Rural Mutual Insurance Company, Plaintiff-Appellant-Petitioner,
Lester Buildings, LLC and The Phoenix Insurance Company, Defendants-Third-Party Plaintiffs-Respondents, West Bend Mutual Insurance Company, Defendant-Respondent, Jim Herman, Inc., Defendant-Co-Appellant,
Van Wyks, Inc., Third-Party Defendant-Respondent.
Submitted on Briefs: Oral Argument: March 20, 2 019
Circuit Court: Dane county: 2016AP001837 Maryann Sumi &
Valerie Bailey-Rihn Judge.
OF DECISION OF THE COURT OF APPEALS Reported at 382 Wis.2d
269, 915 N.W.2d 729 (2018 - unpublished)
the plaintiff-appellant-petitioner, there were briefs filed
by Monte E. Weiss, Charles W. Kramer, and Weiss Law Offices
S.C., Mequon. There was oral argument by Monte E. Weiss.
the defendant-third-party-plaintiff-respondent, there was a
brief filed by Kevin A. Christensen, Patricia A. Stone, and
Wilson Elser Moskowitz Edelman & Dicker, . LLP,
Milwaukee. There was oral argument by Kevin A. Christensen.
the third-party-defendant-respondent, there was a brief filed
by Eugene M. LaFlamme, Esq., Michael A. Snider, Esq., and
McCoy Leavitt Laskey LLC, Waukesha. There was oral argument
by Eugene M. LaFlamme.
the defendant-respondent, there was a brief filed by Jeffrey
Leavell, Danielle N. Rousset, and Jeffrey Leavell, S.C.,
Racine. There was oral argument by Jeffrey Leavell.
REBECCA FRANK DALLET, J.
Rural Mutual Insurance Company seeks review of an unpublished
per curiam decision of the court of appeals affirming the
circuit court's grant of summary judgment dismissing
Rural Mutual's subrogation claims.The circuit court
determined that Rural Mutual's claims against Lester
Buildings, LLC, Phoenix Insurance Company, Van Wyks, Inc.,
and West Bend Mutual Insurance Company were barred pursuant
to a subrogation waiver contained in a Lester Buildings'
contract with Rural Mutual's insured, Jim Herman, Inc.
("Herman") . The circuit court also found that
Wis.Stat. § 895.447 did not void that subrogation
The court of appeals affirmed the circuit court and dismissed
Rural Mutual's claims. However, the court of appeals
declined to address whether Wis.Stat. § 895.447 voided
the subrogation waiver, reasoning that the argument was
insufficiently developed. We granted review as to two issues:
Does § 895.447 void the subrogation waiver at issue? And
was the subrogation waiver an unenforceable exculpatory
contract contrary to public policy?
We conclude that Wis.Stat. § 895.447 does not void the
subrogation waiver in Lester Buildings' contract because
the waiver does not limit or eliminate tort liability. We
also conclude that the subrogation waiver is not an
unenforceable exculpatory contract contrary to public policy.
We therefore affirm the court of appeals.
FACTUAL BACKGROUND AND PROCEDURAL POSTURE
As the court of appeals correctly noted, "[t]he
procedural history of this case is lengthy and
complicated." Rural Mut. Ins. Co. v. Lester
Buildings, LLC, No. 2016AP1837, unpublished slip op.,
¶2 (Wis. Ct. App. Apr. 26, 2018) . In 2009, Herman
entered into a contract with Lester Buildings for the design
and construction of a barn on its property. The contract
included the following language:
Both parties waive all rights against each other and any of
their respective contractors, subcontractors and suppliers of
any tier and any design professional engaged with respect to
the Project, for recovery of any damages caused by casualty
or other perils to the extent covered by property insurance
applicable to the Work or the Project, except such rights as
they have to the proceeds of such property insurance and to
the extent necessary to recover amounts relating to
deductibles of self-insured retentions applicable to insured
losses. . . . This waiver of subrogation shall be effective
notwithstanding allegations of fault, negligence, or
indemnity obligation of any party seeking the benefit or
production of such waiver.
Herman's barn required concrete in several areas,
including the foundation, walls, and piers that supported the
roof. The specifications for the concrete were provided by
Lester Buildings, but Herman entered into a separate contract
with Van Wyks in May 2010 to provide the
concrete. The barn that Lester Buildings and Van
Wyks constructed was covered by Herman's insurance policy
with Rural Mutual. In that policy, Rural Mutual explicitly
allowed its insured, Herman, to waive its rights without
interfering with Rural Mutual's insurance coverage:
"You may waive your right of recovery in writing before
a loss occurs without voiding the coverage."
