Title: Estate of Kriefall v. Sizzler USA Franchise, Inc.

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2012 WI 70 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2009AP1212 & 2010AP491 
COMPLETE TITLE: 
 
Estate of Brianna Kriefall, deceased, by her Special 
Administrator, Douglas A. Kriefall, Connie J. 
Kriefall and Chad Kriefall , a minor, by his 
Guardian ad Litem, 
          Plaintiffs, 
     v. 
Sizzler USA Franchise, Inc., 
          Defendant-Respondent-Cross-Appellant-Cross 
          Petitioner, 
E & B Management Co., Waukesha, d/b/a Sizzler, 
Sizzler USA and Secura Insurance, 
          Defendants, 
Excel Corporation and American Home Assurance Co., 
          Defendants-Appellants-Cross-Respondents-
Petitioners. 
____________________________________________________ 
Estate of Brianna Kriefall, deceased, by her Special 
Administrator, Douglas A. Kriefall, Connie J. 
Kriefall and Chad Kriefall, a minor, by his Guardian 
ad Litem, 
          Plaintiffs, 
     v. 
Sizzler USA, 
          Defendant, 
Sizzler USA Franchise, Inc., 
          Defendant-Respondent-Cross  
          Petitioner, 
Secura Insurance, 
          Defendant-Respondent-Cross-Appellant, 
E & B Management Co., Waukesha, d/b/a Sizzler, 
          Defendant-Respondent-Cross-Appellant- 
          Cross Petitioner, 
American Home Assurance Co. and Excel Corporation, 
          Defendants-Appellants-Cross- 
          Respondents-Petitioners. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at: 335 Wis. 2d 151, 801 N.W. 2d 781 
(Ct. App. – Published) 
PDC No: 2011 WI App 101 
 
 
OPINION FILED: 
June 29, 2012   
SUBMITTED ON 
BRIEFS: 
        
ORAL ARGUMENT: 
January 13, 2012 
 
 
2
 
 
SOURCE OF 
APPEAL: 
 
 COURT: 
Circuit   
 COUNTY: 
Milwaukee 
 JUDGE: 
Charles F. Kahn, Jr. 
  
 
JUSTICES: 
 
 CONCURRED: 
ABRAHAMSON, C.J., concurs in part and dissents in 
part (Opinion filed).  
BRADLEY, J., joins concurrence/dissent. 
 DISSENTED: 
        
 NOT 
PARTICIPATING:         
  
 
ATTORNEYS: 
 
For the defendants-appellants-cross-respondents-petitioners 
there were briefs filed by Nora E. Gierke, Rebecca E. Frihart 
and Reinhart Boerner VanDeuren, S.C., Milwaukee, William C. 
Buhay, Earl W. Gunn, David I. Matthews and Weinberg, Wheeler, 
Hudgins, Gunn & Dial, LLC, Atlanta, Barbara I. Michaelides, 
Paula M. Carstensen and Bates, Carey Nicolaides, LLP, Chicago, 
and oral argument by Paula M. Carstensen. 
For 
the 
defendants-third-party-plaintiff-appellant there 
were briefs filed by Terry E. Johnson, Ronald G. Pezze, Jr. and 
Peterson, Johnson & Murray, S.C. Milwaukee and oral argument by 
Terry E. Johnson. 
For the defendant-respondent-cross petitioner there were 
briefs filed by Russell A. Klingaman, Noah D. Fiedler and 
Hinshaw & Culbertson LLP, Milwaukee, Frederic L. Gordon and 
Gordon & Holmes, APC, San Diego, and oral argument by Frederic 
L. Gordon. 
 
 
 
2012 WI 70
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2009AP1212 & 2010AP491 
(L.C. No. 
2000CV6463) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Estate of Brianna Kriefall, deceased, by her 
Special Administrator, Douglas A. Kriefall, 
Connie J. Kriefall and Chad Kriefall, a minor, 
by his Guardian ad Litem, 
 
          Plaintiffs, 
 
     v. 
 
Sizzler USA Franchise, Inc., 
 
          Defendant-Respondent-Cross-Appellant- 
          Cross Petitioner, 
 
E & B Management Co., Waukesha, d/b/a Sizzler, 
Sizzler USA and Secura Insurance, 
 
          Defendants, 
 
Excel Corporation and American Home Assurance 
Co., 
 
          Defendants-Appellants-Cross- 
          Respondents-Petitioners. 
 
FILED 
 
JUN 29, 2012 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
Estate of Brianna Kriefall, deceased, by her 
Special Administrator, Douglas A. Kriefall, 
Connie J. Kriefall and Chad Kriefall, a minor, 
by his Guardian ad Litem, 
 
          Plaintiffs, 
 
     v. 
 
Sizzler USA, 
 
 
2 
 
 
          Defendant, 
 
Sizzler USA Franchise, Inc., 
 
          Defendant-Respondent-Cross  
          Petitioner, 
 
Secura Insurance, 
 
          Defendant-Respondent-Cross-Appellant, 
 
E & B Management Co., Waukesha, d/b/a Sizzler, 
 
          Defendant-Respondent-Cross-Appellant- 
          Cross Petitioner, 
 
American Home Assurance Co. and Excel 
Corporation, 
 
          Defendants-Appellants-Cross- 
          Respondents-Petitioners. 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
PATIENCE DRAKE ROGGENSACK, J.   This is a review of a 
published decision of the court of appeals1 that affirmed in part 
and reversed in part the judgment of the Circuit Court for 
Milwaukee County.2  The questions before this court stem from 
                                                 
1 Estate of Kriefall v. Sizzler USA Franchise, Inc. 
(Kriefall II), 2011 WI App 101, 335 Wis. 2d 151, 801 N.W.2d 781.  
The first case involving the Kriefalls, Estate of Kriefall v. 
Sizzler USA Franchise, Inc. (Kriefall I), 2003 WI App 119, 265 
Wis. 2d 476, 665 N.W.2d 417, addressed issues of federal 
preemption and has no bearing on our decision today. 
2 The Honorable Charles F. Kahn, Jr. presided. 
No. 
2009AP1212 & 2010AP491   
 
3 
 
damages sustained because of food contaminated by E. coli 
0157:H7 pathogens at two Sizzler Steak House restaurants in the 
Milwaukee area.3  The plaintiffs in the underlying actions 
settled years ago, and the claims now before us relate to the 
apportionment of liability and costs among those who were 
defendants in the underlying actions. 
¶2 
The parties raise five issues, and we affirm the 
decision of the court of appeals on all issues.  First, we hold 
that Sizzler is entitled to recover consequential damages for 
Excel's breach of implied warranties in the parties' meat supply 
contract, notwithstanding limiting language in the Continuing 
Guaranty.  Second, Sizzler also is entitled to indemnity from 
Excel for the entirety of Sizzler's $1.5 million advance partial 
payment to the Kriefall family because the payment was not 
voluntary and the jury found that Sizzler was zero percent 
liable for the E. coli contamination.  Third, pursuant to the 
Hold Harmless Agreement and Guaranty/Warranty of Product (Hold 
                                                 
3 E. coli 0157:H7 is a type of bacteria that can cause 
stomach cramping, diarrhea, vomiting, and fever; in some cases, 
the infection may be life threatening.  Center for Disease 
Control and Prevention, Escherichia coli 0157:H7 and other Shiga 
toxin-producing 
Escherichia 
coli 
(STEC), 
http://www.cdc.gov/nczved/divisions/dfbmd/diseases/ecoli_o157h7/
#what (last visited June 22, 2012).  The E. coli 0157:H7 
bacteria occurs naturally in the digestive tracts of ruminant 
animals such as cattle.  Id.  A major cause of human infection 
from E. coli 0157:H7 is consumption of food that has been in 
contact with feces of cattle.  Id.  Although numerous forms of 
E. coli bacteria exist, the primary source of human sickness is 
0157:H7.  Id.  Accordingly, all subsequent discussion of E. coli 
refers to the 0157:H7 form. 
No. 
2009AP1212 & 2010AP491   
 
4 
 
Harmless Agreement), Excel is required to indemnify E&B for 
payments E&B made to certain non-Kriefall plaintiffs in exchange 
for Pierringer releases;4 however, Excel's obligation extends 
only so far as its apportioned liability, which is 80 percent.  
Fourth, Excel is not required to indemnify E&B for payments that 
Federal Insurance Company made on E&B's behalf in settling the 
non-Kriefall 
plaintiffs' 
claims. 
 
