SHOWERS APPRAISALS, LLC, Real Marketing, LLC and Mark W. Showers, Plaintiffs-Appellants-Petitioners, v. MUSSON BROS., INC. and West Bend Mutual Insurance Company, Defendants-Respondents-Cross-Appellants, LEAGUE OF WISCONSIN MUNICIPALITIES MUTUAL INSURANCE and City of Oshkosh, Defendants-Cross-Respondents.
No. 2011AP1158
Supreme Court of Wisconsin
Oral argument March 13, 2013. Decided July 18, 2013.
2013 WI 79 | 835 N.W.2d 226 | 350 Wis. 2d 509
For the defendants-respondents-cross-appellants, there was a brief by David G. Dudas and Joseph P. Putzstuck, and McCanna, Dudas & Kewley, S.C., Appleton, with oral argument by David G. Dudas.
An amicus curiae brief was filed by Martha H. Heidt and Bye, Goff & Rohde, Ltd., River Falls, on behalf of the Wisconsin Association of Justice.
¶ 2. We conclude that where a third party’s claim against a governmental contractor4 is based on the allegation that the contractor negligently performed its work under a contract with a governmental entity, the governmental contractor must prove both that the contractor meets the definition of “agent” under
¶ 5. Musson may therefore be liable if Showers is able to show that in performing its work under the government contract, Musson had a duty of due care to Showers, that Musson breached that duty, and that such breach was a cause of Showers’ damages. Accordingly, we reverse and remand to the circuit court for further proceedings on Showers’ claims against Musson consistent with this opinion. Additionally, because Musson’s and the City’s cross-claims were not fully litigated in the circuit court and were not addressed by the court of appeals, those claims should be addressed on remand.
I. BACKGROUND
¶ 6. In September 2007, the DOT and the City of Oshkosh entered into a state–municipal agreement for a sewer improvement project along a stretch of Ohio Street in Oshkosh, which is also State Highway 44. Under the agreement, the State (through the DOT) would provide substantial financing for the project, although the City was responsible for funding and construction of sanitary sewers and water mains, as well as the sealing of concrete joints. The DOT would remain involved in the project, including overseeing the bidding process and being onsite during construction.
¶ 7. The DOT opened the Ohio Street project for bidding, informing potential bidders that, as contractors, they would be “responsible for any damages to property or injury to persons occurring through their own negligence or that of their employees or agents, incident to the performance of work under this contract, pursuant to the Standard Specifications for Road and Bridge Construction applicable to this contract.” The specifications applicable to the project were the State of Wisconsin Standard Specifications for Highway and Structure Construction. These Standard Specifications consist of hundreds of pages of directions and specifications regarding how governmental contractors are to perform certain aspects of contracted projects.
¶ 8. After completion of the bidding process, the DOT awarded the contract to Musson, and the two entered into the Contract for Highway Work, which provided that DOT would pay Musson $4,393,833.15 for its work. Musson began work on the Ohio Street project in spring 2008.
¶ 10. When the Ohio Street sewer project commenced in spring 2008, the City, the DOT, and Musson discussed certain aspects of how the project would proceed, one of which was whether the roadway was to be removed all at once, or whether it should be removed and repaired on a block-by-block basis. The parties purportedly agreed that the block-by-block approach would be best; however, there is no formal documentation of the parties’ alleged agreement on this aspect of the project, and indeed, Musson has at times disputed whether there was such an agreement.
¶ 11. Whatever the parties did or did not agree to, Musson removed the entire roadway along Ohio Street, from the storm sewer’s outlet at the Fox River to the end of the project, around Ninth Street; disconnected the storm sewers in that reach; and placed a bladder at the discharge at the Fox River so that water would not flow from the river into the non-operational sewer system. Musson’s decision to proceed in this manner caused some disputes between City officials and Musson, based on the City’s concern that by removing the entire storm sewer, Musson would compromise the City’s ability to manage storm water.