The barn was completed in June 2010. In May 2013, one half of
the barn collapsed due to strong winds, killing or causing
catastrophic injuries to a large number of Herman's
cattle. Rural Mutual asserts that the barn collapsed due to
the improper installation of steel rebar cages in the
concrete piers supporting the barn's roof. The cages were
allegedly installed by Van Wyks several inches below where
Lester Buildings' design had called for them to be
installed, which led to the column tops cracking from the
strong winds. Rural Mutual paid approximately $607, 000
to rebuild Herman's barn and approximately $51, 000 for
the losses related to cattle and other miscellaneous damages.
In 2014, Rural Mutual brought a subrogation action against
Lester Buildings and its insurer, Phoenix, alleging that
Lester Buildings had breached its contract with Herman and
had been negligent in placing the rebar cages lower than
where the specifications required. Lester Buildings and
Phoenix then filed third-party cross-claims against Van Wyks
and its insurer, West Bend, alleging that if Lester Buildings
was liable to Rural Mutual, then Van Wyks would be
responsible for any damages owed. Rural Mutual filed an
amended complaint which included a count against West Bend,
pursuant to Wisconsin's direct action statute, Wis.Stat.
§ 632.24. Lester Buildings also moved to join Herman
as a defendant in the case. Lester Buildings and Van Wyks,
and their respective insurers (collectively the
"Contractors"), filed separate motions for summary
judgment against Rural Mutual. The Contractors asserted that
the subrogation waiver in the Lester Buildings' contract
barred Rural Mutual's claims against all of them.
The circuit court granted summary judgment to the Contractors
on all of Rural Mutual's claims, reasoning that the
subrogation waiver was enforceable and precluded Rural
Mutual's claims. The circuit court determined that
Gerdmann and Dykstra controlled its
interpretation of Wis.Stat. § 895.447 and resolved the
claims against Rural Mutual. Gerdmann v. United States
Fire Ins. Co., 119 Wis.2d 367, 350 N.W.2d 730');">350 N.W.2d 730 (Ct. App.
1984); Dykstra v. Arthur G. McKee & Co., 100
Wis.2d 120, 301 N.W.2d 201');">301 N.W.2d 201 (1981) . In affirming the circuit
court's decision, the court of appeals did not address
Rural Mutual's argument that § 895.447 barred the
subrogation waiver because it found Rural Mutual's
argument regarding the specific waiver to be "woefully
insufficient." Rural Mut., No. 2016AP1837,
¶20.Rural Mutual filed a motion to reconsider,
which was denied. Rural Mutual then petitioned this court for
STANDARD OF REVIEW
We review a decision on summary judgment using the same
methodology as the circuit court. Green Spring Farms
v. Kersten, 136 Wis.2d 304, 314-15, 401 N.W.2d
816 (1987). Summary judgment shall be granted where the
record demonstrates "that there is no genuine issue as
to any material fact and that the moving party is entitled to
a judgment as a matter of law." Wis.Stat. §
802.08(2). The facts related to this issue are not in dispute
and therefore only questions of law remain. Statutory
interpretation and the interpretation of an insurance policy
present questions of law that this court reviews de novo.
Mau v. North Dakota Ins. Reserve Fund, 2001 WI 134,
¶¶12, 28, 248 Wis.2d 1031, 637 N.W.2d 45.
This case involves the validity of a subrogation waiver
contained in Lester Buildings' contract with Rural
Mutual's insured, Herman. The Contractors argue that
Rural Mutual's subrogation claims are entirely precluded
by the subrogation waiver in Lester Buildings' contract
with Herman. Rural Mutual asserts that Wis.Stat. §
895.447 voids the subrogation waiver. In the alternative,
Rural Mutual asserts that the subrogation waiver is an
unenforceable exculpatory contract contrary to public
Wisconsin Stat. § 895.447 does not void the subrogation
We first interpret Wis.Stat. § 895.447 to determine
whether it voids the subrogation waiver. Statutory
interpretation begins with the language of the statute and if
the meaning is plain, the inquiry ordinarily ends. State
ex rel. Kalal v. Circuit Court for Dane Cty.,
2004 WI 58, ¶45, 271 Wis.2d 633, 681 N.W.2d 110. "A
statute's purpose or scope may be readily apparent from
its plain language or its relationship to surrounding or
closely-related statutes-that is, from its context or the
structure of the statute as a coherent whole."
We begin with an examination of the plain language of
Wis.Stat. § 895.447, which reads:
Any provision to limit or eliminate tort liability
as a part of or in connection with any contract, covenant or
agreement relating to the construction, alteration, repair or
maintenance of a building, structure, or other work related
to construction, including any moving, ...