Fifth, 
and 
finally, 
notwithstanding the jury's determination that Sizzler was zero 
percent responsible for the E. coli contaminated food that 
caused the illnesses of so many people, Sizzler may not recover 
attorney fees from Excel because the exception to the American 
Rule stated in Weinhagen v. Hayes, 179 Wis. 62, 190 N.W. 1002 
(1922), does not apply here. 
I.  BACKGROUND 
¶3 
In late July and early August 2000, approximately 150 
people became ill from ingesting food contaminated with E. coli 
at two Sizzler Steak House restaurants in the Milwaukee area.  
Their illnesses ranged from diarrhea and cramps to, in the case 
of three-year-old Brianna Kriefall, death. 
¶4 
Excel 
Corporation 
processed 
and 
distributed 
the 
contaminated meat that was the source of the E. coli pathogens.  
Excel's role in the contamination was confirmed by tests of 
sealed packages of Excel's tri-tip beef that had been shipped to 
                                                 
4 Such releases derive their name from the form of release 
approved by this court in Pierringer v. Hoger, 21 Wis. 2d 182, 
124 N.W.2d 106 (1963).  A Pierringer release imputes to the 
settling plaintiff any liability in contribution that the 
settling defendant may have.  Id. at 193. 
No. 
2009AP1212 & 2010AP491   
 
5 
 
Sizzler restaurants; also, Excel eventually stipulated to its 
meat having been the source of the E. coli. 
¶5 
Excel's 
contaminated 
meat 
was 
distributed 
to 
franchisees of Sizzler USA Franchise, Inc. (Sizzler).  Sizzler's 
franchisee here, E&B Management Co., Waukesha (E&B), operated 
two Sizzler Steak House restaurants in the Milwaukee area.  E. 
coli contamination occurred at both restaurants, although the 
Wisconsin Department of Health and Family Services classified 
the two outbreaks as separate occurrences, caused by different 
food handling errors.  There was testimony at trial that 
numerous food handling procedures employed at E&B's Sizzler 
restaurants failed to comply with established standards for safe 
food handling, including using the same utensils to handle raw 
meat and ready-to-eat foods, cutting raw meat near ready-to-eat 
foods, and storing raw meat and ready-to-eat foods in close 
proximity. 
¶6 
Many of those sickened by the Milwaukee E. coli 
contamination asserted claims against Excel, Sizzler, E&B, E&B's 
shareholders, and Sysco Food Services of Eastern Wisconsin, the 
local distributor for Excel's meats.  The claims included 
negligence, strict liability, and breaches of implied warranties 
of merchantability and fitness.  Over the course of negotiations 
and pre-trial preparations, the plaintiffs' claims were broadly 
classified into two groups.  One group, the Kriefall plaintiffs, 
includes Brianna Kriefall's estate, and Brianna's mother, father 
and brother.  The plaintiffs in the second group, referred to 
collectively as the "non-Kriefall plaintiffs," have proceeded 
No. 
2009AP1212 & 2010AP491   
 
6 
 
separately and were subject to different settlement proceedings 
than the Kriefall plaintiffs. 
¶7 
Prior to trial, the Kriefall plaintiffs settled with 
Excel, E&B, Sizzler, and their insurers.5  The Kriefalls received 
$10.5 million, including $8.5 million in settlement of claims 
against Excel, and $2 million in settlement of claims against 
E&B and Sizzler.  Excel paid the entire $10.5 million amount. 
¶8 
The 138 non-Kriefall plaintiffs also settled their 
claims.  The plaintiffs received differing amounts, depending on 
the severity of their injuries.  Settlements for the non-
Kriefall claims were paid from a fund administered by one of 
E&B's insurers, Secura Insurance Co.  The fund included the 
policy limits under E&B's Secura policy, $3.5 million, as well 
as another $1 million from Federal Insurance that provided 
coverage to E&B as an additional insured under a policy issued 
to Sizzler.  In total, the non-Kriefall plaintiffs were paid 
approximately $3.5 million.  The remaining amount from the 
settlement fund, approximately $1 million, was paid to the 
Kriefalls on behalf of Sizzler as an advance payment pursuant to 
Wis. Stat. § 885.285 (2009-10).6 
¶9 
After all of the plaintiffs' claims were settled, 
Excel, Sizzler, E&B and their respective insurers went to trial 
                                                 
5 Sysco Food Services of Eastern Wisconsin and E&B's 
shareholders were given releases.  Those parties' liability is 
not at issue here. 
6 All subsequent references to the Wisconsin Statutes are to 
the 2009–10 version unless otherwise indicated. 
No. 
2009AP1212 & 2010AP491   
 
7 
 
to apportion liability among them.  The jury found that Excel 
was 80 percent liable, E&B was 20 percent liable, and Sizzler 
was not liable.  The parties then sought to apply certain 
contractual and common law doctrines in the assignment of the 
ultimate 
responsibility 
for 
the 
settlement 
amounts 
among 
themselves. 
¶10 Much of the parties' dispute turns on three components 
of the contractual relationship governing Excel's distribution 
of meat to Sizzler's restaurants.  First, the Boxed Beef Sales 
Confirmation and Contract (Boxed Beef contract) affected Excel 
and Sizzler's relationship for the sale and purchase of meat 
products.  That document, renewed yearly, set forth the amounts 
of certain cuts of beef that Sizzler agreed to purchase from 
Excel.  The Boxed Beef contract included tri-tip steaks that 
were the source of the E. coli contamination at the Milwaukee 
Sizzler restaurants. 
¶11 Second, in 1997, Excel had sought to participate as a 
supplier of meat for Sizzler's restaurants.7  In the parties' 
agreement, Excel was required to provide Sizzler with a guaranty 
that Excel's beef products complied with various federal, state 
and local food safety laws.  This guaranty, referred to as the 
"Continuing Guaranty," provides, in relevant part: 
Excel Corporation (Seller), hereby states that each 
and every article contained in and comprising each 
                                                 
7 Excel had previously participated as one of Sizzler's meat 
suppliers, but after a separate E. coli outbreak in the early 
1990s, which Sizzler suspected was attributable to Excel meat, 
Sizzler terminated Excel as a meat supplier. 
No. 
2009AP1212 & 2010AP491   
 
8 
 
shipment or other delivery hereafter made by Seller, 
to or on the order of Sizzler International, Inc. 
(Buyer), is hereby guaranteed, as of the date of each 
such shipment or delivery, to be: 
1.  Not adulterated or misbranded within the 
meaning of the Federal Food, Drug and Cosmetic 
Act . . . . 
. . . . 
This Guaranty shall not render Seller liable for 
any incidental or consequential damages of whatsoever 
nature nor shall it extend to the benefit of persons 
or corporations other than Sizzler International, Inc. 
or its affiliates.8 
¶12 Third, Excel entered into a Hold Harmless Agreement 
with its regional distributor, Sysco Food Services of Eastern 
Wisconsin.  The Hold Harmless Agreement provides, in relevant 
part, that Excel, as Seller:  
agrees to defend, indemnify and hold harmless Buyer 
and its employees, officers, directors and customers 
(individually, an "Indemnitee") from all actions, 
suits, claims and proceedings ("Claims"), and any 
judgments, 
damages, 
fines, 
costs 
and 
expenses 
(including 
reasonable 
attorneys' 
fees) 
resulting 
therefrom 
. . . 
provided, 
however, 
that 
Seller's 
indemnification obligations hereunder shall not apply 
to the extent that Claims are caused by the negligent 
acts or omissions of Buyer or any other third party. 
Excel does not dispute that under the language of the Hold 
Harmless Agreement, E&B is covered as a "customer" of the Buyer, 
Sysco Corp. 
                                                 
8 It is undisputed that Sizzler USA Franchise, Inc. is an 
"affiliate" of Sizzler International, Inc.; Sizzler USA is a 
wholly owned subsidiary of Sizzler International.  Sizzler 
International, Inc. has had no role in this litigation, and any 
reference to "Sizzler" refers to Sizzler USA Franchise, Inc. 
No. 
2009AP1212 & 2010AP491   
 
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¶13 With this background, we turn to the discussion of the 
parties' individual claims before this court. 
II.  DISCUSSION  
A.  Standard of Review 
¶14 Some of the issues turn on the language of the 
parties' contracts.  Contract interpretation presents a question 
of law that we review independently of previous decisions of the 
circuit court and court of appeals, but benefitting from their 
discussions.  Admanco, Inc. v. 700 Stanton Drive, LLC, 2010 WI 
76, ¶15, 326 Wis. 2d 586, 786 N.W.2d 759.  We are also required 
to interpret and apply statutes that interact with the parties' 
contracts, which present additional questions of law for our 
independent review.  See Columbus Park Hous. Corp. v. City of 
Kenosha, 2003 WI 143, ¶9, 267 Wis. 2d 59, 671 N.W.2d 633.   
¶15 In 
regard 
to 
Sizzler's 
claim 
for 
equitable 
indemnification, we are asked to review the court of appeals' 
reversal 
of 
the 
circuit 
court's 
discretionary 
denial 
of 
equitable relief to Sizzler.  Discretionary decisions are upheld 
if they are based on the relevant facts and apply a proper 
standard of law.  Wynhoff v. Vogt, 2000 WI App 57, ¶13, 233 
Wis. 2d 673, 608 N.W.2d 400.  However, "[a]n exercise of 
discretion based on an erroneous application of the law is an 
erroneous exercise of discretion."  State v. McCallum, 208 
Wis. 2d 463, 473, 561 N.W.2d 707 (1997).   
¶16 Finally, whether a party is entitled to attorney fees 
under an undisputed factual scenario is a question of law that 
No. 
2009AP1212 & 2010AP491   
 