¶ 13. On June 8, 2008, rain storms inundated the Ohio Street project site, dropping approximately 4.25 inches of rain in the area of the project site. The storm left water standing in the exposed roadbed outside Showers’ property, and a manager with Musson reported that Musson’s pumps were unable to maintain drainage for the amount of rain that had fallen. After viewing the project site outside his property, Showers noted multiple conditions that potentially impeded drainage (as well as other conditions that he alleged were contrary to the Standard Specifications), including mounds of soil in the roadbed and drainage inlets clogged with soil and debris. When Showers spoke with employees from the City and Musson regarding the standing water and the potential for damage from another large storm that was predicted, Showers was told that there was nothing that either entity could do to remedy the situation.
¶ 15. By 5:30 p.m. on June 12, water was overflowing from the storm sewers in Showers’ parking lot, and the Ohio Street roadbed was entirely flooded. Additionally, water had begun to overflow from another drainage basin into the stretch of Ohio Street near Showers’ property. The June 12 storm was estimated to have dropped approximately 4.36 inches of rain on the area within 5.5 hours during the evening, in addition to near-continuous, but less intense rain throughout the entire day.
¶ 16. Following the June 12 rains, the basement at Showers’ property flooded with more than seven feet of water. Showers retained an engineer who concluded that approximately 117,500 gallons of water had been trapped in the roadbed outside Showers’ property for 15 to 18 hours, and that the hydrostatic pressure caused by that water eventually caused Showers’ basement floor to rupture, thereby allowing the water to seep up into the basement. Showers’ sump pump ran continuously following the storm, but because the pump was connected with the storm sewers, the discharge of the sump pump merely recycled water out into the roadbed, which then seeped back into Showers’ basement. Neither the City nor Musson had informed Showers that the storm sewers had been disconnected. Because of the flooding, Showers incurred at least $140,000 in damages to his business and personal property, and was forced to relocate his businesses for four months while the Ohio Street property could be cleaned, repaired, and restored.9
¶ 19. The court of appeals affirmed the grant of summary judgment for Musson. Showers Appraisals, LLC v. Musson Bros., Inc., 2012 WI App 80, ¶ 1, 343 Wis. 2d 623, 819 N.W.2d 316. The court concluded that under the test set forth in Lyons, Musson was entitled to governmental contractor immunity as a statutory “agent” under ¶ 20. Showers filed a petition for review, which we granted.11 ¶ 21. The circuit court granted summary judgment for the City and Musson on the basis of governmental immunity and governmental contractor immunity under ¶ 22. The City and Musson assert that, under ¶ 24. ¶ 25. Holytz excepted from that abrogation the acts of a governmental entity exercising its legislative, quasi-legislative, judicial or quasi-judicial functions. See id. at 40. That language carving out an exception to governmental liability now appears in ¶ 27. In the present case, the parties’ arguments center on the application of ¶ 29. In analyzing whether the contractor’s governmental-contractor defense had merit, the Supreme Court focused on whether the government contract required the contractor to “deliver helicopters with the sort of escape-hatch mechanism shown by the specifications” of the helicopter that the Marine Corps had chosen. Id. at 509. The Supreme Court reasoned that “the selection of the appropriate design for military equipment to be used by our Armed Forces is assuredly a discretionary function.” Id. at 511. The Court then concluded by setting out a three-part test to determine whether the relationship between the governmental contractor and the governmental entity was such that the contractor should be immune from liability for design defects in military equipment chosen by the Armed Forces: “(1) the United States approved reasonably precise specifications; (2) the equipment conformed to those specifications; and (3) the supplier warned the United States about the dangers in the use of the equipment that were known to the supplier but not to the United States.” Id. at 512. ¶ 30. In explaining its test, the Supreme Court said, “[t]he first two of these conditions assure that the suit is within the area where the policy of the ‘discretionary function’ would be frustrated——i.e., they assure that the design feature in question was considered by a Government officer, and not merely by the contractor itself.” Id. (emphasis added). In so explaining, the Supreme Court made clear