court were dismissed, except the claim of violation of constitutional rights. That claim went to trial and both Attorneys Beaver and Charnholm defended the plaintiffs through the Conclusion of a jury trial. On August 6, 1981, a verdict of not guilty was returned and a judgment dismissing the action was entered.
The record demonstrates that the attorneys cooperated with each other and coordinated the defense together. Charnholm's deposition shows that both his firm and Beaver's firm appeared as counsel of record and collaborated while preparing for trial and during the trial itself. However, the record offers no details concerning how the attorneys coordinated their efforts.
After the trial's Conclusion, Attorney Beaver asked the city to pay him a total of $50,000 for representing the plaintiffs pursuant to sec. 895.46(1) (a), Stats. The city refused to pay claiming that it was under no obligation to indemnify the plaintiffs, since the plaintiffs did in fact receive legal counsel from the city through the services of Attorney Charnholm.
The trial court found there were no issues of fact "with respect to whether or not the City had provided legal counsel to the defendant employes within the meaning of Sec. 895.46(1), W.S." In arriving at the Conclusion concerning the application of sec. 895.46(1), Stats., the trial court held:
"The court is of the opinion that under this circumstance, the City should be willing to pay for the cost of additional counsel. Unfortunately, the statute imposes an obligation on the city to pay reasonable attorney fees and costs only if it does not provide legal counsel to the defendant officers.
"It is undisputed that the City did furnish and provide legal counsel to the ...