10 
 
we review independently.  See DeChant v. Monarch Life Ins. Co., 
200 Wis. 2d 559, 568, 547 N.W.2d 592 (1996). 
B.  Implied Warranties 
¶17 The first issue we consider is whether the limitation 
of damages provision set out in the Continuing Guaranty prevents 
Sizzler from recovering consequential damages for Excel's breach 
of the implied warranties of merchantability and fitness.9  The 
circuit court granted summary judgment in favor of Excel on 
Sizzler's claim for consequential damages for breach of the 
warranties expressed in the Continuing Guaranty.  However, the 
circuit court allowed Sizzler to proceed to the jury on 
consequential 
damages 
on 
a 
theory 
of 
breach 
of 
implied 
warranties of merchantability and fitness under the Boxed Beef 
contract. 
¶18 In allowing the claim under the Boxed Beef contract's 
implied warranties to proceed, the circuit court reasoned that 
the language of the Continuing Guaranty applied to those 
warranties created by the Continuing Guaranty, but that the 
Guaranty did not address the implied warranties of fitness and 
merchantability.  The court reasoned that provisions of the 
Uniform Commercial Code (UCC), Wis. Stat. § 402.314 and Wis. 
Stat. § 402.315, provide warranties that are implied in every 
contract for the sale of goods, unless expressly excluded.  
                                                 
9 Sizzler sought lost profits, franchise fees, and out-of-
pocket expenses as consequential damages. 
No. 
2009AP1212 & 2010AP491   
 
11 
 
Therefore, the terms of the Continuing Guaranty did not affect 
implied warranties under the Boxed Beef contract.   
¶19 The jury awarded Sizzler $7,161,000 as damages for 
Excel's 
breaches 
of 
implied 
warranties 
of 
fitness 
and 
merchantability.  The court of appeals affirmed, concluding that 
"the 
incidental-and-consequential-damages 
limitation 
in 
the 
Continuing Guaranty applies only to any breach of express 
warranties created by that agreement . . . and thus the 
limitation did not extend beyond the four corners of the 
Continuing Guaranty."  Estate of Kriefall v. Sizzler USA 
Franchise, Inc. (Kriefall II), 2011 WI App 101, ¶16, 335 Wis. 2d 
151, 801 N.W.2d 781. 
¶20 It is under the implied warranties of merchantability 
and fitness that the jury awarded damages.  However, Excel 
contends that the Continuing Guaranty should be read to prevent 
the claims for breach of implied warranties, even though neither 
the Continuing Guaranty nor the Boxed Beef contract mentions 
implied warranties of merchantability or fitness.   
¶21 Our consideration of the parties' positions requires 
us to interpret two contracts, the Continuing Guaranty and the 
Boxed Beef contract.  When we interpret contracts, we do so to 
determine and give effect to the intentions of the parties.  
Steffens v. BlueCross BlueShield of Illinois, 2011 WI 60, ¶46, 
335 Wis. 2d 514, 804 N.W.2d 196.  We presume their intentions 
are expressed in the language of the contract.  Id.  Where the 
language 
of 
a 
contract 
is 
unambiguous 
and 
the 
parties' 
intentions can be ascertained from the face of the contract, we 
No. 
2009AP1212 & 2010AP491   
 
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give effect to the language they employed.  Solowicz v. Forward 
Geneva Nat'l, LLC, 2010 WI 20, ¶36, 323 Wis. 2d 556, 780 N.W.2d 
111.  Furthermore, our interpretation of contracts involving a 
transaction in goods also may be affected by provisions of the 
Wisconsin UCC, Wis. Stat. ch. 402.  See Linden v. Cascade Stone 
Co., Inc., 2005 WI 113, ¶9, 283 Wis. 2d 606, 699 N.W.2d 189. 
¶22 In the case before us, provisions of the Wisconsin UCC 
do affect the parties' obligations because transactions in goods 
are at issue; therefore, we consider Wis. Stat. ch. 402 as we 
construe the parties' written agreements.  Chapter 402 provides 
that a contract for a transaction in goods includes certain 
implied 
warranties, 
unless 
such 
warranties 
are 
expressly 
excluded or modified.  Wis. Stat. § 402.316.   
¶23 In particular, Wis. Stat. § 402.314 provides that 
contracts for the sale of goods include an implied warranty of 
merchantability if the seller is a merchant with respect to the 
type of goods sold.10  Excel was a merchant with respect to the 
                                                 
10 Wisconsin Stat. § 402.314 provides: 
 
(1) Unless excluded or modified (s. 402.316), a 
warranty that the goods shall be merchantable is 
implied in a contract for their sale if the seller is 
a merchant with respect to goods of that kind. . . . 
 
(2) Goods to be merchantable must be at least 
such as: 
. . . . 
 
(c) Are fit for the ordinary purposes for which 
such goods are used[.] 
. . . . 
No. 
2009AP1212 & 2010AP491   
 
13 
 
beef it sold.  Wis. Stat. § 402.104(3).  Wisconsin Stat. 
§ 402.31511 provides that contracts for the sale of goods also 
include an implied warranty that the goods will be fit for the 
purpose for which the goods are required, unless such warranty 
is excluded or modified under Wis. Stat. § 402.316. 
¶24 In addition to excluding or modifying warranties 
pursuant to Wis. Stat. § 402.316, a seller also may limit his 
exposure to damages by limiting the remedies to which a buyer is 
entitled.  Wis. Stat. § 402.719; see Murray v. Holiday Rambler, 
Inc., 83 Wis. 2d 406, 414, 265 N.W.2d 513 (1978) (explaining 
that a seller may restrict a buyer's claims in two ways——by 
expressly 
disclaiming 
all 
implied 
warranties 
pursuant 
to 
§ 402.316 or by limiting the buyer's remedies pursuant to 
§ 402.719). 
¶25 Wisconsin 
Stat. 
§ 402.316, 
to 
which 
Wis. 
Stat. 
§ 402.314 and Wis. Stat. § 402.315 refer, provides specific 
methods by which a party may exclude or modify warranties 
                                                                                                                                                             
 
(3) Unless excluded or modified (s. 402.316) 
other implied warranties may arise from course of 
dealing or usage of trade. 
11 Wisconsin Stat. § 402.315 provides: 
 
Where the seller at the time of contracting has 
reason to know any particular purpose for which the 
goods are required and that the buyer is relying on 
the seller's skill or judgment to select or furnish 
suitable goods, there is unless excluded or modified 
under s. 402.316 an implied warranty that the goods 
shall be fit for such purpose. 
No. 
2009AP1212 & 2010AP491   
 
14 
 
otherwise available.  Section 402.316 provides, in pertinent 
part: 
(1) Words or conduct relevant to the creation of 
an express warranty and words or conduct tending to 
negate or limit warranty shall be construed wherever 
reasonable as consistent with each other; but subject 
to s. 402.202 on parol or extrinsic evidence, negation 
or limitation is inoperative to the extent that such 
construction is unreasonable.  
(2) Subject to sub. (3), to exclude or modify the 
implied warranty of merchantability or any part of it 
the language must mention merchantability and in case 
of a writing must be conspicuous, and to exclude or 
modify any implied warranty of fitness the exclusion 
must be by a writing and conspicuous. Language to 
exclude 
all 
implied 
warranties 
of 
fitness 
is 
sufficient if it states, for example, that "There are 
no warranties which extend beyond the description on 
the face hereof." 
(3) Notwithstanding 
sub. 
(2), 
all 
of 
the 
following apply:  
(a) Unless the circumstances indicate otherwise, 
all implied warranties are excluded by expressions 
like "as is", "with all faults" or other language 
which 
in 
common understanding calls the buyer's 
attention to the exclusion of warranties and makes 
plain that there is no implied warranty. 
. . . . 
 