that a discretionary act of a governmental officer is a necessary component to potential immunity for the governmental contractor. Accordingly, a governmental contractor’s own “discretionary actions” would not have sufficed to afford the contractor immunity for its actions in Boyle. ¶ 32. Lyons adopted Boyle’s three-part test. Id. at 457–58. The court of appeals explained that a governmental contractor that follows governmental specifications is an “agent” within the meaning of ¶ 33. Subsequent court of appeals decisions have affirmed the Lyons court‘s rationale regarding contractor immunity, stating, for example, that “[i]n Lyons, we expressly held that an independent contractor meeting the three-part test was an agent within the meaning of ¶ 34. However, analyzing whether the conduct of a governmental contractor was undertaken as a statutory “agent” within the scope of the immunity accorded ¶ 35. Immunity is available to a governmental entity only for those governmental decisions that are made as an exercise of “legislative, quasi-legislative, judicial or quasi-judicial functions” as set out in ¶ 36. From the foregoing, when a governmental contractor seeks immunity under ¶ 37. The first and second requirements of the Lyons test, i.e., whether the governmental entity approved reasonably precise specifications that the governmental contractor adhered to when engaging in the conduct that caused the injury, limit when a governmental contractor is a statutory agent under ¶ 38. The principles of immunity for particular types of agents under ¶ 39. However, if the allegation in Lyons were not that the design was a cause of the accident, and were instead that the contractor did not construct the bridge in a workmanlike manner and thereby caused injury, such an allegation would not implicate a legislative, quasi-legislative, judicial or quasi-judicial function under ¶ 40. Some cases applying Kettner‘s agency principles in the context of immunity inquiries could be read to suggest that “agent” may be interpreted broadly to afford immunity to all governmental contractors’ conduct. However, in light of ¶ 41. Other cases following Lyons also illustrate that care in analysis is needed when a claim of governmental contractor immunity is made. For example, in Bronfeld, the court of appeals addressed an allegation that a subcontractor negligently erected barricades and failed to maintain the construction site so as to protect public safety. The plaintiff claimed that the contractor was therefore liable for the plaintiff‘s injuries, which occurred when she tripped over a barricade that the contractor had placed at the site. See Bronfeld, 330 Wis. 2d 123, ¶¶ 10, 12. ¶ 42. In Bronfeld, the government‘s general contractor had provided a detailed traffic control plan that the City of River Falls approved, and the subcontractor followed that plan. Id., ¶ 6. The court of appeals began by noting that placement of barricades is a discretionary duty, and therefore, if the City had placed the barricades itself, it would have been immune from suit pursuant to ¶ 43. After making this primary determination, the court in Bronfeld applied the Lyons test to determine whether the contractor was an agent. The court concluded that the test was satisfied, and that the contractor was entitled to immunity, because (1) the City had provided reasonably precise specifications re ¶ 44. Bronfeld‘s cursory analysis of governmental contractor immunity under ¶ 45. In sum, in addition to satisfying the Lyons test for governmental contractor immunity, a contractor asserting immunity must be able to demonstrate ¶ 46. Our conclusion regarding the intersection of the agency principles embodied in the Lyons test and the type of acts for which governmental immunity may be afforded under ¶ 47. With the above principles in mind, we turn to the present case. Although the parties have framed their arguments solely in terms of the Lyons test, we analyze Musson‘s claim for immunity under both requirements of ¶ 48. Under the Lyons test as applied to ¶ 49. The means and methods provision states, in relevant part, that Musson “is solely responsible for the means, methods, techniques, sequences, and procedures of construction.” (Emphasis added.) In this context, being “responsible” for the “means, methods, [etc.]” involves both powers and duties. That is, Musson was not only empowered to take actions involving how the construction process was to proceed, Musson also had the responsibility for the actions it took, including incurring liability if its actions caused injury. See Black‘s Law Dictionary 1427 (9th ed. 2009) (defining “responsibility” as “liability“); see id. (noting that “responsible . . . simply means liable to be made to account or pay“) (quoting H.L.A. Hart, “Changing Conceptions of Responsibility,” in