801 N.W.2d 781
Wis. Ct. App.2011Background
- Estates of Kriefall sued Excel for injuries and death from E. coli in Excel meat at Sizzler locations; judgments awarded damages including lost profits, royalties, and pain-and-suffering loss; trial court held Excel liable for implied warranties; holdings involved apportionment of fault and indemnity disputes among Excel, E&B, and Sizzler USA Franchise; Pierringer releases and Hold Harmless Agreement governed settlements with non-Kriefall claimants; appellate court affirmed most rulings but reversed two related orders.
- Excel, its insurer American Home, E&B Management (Sizzler operations), Secura Insurance, and Sizzler USA Franchise (the franchisee) were involved; Sizzler’s parent entity and Sysco were implicated through hold-harmless arrangements; trial jury apportioned 80% Excel and 20% E&B fault for E. coli contamination; Sizzler USA Franchise was found not negligent as a franchisor; Boxed Beef Sales Confirmation contract and Addendum connected Excel to SizzlerUSA Franchise and its distributors.
- The issue of whether Sizzler USA Franchise could recover consequential damages under the Uniform Commercial Code implied warranties (402.314, 402.315) against Excel was central; the court held the implied warranties apply notwithstanding the Continuing Guaranty’s exclusion of consequential damages; privity and who qualifies as a “buyer” under the UCC were addressed; the appellate court discussed the Hold Harmless Agreement’s scope and Pierringer releases’ effect on indemnity rights; equitable-indemnity rights for Sizzler USA Franchise regarding advance payments to Kriefalls were considered; collateral-source considerations were rejected when seeking indemnity from Excel.
- The court concluded that: (i) Sizzler USA Franchise may sue on implied UCC warranties even if it did not take delivery of the meat; (ii) the Continuing Guaranty exclusion does not bar implied warranties; (iii) Pierringer settlements do not extinguish Excel’s indemnity obligation to E&B; (iv) Excel must indemnify E&B to the extent not caused by E&B’s own negligence; (v) Sizzler USA Franchise’s equitable indemnity claim for the Kriefall advance payment was viable; (vi) the collateral-source rule does not permit a windfall to E&B from Federal Insurance’s payment.
- The Wisconsin Supreme Court or Court of Appeals affirmed most judgments and orders but reversed two: (1) the trial court’s order allowing E&B and Secura to recover from Excel the Federal Insurance payment to Secura, and (2) the trial court’s rejection of Sizzler USA Franchise’s equitable-indemnity claim against Excel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Consequence damages under UCC implied warranties | SizzlerUSA Franchise argues implied warranties permit consequential damages. | Excel argues Continuing Guaranty excluded consequential damages and UCC provisions do not override. | Yes; implied warranties allow consequential damages despite the guaranty exclusion. |
| Who qualifies as a buyer under the UCC to sue for implied warranties | SizzlerUSA Franchise contracted to buy meat and may sue despite not taking possession. | Argues privity and delivery requirements bar SizzlerUSA Franchise from asserting implied warranty claims. | SizzlerUSA Franchise qualifies as a buyer and may rely on implied warranties. |
| Hold Harmless Agreement vs Pierringer releases | E&B and SizzlerUSA Franchise seek indemnity from Excel for Pierringer settlements. | Pierringer releases extinguish cross-claims against settling parties; ambiguity about application to indemnity. | Hold Harmless Agreement functions to indemnify for non-E&B-caused portions; Pierringer releases do not bar indemnity claims. |
| Equitable indemnity for advance Kriefall payment | SizzlerUSA Franchise seeks recovery of $1.5 million advance as equitable indemnity. | Advance payment was charitable, not recoverable as equitable indemnity. | Equitable indemnity applies; reimbursement for the advance payment is permitted. |
| Collateral-source offset | Windfall from Federal Insurance should be available to E&B under indemnity. | Collateral-source rule bars this windfall to injury-causing parties. | Collateral-source windfall to the tortfeasor is not allowed; reverse the trial court on that point. |
Key Cases Cited
- Kalal v. Kalal, 271 Wis. 2d 633 (2004 WI 58) (interpretation of statutes; ambiguity resolved in context)
- Edwards v. Petrone, 160 Wis. 2d 255 (Ct. App. 1990) (contract interpretation de novo review)
- State v. Sullivan, 216 Wis. 2d 768 (1998) (evidence and trial court discretion standard)
- Hefty v. Strickhouser, 312 Wis. 2d 530 (2008 WI) (trial court discretion in scheduling and evidence)
- Wyatt Industries, Inc. v. Publicker Indus., Inc., 420 F.2d 454 (5th Cir. 1969) (as‑is/modified warranties; contract modifications under UCC)
- Unigard Ins. Co. v. Insurance Co. of North America, 184 Wis. 2d 78 (Ct. App. 1994) (Pierringer releases and indemnity rights; contribution rule)
- Dippel v. Sciano, 37 Wis. 2d 443 (1967) (privity requirement for implied warranties)
- Eden Stone Co., Inc. v. Oakfield Stone Co., Inc., 166 Wis. 2d 105 (Ct. App. 1991) (Pierringer context; contract vs tort actions)
- Kafka v. Pope, 194 Wis. 2d 234 (1995) (contribution and indemnity principles)
- Mieske v. Bartell Drug Co., 593 P.2d 1308 (Wash. 1979) (beyond mere sales; Article 2 breadth)