(4) Remedies for breach of warranty can be 
limited in accordance with ss. 402.718 and 402.719 on 
liquidation 
or 
limitation 
of 
damages 
and 
on 
contractual modification of remedy. 
¶26 Neither the Continuing Guaranty nor the Boxed Beef 
contract employs any method set out in Wis. Stat. § 402.316 for 
excluding implied warranties of merchantability and fitness.  
Neither contract mentions implied warranties of merchantability 
or fitness.   
No. 
2009AP1212 & 2010AP491   
 
15 
 
¶27 The language of the Continuing Guaranty is clear and 
unambiguous.  No exclusion of implied warranties is mentioned; 
therefore, we will create none.  Columbia Propane, L.P. v. Wis. 
Gas Co., 2003 WI 38, ¶12, 261 Wis. 2d 70, 661 N.W.2d 766 
(explaining that when a contract is expressed in plain language, 
we will not rewrite the agreement that the parties made).   
¶28 Excel also contends that a provision in the Continuing 
Guaranty 
is 
intended 
to 
bar 
recovery 
of 
incidental 
and 
consequential damages, no matter under which contract a breach 
has occurred.  This argument requires us to examine Wis. Stat. 
§ 402.719, to which Wis. Stat. § 402.316(4) refers, with regard 
to limitation of remedies for breach of the implied warranties.  
Wisconsin Stat. § 402.719 provides in relevant part: 
(3) Consequential 
damages 
may 
be 
limited 
or 
excluded 
unless 
the 
limitation 
or 
exclusion 
is 
unconscionable. Limitation of consequential damages 
for injury to the person in the case of consumer goods 
is prima 
facie unconscionable but limitation of 
damages where the loss is commercial is not. 
¶29 Prior cases have construed Wis. Stat. § 402.719(3), 
parsing whether an expressed limitation of consequential damages 
was unconscionable.  See Sunnyslope Grading, Inc. v. Miller, 
Bradford & Risberg, Inc., 148 Wis. 2d 910, 437 N.W.2d 213 
(1989); Trinkle v. Schumacher Co., 100 Wis. 2d 13, 301 N.W.2d 
255 (Ct. App. 1980).  However, those cases find no application 
here because they did not address claims for implied warranties 
of merchantability or fitness, and further, Excel included no 
language to limit damages for the breach of those implied 
warranties.   
No. 
2009AP1212 & 2010AP491   
 
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¶30 In addition, Excel's reliance on the statement in the 
Continuing Guaranty that "This Guaranty shall not render Seller 
liable for any incidental or consequential damages of whatsoever 
nature" is misplaced because the statement cuts against Excel's 
position before us.  The words, "This Guaranty," focus the 
limitation of damages on those damages that may flow from a 
breach of the express warranties set out in "This Guaranty," 
i.e., the Continuing Guaranty.  They say nothing about damages 
that may result from the breach of an implied warranty under the 
Boxed Beef contract.   
¶31 Therefore, although the two principles——exclusion or 
modification of implied warranties and limitation of remedies——
have 
different 
effects 
on 
contracts, 
any 
difference 
in 
application of these principles does not help Excel here because 
the language of the Continuing Guaranty does not extend beyond 
the warranties given in the Guaranty itself.  Therefore, even 
if, arguendo, we were to construe the provision limiting 
consequential damages as a limitation of remedies, the provision 
of the Guaranty applies exclusively to the Continuing Guaranty.  
Consequently, the warranties implied under the Boxed Beef 
No. 
2009AP1212 & 2010AP491   
 
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contract, and the remedies available for breach thereof, are 
unaffected by the Continuing Guaranty.12 
¶32 We, therefore, conclude that the language used in the 
Continuing Guaranty had the precise effect of barring Sizzler's 
recovery of incidental and consequential damages for breach of 
those express warranties contained in the Guaranty; however, the 
Continuing Guaranty's limitation of remedies simply cannot be 
construed to extend to the Boxed Beef contract.13  We will not 
depart from the language of the contract, nor read language into 
a contract, when the language that the parties employed plainly 
                                                 
12 Excel relies heavily on Wyatt Industries, Inc. v. 
Publicker Industries, Inc., 420 F.2d 454 (5th Cir. 1969), to 
support its argument that the Continuing Guaranty's language 
need not explicitly refer to implied warranties to limit the 
remedies for breach of such warranties.  Id. at 456–57.  We do 
not question the underlying proposition that parties may alter 
the remedies available under their contracts.  See Wis. Stat. 
§ 402.719(1)(a).  However, the contract at issue in Wyatt stated 
that the merchandise was to be shipped "as is" and that, in any 
event, the seller's liability was not to exceed $25,000.  See 
Wyatt, 420 F.2d at 456.  Therefore, the contract in Wyatt used 
UCC-approved 
language 
to 
disclaim 
implied 
warranties 
and 
explicitly limited the remedies available "for any damage claims 
or repair costs occurring in connection with" the merchandise.  
See id.  By contrast, the language of the Continuing Guaranty 
does not state that Excel's meat was to be shipped "as is," nor 
did the terms of the Continuing Guaranty suggest that the 
Continuing Guaranty would apply to other aspects of the parties' 
agreements, such as the Boxed Beef contract.  Accordingly, Wyatt 
is inapplicable. 
13 Because we conclude that the Continuing Guaranty neither 
disclaimed implied warranties under the Boxed Beef contract nor 
limited remedies for breach of any warranties under the Boxed 
Beef contract, we do not reach Sizzler's counterarguments that 
such a limited remedy as replacement value would have failed of 
its essential purpose or that Sizzler would have been left 
without a minimum quantum of remedies. 
No. 
2009AP1212 & 2010AP491   
 
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states their intentions.  See Dykstra v. Arthur G. McKee & Co., 
92 Wis. 2d 17, 38, 284 N.W.2d 692 (Ct. App. 1979).  Therefore, 
we agree with the reasoning and conclusion of the court of 
appeals. 
 
The 
Continuing 
Guaranty 
lacks 
the 
requisite 
specificity to exclude or modify the implied warranties of Wis. 
Stat. ch. 402 in the Boxed Beef contract.   
C.  Indemnification, Contribution and Subrogation 
¶33 Three of the claims presented involve the application 
of 
equitable 
or 
contractual 
indemnification, 
as 
well 
as 
consideration of contribution and subrogation principles.   
¶34 Indemnification can arise by contract or it can be 
based 
on 
equitable 
principles. 
 
Greenlee 
v. 
Rainbow 
Auction/Realty Co., Inc., 218 Wis. 2d 745, 754 n.4, 582 N.W.2d 
93 (Ct. App. 1998).  Contractual indemnification assigns the 
risk for a potential loss as part of the bargain of the parties.  
See Deminsky v. Arlington Plastics Mach., 2003 WI 15, ¶22, 259 
Wis. 2d 587, 657 N.W.2d 411.  Equitable indemnification seeks to 
shift the burden of payment to the party who, in equity, should 
pay.  See 1 Dan B. Dobbs, Dobbs Law of Remedies:  Damages, 
Equity, Restitution § 4.3(4) (2d ed. 1993); 63B Am. Jur. 2d, 
Products Liability § 1879 (2012).  Equitable indemnification 
"shifts the entire loss from one person who has been compelled 
to pay it to another who, on the basis of equitable principles, 
should bear the loss."  Swanigan v. State Farm Ins. Co., 99 
Wis. 2d 179, 196, 299 N.W.2d 234 (1980).   
¶35 No shared liability for the debt is required to 
support indemnification.  See id.; Perkins v. Worzala, 31 
No. 
2009AP1212 & 2010AP491   
 
19 
 
Wis. 2d 634, 637, 143 N.W.2d 516 (1966).  Contribution, on the 
other hand, requires the discharge of a common liability, and 
"distributes the loss by requiring each person to pay his 
proportionate share of the damages on a comparative fault 
basis."  Swanigan, 99 Wis. 2d at 196.  The right to receive 
either indemnification and contribution requires a party seeking 
payment to prove it has made a payment, part or all of which the 
party seeks to recover.  See State Farm Mut. Auto. Ins. Co. v. 
Cont'l Cas. Co., 264 Wis. 493, 497, 59 N.W.2d 425 (1953) 
(holding that the right of contribution "ripens into a cause of 
action upon payment by reason of a judgment, or pursuant to a 
reasonable 
settlement 
made 
with 
the 
injured"); 
Brown 
v. 
LaChance, 165 Wis. 2d 52, 64, 477 N.W.2d 296 (Ct. App. 1991) 
(recognizing that one element of the right to indemnification is 
payment by the party seeking the remedy). 
¶36 Contribution claims ripen when more than one party is 
responsible for the loss a third party has sustained and one of 
those responsible has paid more than that party's share.  See 
Day v. Allstate Indemn. Co., 2011 WI 24, ¶44, 332 Wis. 2d 571, 
798 N.W.2d 199.  Contribution permits the loss to be allocated 
among 
the 
responsible 
parties 
based 
on 
each 
party's 
proportionate responsibility for the loss.  See id.   
¶37 Subrogation is akin to indemnification in that it 
seeks to recoup the total payment that the party seeking 
subrogation 
has 
made. 
 