Punishment and Responsibility 186, 196-97 (1968)). ¶ 50. Many of Musson‘s day-to-day actions at the Ohio Street project site are chronicled in the daily logs of onsite activity kept by one of the DOT‘s engineers, Ryan Schanhofer. These logs note numerous instances of Musson taking actions without DOT or City approval, pursuant to Musson‘s independent responsibility under the means and methods provision. Throughout the course of the project, there were multiple occasions on which Schanhofer had to inform City officials that he could not stop Musson from proceeding on a certain course because Musson‘s action was within the “means and methods” provision. One of these actions was the removal of the entire roadbed of Ohio Street, rather than removing portions on a block-by-block basis. Other such actions included whatever steps Musson would take to ensure proper drainage, as demonstrated by Schanhofer‘s note ¶ 51. As discussed above, the nature of Musson‘s actions, taken pursuant to the means and methods provision, demonstrates that Musson had substantial independent decision-making authority in performing its tasks, such that Musson‘s relationship with the DOT for the conduct that is alleged to have resulted in harm cannot be characterized as that of a servant. See Arsand, 83 Wis. 2d at 45-46 (defining servant as one subject to the master‘s control or right to control). Such independent discretion is also contrary to Lyons’ “reasonably precise specifications” requirement, in that a contractor may not possess such control over the alleged injury-causing action and still be considered an agent for purposes of governmental contractor immunity under satisfy the Lyons test and is not an agent under ¶ 52. Next, having concluded that Musson is not entitled to immunity as an agent under the Lyons test, we also examine Musson‘s claim for immunity in light of the injury alleged and the plain language of ¶ 53. These assertions are fundamentally different from the assertion that a governmental entity negligently selected a design that a contractor imple- mented for a government project. Design selection is a type of governmental entity decision that we have determined is within the legislative or quasi-legislative function immunized under ¶ 54. In contrast, Showers alleges that Musson‘s performance of its construction duties, such as maintaining drainage at the worksite, did not meet the standard of due care for construction work. Cf. Brooks v. Hayes, 133 Wis. 2d 228, 234-35, 395 N.W.2d 167 (1986) (recognizing that a construction contract implicitly imposes a duty on contractors to perform work according to the standard of due care). An allegation such as Showers makes does not implicate the types of acts for which ¶ 55. In future cases, governmental contractors seeking immunity should include in their pleadings sufficient facts to demonstrate that the governmental ¶ 56. Accordingly, Showers’ claims, that Musson negligently performed the work required by the government contract, should be analyzed under standard negligence principles. See Coffey, 74 Wis. 2d at 531, 535-40 (setting forth elements of standard negligence analysis and applying those elements after determining that municipal officer was not entitled to immunity). Although ultimately Musson may be found not to have been negligent in its performance of its construction activities, summary judgment was inappropriate based on the substance of Showers’ complaint. ¶ 57. We conclude that where a third party‘s claim against a governmental contractor is based on the allegation that the contractor negligently performed its work under a contract with a governmental entity, the governmental contractor must prove both that the contractor meets the definition of “agent” under ¶ 58. Moreover, pursuant to the plain language of ¶ 59. Therefore, based on Musson failing to meet the standard for a ¶ 60. Musson may therefore be liable if Showers is able to show that in performing its work under the government contract, Musson had a duty of due care to Showers, that Musson breached that duty, and that such breach was a cause of Showers’ damages. Accordingly, we reverse and remand to the circuit court for further proceedings on Showers’ claims against Musson consistent with this opinion. Additionally, because Musson‘s and the City‘s cross-claims were not fully litigated in the circuit court and were not addressed by the court of appeals, those claims should be addressed on remand. By the Court.