816 N.W.2d 853
Wis.2012Background
- Approximately 150 people became ill from E. coli at two Milwaukee Sizzler restaurants; Excel supplied the contaminated meat.
- Excel admitted the meat was the source of the illness and distributed it to Sizzler franchisees, including E&B Management Co.
- Kriefall plaintiffs settled with Excel, E&B, Sizzler; non-Kriefall plaintiffs settled through a fund administered by Secura and Federal Insurance.
- Jury found Excel 80% liable, E&B 20% liable, Sizzler 0% liable; disputes concerned allocation of settlements and defense/indemnity rights.
- Disputes centered on (a) implied warranties and the Continuing Guaranty, (b) Hold Harmless Agreement with Sysco, (c) Pierringer releases and subrogation, (d) collateral-source issues, and (e) attorney-fee recoverability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Continuing Guaranty limits consequential damages for implied warranties | Sizzler argues implied warranties breach damages fall outside Guaranty limit | Excel contends Guaranty limits damages including implied warranties | Guaranty does not bar implied-warranty damages under Boxed Beef contract |
| Whether Sizzler may recover equitable indemnity for the $1.5 million Kriefall payment | Sizzler paid under pressure; seeks equitable indemnity from Excel | Excel argues payment voluntary or not, but rights limited; indemnity not automatic | Sizzler entitled to equitable indemnification for full $1.5 million from Excel |
| Extent of E&B indemnification under Hold Harmless Agreement for non-Kriefall settlements | E&B entitled to indemnity for Pierringer settlements | Indemnity limited to extent of Excel's liability (80%) | Excel indemnifies E&B for 80% of non-Kriefall settlements; but not beyond apportioned liability |
| Whether indemnification reduction for Federal Insurance’s payment applies | E&B seeks recovery of $1 million paid by Federal Insurance | Collateral source and subrogation rights negate recovery | Indemnification reduction based on Hold Harmless; collateral source does not yield $1 million recovery to E&B |
| Whether Sizzler may recover attorney fees under Weinhagen exception to American Rule | Sizzler innocent and compelled to defend; seeks fees | Weinhagen requires wrongful act by the other party; not shown here | Weinhagen exception does not apply; no attorney-fee recovery for Sizzler |
Key Cases Cited
- Estate of Kriefall v. Sizzler USA Franchise, Inc. (Kriefall II), 335 Wis. 2d 151 (Wis. Ct. App. 2011) (affirmed equitable indemnity and contractual interpretation under Wisconsin law)
- Estate of Kriefall v. Sizzler USA Franchise, Inc. (Kriefall I), 265 Wis. 2d 476 (Wis. Ct. App. 2003) (federal preemption considerations unrelated to current decision)
- Kjellsen v. Stonecrest, Inc., 47 Wis. 2d 8 (Wis. 1970) (equitable indemnification requires discharge of a duty by the other party)
- Swanigan v. State Farm Ins. Co., 99 Wis.2d 179 (Wis. 1980) (contribution vs indemnification; allocation of loss)
- Voge v. Anderson, 181 Wis.2d 726 (Wis. 1994) (collateral source rule generally favors plaintiff recoveries)
- Weinhagen v. Hayes, 179 Wis. 62 (Wis. 1922) (Weinhagen exception allowing attorney-fee recovery requires wrongful act)
- Unigard Ins. Co. v. Ins. Co. of N. Am., 184 Wis.2d 78 (Wis. Ct. App. 1994) (Pierringer releases and impact on later subrogation/indemnification)
- Eden Stone Co., Inc. v. Oakfield Stone Co., Inc., 166 Wis.2d 105 (Wis. Ct. App. 1991) (Tort/contract releases; Pierringer applicability in mixed claims)
- Wyatt Industries, Inc. v. Publicker Industries, Inc., 420 F.2d 454 (5th Cir. 1969) (Wyatt on limitations of implied warranties and remedies)