Steffens, 
335 
Wis. 2d 
514, 
¶36.  
Subrogation rights may arise in three ways: 
No. 
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(1) contractual 
subrogation, 
Millers 
National 
Insurance Co. v. City of Milwaukee, 184 Wis. 2d 155, 
167, 516 N.W.2d 376 (1994); (2) statutory subrogation, 
Ellsworth v. Schelbrock, 2000 WI 63, ¶19, 235 Wis. 2d 
678, 611 N.W.2d 764; and (3) equitable subrogation, 
Berna-Mork v. Jones, 174 Wis. 2d 645, 652-53, 498 
N.W.2d 221 (1993).  
Id., ¶37.   
¶38 Here, E&B seeks to exercise Federal Insurance's right 
to subrogation for the $1 million payment Federal Insurance made 
on E&B's behalf.  In so doing, E&B is attempting to exercise its 
contractual rights under the Hold Harmless Agreement as though 
it had made the payment that Federal Insurance made.  Keeping in 
mind the principles of law explained above, we move to three of 
the claims presented for our review. 
1.  Sizzler's claim for equitable indemnification 
¶39 Sizzler seeks equitable indemnification from Excel for 
its pre-settlement payment of $1.5 million to the Kriefall 
family.  Sizzler made this payment under an agreement entitled 
an "Advance Partial Payment Pursuant to Sec. 885.285 Wis. 
Stats."  Approximately $1 million of this payment was funded by 
Sizzler's insurer, Secura, who has retained its contractual 
rights of subrogation as to payments made on Sizzler's behalf.  
The advance partial payment of $1.5 million was included in the 
figure that Sizzler urged the jury to award as out-of-pocket 
expenses; however, the jury declined to do so.  Instead, the 
jury awarded $311,000, which was the remainder after subtracting 
$1.5 million from approximately $1.8 million that Sizzler sought 
as its total out-of-pocket expenses.  After the jury's verdict, 
No. 
2009AP1212 & 2010AP491   
 
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Sizzler brought a post-verdict motion to recover the $1.5 
million under a theory of equitable indemnification. 
¶40 The circuit court concluded that, "the law does not 
allow for [Sizzler's] recovery of the $1.5 million as equitable 
indemnity."  However, the court of appeals reversed the circuit 
court's denial of equitable relief, reasoning that Sizzler's 
payment to the Kriefalls was sufficiently involuntary to satisfy 
the requirement that a party seeking equitable indemnification 
must not have voluntarily paid the sum that it now seeks to 
recover.  See Kriefall II, 335 Wis. 2d 151, ¶81.  We agree with 
the conclusion of the court of appeals.   
¶41 Equitable indemnity is possible when one party is 
exposed to liability for the wrongful acts of another.  In order 
to be eligible for equitable indemnification for the $1.5 
million payment Sizzler paid to the Kriefall family, Sizzler 
must show that it "in whole or in part, has discharged a duty 
which is owed by [Sizzler] but which as between [Sizzler] and 
another should have been discharged by the other."  Kjellsen v. 
Stonecrest, Inc., 47 Wis. 2d 8, 11–12, 176 N.W.2d 321 (1970).  
The discharge-of-a-duty requirement ensures that a party who 
voluntarily pays the obligation of another will not be equitably 
indemnified.  See Milwaukee Mut. Ins. Co. v. Priewe, 118 Wis. 2d 
318, 322-23, 348 N.W.2d 585 (Ct. App. 1984).  
¶42 Potential liability will defeat the conclusion that a 
payment was voluntary.  Kennedy-Ingalls Corp. v. Meissner, 5 
Wis. 2d 100, 106-07, 92 N.W.2d 247 (1958).  In Kennedy-Ingalls, 
we considered a subrogation claim in circumstances similar to 
No. 
2009AP1212 & 2010AP491   
 
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those for which Sizzler seeks indemnification.  We held that an 
alleged joint tortfeasor's payment to a plaintiff as part of a 
settlement was not voluntary.  Id.  We so held because prior to 
the adjudication of fault, a payor's actions are colored by the 
potential for liability.  See id.  In Kennedy-Ingalls, we 
explained that "one who pays the liability of another in 
response to the threat of civil suit is not a volunteer if the 
payor acted to avoid trouble and expense."  Id. (citing 
Restatement (First) of Restitution § 71(2) (1937)); see also 
Voge v. Anderson, 181 Wis. 2d 726, 731, 512 N.W.2d 749 (1994); 
Perkins, 31 Wis. 2d at 637-38. 
¶43 Furthermore, although a contractual obligation may 
demonstrate a lack of voluntariness, a party seeking equitable 
indemnification need not show a contractual relationship with 
the party from whom equitable indemnification is sought.  See 
Kjellsen, 47 Wis. 2d at 11-12.  Rather, a party seeking 
indemnification must show that the obligation to pay should be 
shifted to one who in equity should bear the loss.  See id.; 
Swanigan, 99 Wis. 2d at 196.  Here, the circumstance that gave 
rise to Sizzler's claim of equitable indemnification from Excel 
was Sizzler's exposure to liability for Excel's delivery of 
contaminated meat, an act that Sizzler did not join.  See 
Kjellsen, 47 Wis. 2d at 11–12.   
¶44 Based 
on 
the 
circumstance 
herein 
presented 
and 
controlling 
legal 
principles, 
we 
conclude 
that 
Sizzler's 
payments to the Kriefalls were not made voluntarily.  First, at 
the time of the payments, Sizzler was a named defendant in the 
No. 
2009AP1212 & 2010AP491   
 
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Kriefalls' lawsuit, which alleged that the plaintiffs had 
suffered substantial injuries at a Sizzler restaurant.  Second, 
no apportionment of fault had yet been made, and at the time of 
Sizzler's payment, Excel denied any liability for the E. coli 
contamination.  Therefore, the specter of potential liability 
hung heavy over Sizzler at the time of its payment to the 
Kriefall family. 
¶45 Moreover, the jury's allocation of fault demonstrates 
that 
the 
considerations 
necessary 
to 
invoke 
equitable 
indemnification are present.  As between Excel and Sizzler, who 
was found not liable, Sizzler's payment, if unreimbursed would 
benefit the tortfeasor, Excel.  See Brown, 165 Wis. 2d at 64–65.  
Sizzler made a payment in contemplation of potential liability 
for injuries, for which Sizzler was later determined to have no 
responsibility.  We agree with the court of appeals that the 
circuit court erroneously exercised its discretion when it 
failed to apply the relevant principles of law to Sizzler's 
claim for equitable indemnification. 
¶46 We further conclude that, as between Excel and 
Sizzler, no persuasive argument has been made that Sizzler 
should be equitably indemnified for only 80 percent of the 
payment it made to the Kriefall family, as Excel urges.  Excel 
argues that because it was determined to be only 80 percent 
liable, it should not be required to pay Sizzler for the full 
amount, suggesting that Sizzler's claim for indemnification 
should be partially satisfied by E&B.   
No. 
2009AP1212 & 2010AP491   
 
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¶47 However, Excel's argument ignores the purpose of 
equitable 
indemnification, 
which 
is 
to 
shift 
the 
entire 
obligation to pay from one who has paid to another who, in 
equity, should be held liable.  See Kjellsen, 47 Wis. 2d at 11–
12.  We offer no opinion about Excel's seeking equitable relief 
from E&B.  That question is not before us.  However, as between 
Excel and Sizzler, equity entitles Sizzler to shift the entire 
burden of its payment to the Kriefalls to Excel. 
2.  E&B's contractual indemnification claim 
¶48 In response to the 138 individual, non-Kriefall 
plaintiffs' claims raised against E&B and others, E&B attempted 
to tender its defense to Excel multiple times under the parties' 
Hold Harmless Agreement.14  The Hold Harmless Agreement provides 
in relevant part: 
[Excel] agrees to defend, indemnify and hold harmless 
Buyer 
and 
its 
. . . customers (individually, an 
"Indemnitee") from all actions, suits, claims and 
proceedings ("Claims"), and any judgments, damages, 
fines, 
costs 
and 
expenses 
(including 
reasonable 
attorneys' fees) resulting therefrom: 
. . . . 
 
(ii) brought or commenced by any person or entity 
against any Indemnitee for the recovery of damages for 
the injury, illness and/or death of any person or 
damage to property arising out of or alleged to have 
arisen 
out 
of 
(a) 
the 
delivery, 
sale, 
resale, 
labeling, use or consumption of any Product, or (b) 
                                                 
14 The Hold Harmless Agreement is between Sysco Corporation 
(who is termed the Buyer) and Excel, but the agreement also 
encompasses Sysco's customers.  There is no dispute that E&B is 
Sysco's customer and, therefore, is an indemnitee under the 
agreement.   
No. 
2009AP1212 & 2010AP491   
 
25 
 
the negligent acts or omissions of [Excel]; provided, 
however, that [Excel's] indemnification obligations 
hereunder shall not apply to the extent that Claims 
are caused by the negligent acts or omissions of Buyer 
or any other third party. 
 