—The decision of the court of appeals is reversed and the cause remanded to the circuit court. ¶ 61. N. PATRICK CROOKS, J. (concurring). This case is about whether Musson Bros., Inc. (Musson) is an agent of a governmental entity under the test established in the Lyons case. See Estate of Lyons v. CNA Ins. Cos., 207 Wis. 2d 446, 558 N.W.2d 658 (Ct. App. 1996). I agree with the majority‘s conclusion that under the Lyons test, Musson is not an agent because Musson has not shown that it was acting pursuant to “reasonably precise specifications” as the first prong of the Lyons test requires. Musson is therefore not entitled to immunity. The grant of summary judgment should therefore be reversed. Although I do not join the majority opinion, I respectfully concur for reasons stated herein. ¶ 62. In past cases, we have not focused on whether the governmental entity‘s decisions were leg- ¶ 63. While the majority opinion (at ¶ 2 n.5) says that there is no intention to adopt a fundamental change in our immunity jurisprudence, I am also concerned that, due to some notable similarities, the majority opinion could be read as endorsing the type of fundamental change that Justice Gableman advocates in a concurrence in an unrelated governmental immunity case.1 While I share Justice Gableman‘s dismay with some aspects of this court‘s immunity jurisprudence, I favor an incremental approach to correcting the problems. A good place to start would be to recognize that our prior cases have construed the ministerial duty exception to immunity too narrowly.2 ¶ 64. The majority‘s approach provides little guidance as to how the showing it requires could be met. The majority concludes that “[T]he facts set out in support of summary judgment would not support a claim of governmental contractor immunity because Musson has failed to assert that the acts for which it claims immunity were ‘acts done in the exercise of legislative, quasi-legislative, judicial or quasi-judicial functions.‘” Majority op., ¶ 4. ¶ 65. In cases involving immunity, the analysis has usually focused on whether the alleged negligent acts were discretionary or non-discretionary, and immunity determinations often turned on such analysis. Here, the majority holds that Musson must make an initial showing before application of the three prongs of the Lyons test for governmental contractors claiming immunity. Specifically, the majority faults Musson for failing to “assert that the acts for which it claims immunity were ‘acts done in the exercise of legislative, quasi-legislative, judicial or quasi-judicial functions’ . . . .” See majority op., ¶ 59. Litigants may be unable to discern from this opinion what sort of facts they must allege in order to establish that immunity applies. When this court crafts a somewhat different analytical framework, the best practice is to clearly lay out the reasons for the change, and articulate what litigants must show to satisfy the standard. ¶ 66. There are striking similarities between the language of the majority and the language of Justice ¶ 67. Further, in this case, there was extensive briefing on the potential application of the ministerial duty exception to immunity, and yet the majority does not address the arguments or acknowledge its potential application. This might be viewed by some as consistent with Justice Gableman‘s suggestion that in immunity ¶ 68. An incremental approach that would be more consistent with our jurisprudence would be one that addresses the problem of this court‘s overly narrow interpretation of ministerial duty. Our ministerial duty analysis at times turns into a search to find any discretion that could have been exercised, and then declaring immunity is required. Ruling out liability wherever any discretion is exercised essentially creates immunity for almost all actions. As an influential treatise noted: Stating the reasons for the discretionary-ministerial distinction is much easier than stating the rule . . . . [T]he difference between “discretionary” and “ministerial” is artificial. An act is said to be discretionary when the officer must exercise some judgment in determining whether and how to perform an act. The problem is that “[i]t would be difficult to conceive of any official act, no matter how directly ministerial, that did not admit of some discretion in the manner of its performance, even if it involved only the driving of a nail.” McQuillin, Municipal Corporations § 53.04.10 (3d ed.) (quoted in Willow Creek Ranch, L.L.C. v. Town of Shelby, 2000 WI 56, ¶ 136, 235 Wis. 2d 409, 611 N.W.2d 693 (Prosser, J., dissenting)). ¶ 69. The fact that even a “directly ministerial” act involves “some discretion in the manner of its performance” can make it easy for courts to decline to find a ministerial duty where one in fact exists. Like Justice Gableman, I believe our cases have sometimes failed to recognize this and have employed too restrictive an interpretation of ministerial duty. See Bostco, ¶ 109 (Gableman, J., concurring). While I do not favor ¶ 70. This case concerns only one small subset of potential government agents—private governmental contractors. ¶ 