Indemnitee shall notify [Excel] promptly of the 
service of process or the receipt of actual notice of 
any Claim. 
¶49 Excel repeatedly refused to accept E&B's tenders of 
the claims made against E&B.  Instead, Excel denied any 
liability for the E. coli contaminated meat it sold.  Facing 
claims of more than $10 million for the non-Kriefall plaintiffs, 
E&B sought to settle with those claimants. 
¶50 By mid-2001, Federal Insurance, one of E&B's insurers, 
accepted E&B's tender, and Federal Insurance and E&B met with 
representatives from Secura, another of E&B's insurers, to 
discuss settlement of the non-Kriefall claims.  The Federal 
Insurance policy covering E&B included a clause granting Federal 
Insurance a right of subrogation to any rights of recovery that 
E&B may have.  That clause provided: 
 
If the insured has rights to recover all or part 
of any payment we have made under this insurance, 
those rights are transferred to us.  The insured must 
do nothing after loss to impair them.  At our request, 
the insured will bring suit or transfer those rights 
to us and help us enforce them. 
¶51 In 
regard 
to 
settlement 
with 
the 
non-Kriefall 
plaintiffs, E&B, with its insurers Federal Insurance and Secura, 
entered into Pierringer releases with the 138 non-Kriefall 
plaintiffs for approximately $3.5 million.  Federal Insurance 
provided $1 million toward the settlement of the non-Kriefall 
claims, and Secura provided $2.5 million.   
No. 
2009AP1212 & 2010AP491   
 
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¶52 Excel claims that the use of Pierringer releases 
precludes E&B's claims for indemnification, based on the theory 
that the releases adjudicated E&B's individual liability as to 
the 
non-Kriefall 
plaintiffs, 
and 
that 
the 
Hold 
Harmless 
Agreement prevents E&B from obtaining indemnification for E&B's 
own negligent acts.  The court of appeals and the circuit court 
concluded that the two obligations——those that E&B assumed under 
the Pierringer releases and those that Excel contracted for in 
the Hold Harmless Agreement——are entirely separate obligations, 
one arising in tort and the other in contract.  Therefore, E&B 
did not surrender its rights under the Hold Harmless Agreement 
when it entered into the Pierringer releases.  We agree. 
¶53 In support of its position, Excel urges us to apply 
the rationale of Unigard Ins. Co. v. Ins. Co. of N. Am., 184 
Wis. 2d 78, 516 N.W.2d 762 (Ct. App. 1994), in which the court 
of appeals held that after entering into a Pierringer release, a 
joint tortfeasor was barred from seeking contribution from 
another tortfeasor.  Id. at 85–87.  The court distinguished the 
Pierringer-type release from general releases and covenants not 
to sue, noting that the latter two mechanisms preserve a 
settling joint tortfeasor's right to recover from its co-
tortfeasors, whereas the hallmark of the Pierringer release is 
its final determination of the released party's tort liabilities 
as to both the plaintiff and any other co-tortfeasors.  Id.   
¶54 In contrast, E&B relies on Eden Stone Co., Inc. v. 
Oakfield Stone Co., Inc., 166 Wis. 2d 105, 479 N.W.2d 557 (Ct. 
App. 1991), to support its argument that the principles of 
No. 
2009AP1212 & 2010AP491   
 
27 
 
Pierringer are simply inapplicable here because Excel and E&B 
had a separate contractual relationship.  In Eden Stone, the 
court of appeals distinguished between obligations arising under 
contract and those that arise under tort law.  See id. at 119-
20.  The court stated that Eden Stone's release of its contract 
claims against one party, the Schraufnagels, using Pierringer-
type language, did not bar Eden Stone's subsequent tort claims 
against another party, Oakfield Stone.  See id.  In so 
concluding, the Eden Stone decision noted that "Pierringer law 
has never extended or recognized the use of such releases where 
one defendant is sued in contract and another in tort."  Id. at 
120. 
¶55 Although 
we agree with Eden Stone's distinction 
between tort and contract obligations, neither Eden Stone nor 
Unigard is directly on point.  In Eden Stone, the court relied 
on the contractual nature of the released claims, and concluded 
therefore, that the principles of Pierringer were inapplicable 
in the subsequent tort action.  Id. at 119–20.  Here, however, 
the situation is the reverse of that presented in Eden Stone, in 
that E&B used Pierringer releases to settle traditional tort 
claims with the non-Kriefall plaintiffs and now seeks to recover 
from Excel under E&B and Excel's independent contractual 
agreement.   
¶56 Unigard also fails to provide an answer because 
Unigard did not involve a separate, contractual relationship 
between the joint tortfeasors; the only obligations at issue 
were the parties' respective shares of tort liability to the 
No. 
2009AP1212 & 2010AP491   
 
28 
 
plaintiff.  See Unigard, 184 Wis. 2d at 81–82.  In the case 
before us, there was a preexisting contractual relationship 
between Excel and E&B, the Hold Harmless Agreement, and it is 
the indemnification obligations under that agreement that are at 
issue here. 
¶57 Our decision turns in part on the nature of the relief 
E&B seeks.  Excel argues that E&B's claim is based on 
contribution, but that E&B waived any right to contribution by 
entering into the Pierringer releases.  E&B disagrees and 
focuses on the separate contractual rights of defense and 
indemnification under the Hold Harmless Agreement.  E&B asserts 
that its contractual rights were not relinquished by the 
Pierringer releases.   
¶58 Contribution involves apportionment of liability where 
two or more parties share liability for the same injury.  See 
Swanigan, 99 Wis. 2d at 196.  However, E&B's claim here is not 
based on contribution or a shared liability, but rather on 
Excel's breach of the Hold Harmless Agreement, by which Excel 
promised to defend and indemnify E&B against claims such as 
those asserted by the non-Kriefall plaintiffs.  The only 
limitation on Excel's obligation under the Hold Harmless 
Agreement in regard to indemnification is "the extent" to which 
the claims asserted against E&B were caused by the "negligent 
acts or omissions" of E&B.  In addition, there is no stated 
limit on Excel's duty to defend E&B under the Hold Harmless 
Agreement.   
No. 
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¶59 When discussing an alleged breach of the duty to 
defend under an indemnification agreement, we have noted that an 
indemnitor's duty to defend does not depend on the merits of the 
claim asserted.  Elliott v. Donahue, 169 Wis. 2d 310, 321, 485 
N.W.2d 403 (1992).  Instead, the duty to defend arises when 
potential liability is asserted against the indemnitee.  Barrons 
v. J.H. Findorff & Sons, Inc., 89 Wis. 2d 444, 455, 278 N.W.2d 
827 (1979).  Indemnitors who deny their responsibility after 
tender of a potential suit or liability "cannot subsequently be 
allowed to turn around and evade the consequences which their 
own conduct and negligence have superinduced."  Deminsky, 259 
Wis. 2d 587, ¶40 (quoting Ill. Cent. R.R. Co. v. Blaha, 3 
Wis. 2d 638, 644, 89 N.W.2d 197 (1958)) (internal quotation 
marks omitted).   
¶60 Excel's conduct showed that it ignored its duty to 
defend, as well as its duty to indemnify under the Hold Harmless 
Agreement.  The Hold Harmless Agreement explicitly states that 
Excel promised to defend E&B "from all actions, suits, claims 
and proceedings."  Accordingly, regardless of E&B's ultimate 
liability, Excel was obligated to honor its duty to defend upon 
E&B's tender of a claim against it for acts or omissions that 
were arguably within the purview of the Hold Harmless Agreement.   
¶61 E&B tendered its defense of the claims arising from 
the E. coli contaminated meat to Excel numerous times, beginning 
as early as August 14, 2000, just weeks after the illnesses 
first surfaced.  Over the following years, Excel continued to 
refuse to defend E&B and asserted that, because of E&B's alleged 
No. 
2009AP1212 & 2010AP491   
 
30 
 
negligence, Excel had no obligations under the Hold Harmless 
Agreement.   
¶62 In refusing E&B's tenders, Excel breached its duty to 
defend under the Hold Harmless Agreement.  E&B then brought a 
claim against Excel for those damages which naturally flowed 
from Excel's breach.  See Newhouse v. Citizens Sec. Mut. Ins. 
Co., 176 Wis. 2d 824, 837, 501 N.W.2d 1 (1993).  The damage 
sustained is the $3.5 million that E&B was forced to pay to the 
non-Kriefall plaintiffs under the Pierringer-type releases for 
settlement of the tort claims against it, see id. at 837-38, 
unless those damages were unreasonable.  Excel does not assert 
that the amounts paid in settlement of the non-Kriefall 
plaintiffs' claims were unreasonable.  Furthermore, had Excel 
properly honored its duty to defend, E&B would not have been 
forced to undertake the settlement negotiations and to incur 
damages as a result of the settlement.  
¶63 E&B's recovery for Excel's breach of contract is 
controlled by the jury's apportionment of liability and the 
terms of the Hold Harmless Agreement.  E&B's entry into 
Pierringer releases with the non-Kriefall plaintiffs is not 
relevant to Excel's contractual obligations to E&B.  The jury 
determined that Excel's portion of the liability for injuries 
caused by the E. coli contamination of food was 80 percent and 
that E&B should shoulder 20 percent of the liability.  The Hold 
Harmless Agreement set a limit on Excel's obligation to 
indemnify as follows:  "[Excel's] indemnification obligations 
hereunder shall not apply to the extent that Claims are caused 
No. 
2009AP1212 & 2010AP491   
 
31 
 
by the negligent acts or omissions of Buyer or any other third 
party."  (Emphasis added.)  Here, Excel's conduct was not the 
sole cause of the injuries that arose from the contaminated meat 
it sold; the jury determined that E&B was 20 percent liable.  
Accordingly, we conclude that E&B may recover 80 percent of the 
$3.5 million E&B paid in settlement of the claims of the non-
Kriefall plaintiffs, subject to the reduction explained in 
Section C.3. below, because that amount takes into account the 
extent of E&B's negligent acts or omissions, as the Hold 
Harmless Agreement requires. 
3.  Indemnification reduction  
¶64 After 
the 
non-Kriefall claims had been settled, 
Federal Insurance sought dismissal based on a "pay and walk" 
provision in its policy that covered E&B.  Notable for our 
present inquiry, Federal Insurance did not pursue a subrogation 
claim 
for 
its 
$1 
million 
payment 
to 
the 
non-Kriefall 
plaintiffs.15  Federal Insurance was subsequently dismissed from 
the consolidated E. coli cases.   
¶65 The circuit court initially concluded that E&B and its 
insurers were entitled to recover approximately $2.8 million (or 
80 percent) of the $3.5 million that Secura and Federal 
Insurance had paid to settle the non-Kriefall claims.  Excel 
then sought to have its obligation reduced by 80 percent of the 
$1 million that Federal Insurance had paid because Federal 
                                                 
15 There has been no assertion before us that E&B's other 
insurer, Secura, has not maintained its contractual subrogation 
rights throughout this litigation. 
No. 
2009AP1212 & 2010AP491   
 
32 
 
Insurance waived its subrogation rights.  The circuit court 
rejected Excel's arguments and held that E&B was entitled to 
recover $800,000 (80 percent) of Federal Insurance's $1 million 
payment, and that Excel also was required to reimburse Secura $2 
million of the approximately $2.5 million that Secura had 
contributed to the non-Kriefall settlements.  Excel appealed the 
circuit court's award of $800,000 in favor of E&B.  The court of 
appeals reversed, concluding that there was nothing in the Hold 
Harmless 
Agreement 
justifying 
that 
result, 
and 
that 
the 
collateral source rule did not apply.  Kriefall II, 335 Wis. 2d 
151, ¶¶35–36. 
¶66 Before us, E&B asserts that under the Hold Harmless 
Agreement, Excel was required to indemnify E&B for the $1 
million Federal Insurance paid to the non-Kriefall plaintiffs on 
E&B's behalf.  E&B reasons that because Federal Insurance waived 
its 
right 
of 
subrogation 
to 
E&B's 
contractual 
right 
of 
indemnification under the Hold Harmless Agreement, that right 
reverted to E&B.  E&B also argues that the collateral source 
rule supports the result it seeks because Excel, the tortfeasor 
more responsible for the injuries sustained, will receive a 
windfall if Excel is not required to make payment to E&B for the 
amounts Federal Insurance paid on E&B's behalf.  We address each 
contention in turn. 
¶67 As a general principle, indemnification is often 
closely tied to the theory of subrogation.  As we stated in 
Perkins, 31 Wis. 2d at 637, "subrogation gives indemnity."  
Subrogation, as with indemnification, seeks to recoup the total 
No. 
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33 
 
payment that a party seeking subrogation has made.  Steffens, 
335 Wis. 2d 514, ¶36.  Upon payment, the person who made the 
payment stands in the shoes of the person for whom payment was 
made.  Orlowski v. State Farm Mut. Auto. Ins. Co., 2012 WI 21, 
¶17, 339 Wis. 2d 1, 810 N.W.2d 775.  Both indemnification and 
subrogation require that a person seeking to recover under 
either theory has made payment.  See Teacher Ret. Sys. of Tex. 
v. Badger XVI Ltd. P'ship, 205 Wis. 2d 532, 547, 556 N.W.2d 415 
(Ct. App. 1996); Steffens, 335 Wis. 2d 514, ¶36.  The right to 
subrogation, whether established by contract or by equity, may 
be waived by the payor who chooses not to pursue its right to 
recoup the payment made.  See Voge, 181 Wis. 2d at 731-32.   
¶68 The 
Hold 
Harmless 
Agreement 
says 
nothing 
about 
subrogation 
or 
what 
would 
occur 
if 
a 
party 
to 
whom 
indemnification is owed satisfied an obligation to a third party 
by having an insurance company make the third-party payment.  
The Hold Harmless Agreement also does not define indemnification 
such that the usual understanding of that term is changed for 
purposes of the agreement.  Instead, indemnification under the 
Hold Harmless Agreement is linked to "judgments, damages, fines, 
costs and expenses" that result from "actions, suits, claims and 
proceedings" covered by the agreement.  However, E&B made no 
payment in satisfaction of a judgment, or as damages, fines, 
costs or expenses.  Furthermore, E&B does not argue that it has 
an 
assignment 
of 
Federal 
Insurance's 
subrogation 
rights.  
Accordingly, E&B has no contractual right to be indemnified for 
the $1 million payment that Federal Insurance made.   
No. 
2009AP1212 & 2010AP491   
 
34 
 
¶69 We next consider the collateral source rule.  The 
collateral source rule is an equitable doctrine that provides 
that where a plaintiff is injured by the tortious conduct of 
another, the injured plaintiff's recovery will not be reduced by 
payments the plaintiff receives from other sources.  Orlowski, 
339 Wis. 2d 1, ¶¶18, 26 (holding that where plaintiff was 
injured by negligence of another, collateral source rule 
prohibits 
decreasing 
plaintiff's 
recovery 
from 
her 
own 
underinsured motorist carrier for medical expenses written off 
by medical provider).  The collateral source rule causes the 
tortfeasor to fully shoulder the damages his conduct has caused, 
even when doing so provides a windfall to an injured plaintiff.  
Id., ¶18.   
¶70 The collateral source rule has never been applied to 
benefit a tortfeasor, and the policies that underlie the 
collateral source rule support its use to benefit only injured 
plaintiffs.  E&B is a tortfeasor, as is Excel.  Neither one is 
an injured plaintiff whose damages have been supplemented by 
payments received from one who is not a tortfeasor.  While we 
are cognizant of the equitable argument that E&B makes because 
its fault was 20 percent and Excel's was 80 percent, requiring 
Excel to pay E&B $800,000 that E&B never paid would create a 
windfall for a tortfeasor and not a windfall for an injured 
plaintiff.   
D.  Attorney Fees 
¶71 Sizzler also seeks to recover attorney fees that it 
incurred defending against the claims that arose due to Excel's 
No. 
2009AP1212 & 2010AP491   
 
35 
 
sale of meat containing E. coli.  Sizzler asserts that it is an 
innocent party and that Excel's distribution of tainted meat 
constituted wrongful conduct that entitles Sizzler to attorney 
fees under the narrow exception to the "American Rule" stated in 
Weinhagen, 179 Wis. at 63–66.  We disagree. 
¶72 The American Rule provides that parties to litigation 
typically are responsible for their own attorney fees.  See 
Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 
717–18 (1967).  Limited exceptions do exist, such as where 
statutes 
provide 
for 
the 
recovery 
of 
attorney 
fees 
for 
prevailing parties, or where the parties contract for the award 
of attorney fees.  See Meas v. Young, 142 Wis. 2d 95, 101, 417 
N.W.2d 55 (Ct. App. 1987).  In addition, we have developed a 
narrow exception to the American Rule, as we explained in 
Weinhagen. 
¶73 In Weinhagen, 179 Wis. at 63–66, we reaffirmed the 
American Rule, but held that an innocent party, wrongfully drawn 
into litigation with a third party, may recover those fees 
reasonably incurred in defending against such action. 
The general rule is that costs and expenses of 
litigation, other than the usual and ordinary court 
costs, are not recoverable in an action for damages, 
nor are such costs even recoverable in a subsequent 
action; but, where the wrongful acts of the defendant 
have involved the plaintiff in litigation with others, 
or placed him in such relation with others as to make 
it necessary to incur expense to protect his interest, 
such costs and expense should be treated as the legal 
consequences of the original wrongful act. 
No. 
2009AP1212 & 2010AP491   
 
36 
 
Id. at 65 (quoting McGaw v. Acker, Merrall & Condit Co., 73 A. 
731, 734 (Md. 1909)).   
¶74 Subsequently, 
Weinhagen 
has 
been 
interpreted 
to 
require that:  (1) the party from whom fees are sought must have 
committed a wrongful act against the party seeking attorney 
fees; and (2) the commission of such wrongful act forced the 
party seeking fees into litigation with a third party, or 
required the party seeking attorney fees to incur expenses 
protecting that party's interests against claims arising from 
the wrongful act.  See Meas, 142 Wis. 2d at 102–04. 
¶75 The first element, the wrongful act requirement, has 
been found to be satisfied upon a showing of a breach of a 
fiduciary duty or a fraud perpetrated on the party seeking fees, 
by the party from whom attorney fees are sought.  See id.  In 
Weinhagen, the award of attorney fees was driven by a finding 
that the contract giving rise to the action was based on fraud, 
see Weinhagen, 179 Wis. at 63; and in Meas, 142 Wis. 2d at 102–
04, attorney fees were allowed where the sellers were drawn into 
litigation with the buyers solely because of the wrongful acts 
by the realtors against their clients, the sellers.  The court 
in Meas concluded that the realtors' actions constituted a 
breach of their fiduciary duties to the sellers, and on that 
basis held that the first element of the Weinhagen exception was 
satisfied.  See id. 
¶76 Accordingly, the Weinhagen exception's wrongful act 
requirement demands more than an allegation of mere negligence 
that has involved a party in litigation; instead, "wrongfulness" 
No. 
2009AP1212 & 2010AP491   
 