71. Yet, the majority has serially cited public employee and other public official immunity cases. See, e.g., majority op., ¶¶ 22 n.12, 24, 26. Those cases are not relevant to the Lyons analysis and are advanced despite the presence of a line of private governmental contractor immunity cases that apply the Lyons test and private governmental contractor immunity principles in their proper contexts.3 See, e.g., Bronfeld v. Pember Cos., Inc., 2010 WI App 150, 330 Wis. 2d 123, 792 N.W.2d 222; Estate of Brown v. Mathy Const. Co., 2008 WI App 114, 313 Wis. 2d 497, 756 N.W.2d 417.4 ¶ 72. Here, the Lyons test determines which private governmental contractors are considered “agents” under ¶ 73. In this case, the parties dispute whether the first requirement of the Lyons test is met. Thus, the relevant inquiry is whether a governmental authority approved reasonably precise specifications addressing Musson‘s negligent conduct. ¶ 74. To determine whether a governmental authority approved reasonably precise specifications, I look to Musson‘s contract, which sets forth its obligations regarding the road construction project at issue. Musson‘s ability to independently choose the methods of construction on the project is governed by a “means and methods” clause in the contract, which provides: [The contractor] is solely responsible for the means, methods, techniques, sequences, or procedures of construction described in and expressly required by the contract. ¶ 75. Under the “means and methods” clause, Musson was left with near-absolute freedom to choose the means and methods by which it constructed the street—irrespective of the means and methods actually preferred by the governmental authorities overseeing the project. The Department of Transportation sup- ¶ 76. Ultimately, Musson‘s substantial freedom under the “means and methods” clause dooms its argument that the government approved reasonably precise specifications addressing its alleged negligent conduct. To establish that a specification is reasonably precise, Musson must have had its discretion significantly curtailed in some way. Bronfeld v. Pember Cos., Inc., 2010 WI App 150, ¶¶ 29-30, 330 Wis. 2d 123, 792 N.W.2d 222 (requiring a showing by a governmental contractor that the specifications “significantly curtailed” the contractor‘s discretion in order to establish that specifications are reasonably precise under Lyons). The “means and methods” clause fails to clear that hurdle under these facts. ¶ 77. Because there was no government-approved reasonably precise specification that addresses Musson‘s negligent conduct, I conclude that Musson failed to establish that it is an “agent” under ¶ 78. I am authorized to state that Chief Justice SHIRLEY S. ABRAHAMSON and Justice ANN WALSH BRADLEY join this opinion.A. Standard of Review
B. Governmental Contractor Immunity
C. Application
III. CONCLUSION
I.
II.
Notes
I would . . . do away with the ministerial duty and known danger exceptions and restore our immunity jurisprudence to conform with
§ 893.80(4) and Holytz. That is, governmental entities, officials, and employees should be entitled to immunity only for “acts done in the exercise of legislative, quasi-legislative, judicial, or quasi-judicial functions.”Wis. Stat. § 893.80(4) ; see also [Holytz v. City of Milwaukee, 17 Wis. 2d 26, 40, 115 N.W.2d 618 (1962)].
In my view, when this court reviews a decision of the court of appeals, the court of appeals opinion no longer has precedential value. As this court stated in Blum v. 1st Auto & Cas. Ins. Co., 2010 WI 78, ¶ 54, 326 Wis. 2d 729, 786 N.W.2d 78, “[c]ircuit courts should not be forced to engage in a legal analysis as to precisely which holdings in court of appeals decisions are still good law, or whether, based on some particular language in the supreme court decision, the general rule should not be applied.” Such a rule would prevent that kind of confusion.
- § 107.1(2), requiring the contractor to “[p]rovide all necessary safeguards, safety devices, and protective equipment. Take all other actions that are reasonably necessary to protect the life and health of employees on the project and the safety of the public.”
- § 107.11.1(3), requiring the contractor to “[a]ssume liability for all damage to public or private property resulting from contractor operations, defective work or materials, or non-execution of the contract.”
Similarly, where the Standard Specifications are silent on the safety measures or performance standards applicable in a given scenario, a contractor may not rely on that silence as a license to undertake whatever measures the contractor selects without threat of liability. Governmental contractor immunity must be based on the prior exercise of legislative, quasi-legislative, judicial or quasi-judicial functions by a governmental entity under