37 
 
requires something similar to fraud or breach of a fiduciary 
duty to the party seeking attorney fees.16 
¶77 Although we do not expressly limit the wrongful act in 
the Weinhagen exception to a showing of fraud or breach of 
fiduciary 
duty, such application is instructive. Allowing 
recovery upon an allegation of mere negligence would contravene 
the American Rule, which is intended to preserve access to 
justice without fear that a litigant will be liable for her 
opponent's attorney fees if she loses.  See Weinhagen, 179 
Wis. at 66. 
To hold otherwise would be to open the door to 
oppression and extortion, to penalize persons who 
appeal to the courts to adjudicate their differences. 
It would not be in accord with sound public policy. 
The temptation to institute litigation for the purpose 
of recovering from the opposite party generous fees 
would be very great and no doubt lead to great abuses. 
Id. 
¶78 Furthermore, we conclude that Sizzler's reliance on 
Fidelity & Deposit Co. of Maryland v. Krebs Engineers, 859 F.2d 
501, 505–07 (7th Cir. 1988), is misplaced.  Fidelity involved a 
claim for attorney fees pursuant to Wis. Stat. § 402.715, in a 
breach of contract suit where the contract did not address 
attorney fees.  Id. at 504-05.  Fidelity relied on our holding 
in Murray.  In Murray, we declined to allow an award of attorney 
fees under § 402.715.  We noted that other courts that have 
                                                 
16 But see Gorton v. Hostak, Henzl & Bichler, S.C., 217 
Wis. 2d 493, 512, 577 N.W.2d 617 (1998) (explaining that breach 
of fiduciary duty may not always be sufficient to support an 
award of attorney fees). 
No. 
2009AP1212 & 2010AP491   
 
38 
 
considered this question under provisions similar to Wis. Stat. 
§ 402.715 
have 
held that no award of attorney fees as 
consequential damages is proper when the contract at issue does 
not address attorney fees.  See Murray, 83 Wis. 2d at 434-36.  
We nonetheless noted that attorney fees incurred in third-party 
litigation 
may 
be 
recovered 
where 
they 
arise 
from 
the 
defendant's breach of contract or wrongful act that caused the 
plaintiff to be sued by a third-party.  Id. at 435 n.11.  
Although Fidelity, on which Sizzler relies, can be read as 
having gone beyond our holding in Murray, to that extent, 
Fidelity is not grounded in Wisconsin law.  Wisconsin law 
employs the Weinhagen test, as explained above.  
¶79 Here, although there were contracts between Excel and 
Sizzler, the third-party litigation that Sizzler was forced to 
defend cannot be said to have arisen from the parties' 
contractual relationship alone.  The plaintiffs' claims here 
were based primarily in tort law.  Sizzler's involvement arose 
because of Sizzler's potential liability for the alleged breach 
of a claimed duty of due care.  Therefore, we conclude that 
Sizzler has not met the Weinhagen test of what constitutes a 
wrongful act by the party from whom attorney fees are sought.   
¶80 Accordingly, we conclude that Sizzler has not stated a 
claim for attorney fees under the Weinhagen exception to the 
American Rule because Sizzler has not demonstrated that Excel 
engaged in wrongful conduct as to Sizzler.  Sizzler's role in 
this litigation began as a party potentially liable for the 
claims of the plaintiffs who were injured by the E. coli 
No. 
2009AP1212 & 2010AP491   
 
39 
 
contaminated 
meat 
Excel 
sold 
in 
Sizzler's 
franchised 
restaurants.  Sizzler was not an unrelated, third party, 
notwithstanding the jury's ultimate apportionment of fault.  
Therefore, Sizzler may not look to Excel or any other party to 
recover the attorney fees that Sizzler incurred defending 
against the plaintiffs' tort claims in these consolidated cases. 
III.  CONCLUSION 
¶81 We affirm the decision of the court of appeals on all 
five issues presented.  First, we hold that Sizzler is entitled 
to recover consequential damages for Excel's breach of implied 
warranties in the parties' meat supply contract, notwithstanding 
limiting language in the Continuing Guaranty.  Second, Sizzler 
also is entitled to indemnity from Excel for the entirety of 
Sizzler's $1.5 million advance partial payment to the Kriefall 
family because the payment was not voluntary and the jury found 
that 
Sizzler 
was 
zero 
percent 
liable 
for 
the 
E. 
coli 
contamination.  Third, pursuant to the Hold Harmless Agreement, 
Excel is required to indemnify E&B for payments E&B made to 
certain non-Kriefall plaintiffs in exchange for Pierringer 
releases; however, Excel's obligation extends only so far as its 
apportioned liability, which is 80 percent.  Fourth, Excel is 
not required to indemnify E&B for payments that Federal 
Insurance made on E&B's behalf in settling the non-Kriefall 
plaintiffs' claims.  Fifth, and finally, notwithstanding the 
jury's determination that Sizzler was zero percent responsible 
for the E. coli contaminated food that caused the illnesses of 
so many people, Sizzler may not recover attorney fees from Excel 
No. 
2009AP1212 & 2010AP491   
 
40 
 
because the exception to the American Rule stated in Weinhagen 
does not apply. 
¶82 By the Court.—The decision of the court of appeals is 
affirmed. 
 
 
 
 
 
No.  2009AP1212 & 2010AP491.ssa 
 
1 
 
¶83 SHIRLEY S. ABRAHAMSON, C.J.   (concurring in part and 
dissenting in part).  I agree with most of the majority's 
conclusions. 
 
I 
part 
ways 
with 
the 
majority 
on 
the 
"Indemnification Reduction" issue (issue number four).  Majority 
op., ¶¶2, 64-70. 
¶84 This appeal presents a number of challenging issues, 
both factually and legally.  A glance at the parties' briefs 
might suggest that the indemnification reduction issue is the 
most complex issue of the bunch.  But the issue, properly 
analyzed, turns out to be a relatively simple matter of contract 
interpretation. 
¶85 The contract in question is the "Hold Harmless 
Agreement."  According to the text of the Agreement, Excel 
promised to "defend, indemnify and hold harmless" E&B "from all 
actions, suits, claims and proceedings ("Claims"), and any 
judgments, damages, fines, costs and expenses . . . resulting 
therefrom."1   
¶86 E&B was sued by a number of plaintiffs, including the 
"non-Kriefall plaintiffs."  Their claims arose from Excel's meat 
products.   
¶87 The majority concludes that Excel breached its duty to 
defend 
under 
the 
agreement, 
leaving 
E&B 
to 
negotiate 
a 
settlement with the non-Kriefall plaintiffs without Excel's 
                                                 
1 The first place to look when analyzing a contract is to 
the language of the contract itself, as "the best indication of 
the parties' intent is the language of the contract itself, for 
that is the language the parties 'saw fit to use.'"  Town Bank 
v. City Real Estate Dev., LLC, 2010 WI 134, ¶33, 330 
Wis. 2d 340, 793 N.W.2d 476 (citations omitted).   
No.  2009AP1212 & 2010AP491.ssa 
 
2 
 
assistance.  Majority op., ¶62.  As the majority explains, E&B's 
claim against Excel is based "on Excel's breach of the Hold 
Harmless Agreement, by which Excel promised to defend and 
indemnify E&B against claims such as those asserted by the non-
Kriefall plaintiffs."  Majority op., ¶58.     
¶88 The Hold Harmless Agreement covered claims against E&B 
arising from Excel's meat products.  According to the majority 
opinion, "[t]he only limitation on Excel's obligation under the 
Hold Harmless Agreement in regard to indemnification is 'the 
extent' to which the claims asserted against E&B were caused by 
the 'negligent acts or omissions' of E&B."  Majority op., ¶58 
(emphasis added).  See also majority op., ¶¶12, 48.   
¶89 I agree with the majority that E&B is entitled to 
recover from Excel only 80% of the settlement under the 
Agreement because the jury apportioned 20% of the causal 
negligence to E&B. 
¶90 E&B settled with the non-Kriefall plaintiffs for 
payment in the sum of $3.5 million.  Crucially, $2.5 million of 
the settlement was funded by one insurer (Secura) and the 
remaining $1 million was funded by another (Federal Insurance).  
Both insurance policies gave the insurers subrogation rights, 
meaning that if the insurance company paid a claim and the 
insured (E&B here) had the right to recover the money from 
another entity (Excel here), the insurance company could stand 
in E&B's shoes and assert E&B's right to recover funds.   
¶91 Secura joined the present lawsuit, which was to assign 
ultimate responsibility among a number of actors for payment of 
No.  2009AP1212 & 2010AP491.ssa 
 
3 
 
the $3.5 million settlement and other settlements that are not 
relevant to the indemnification reduction issue.  Secura seeks 
to stand in E&B's shoes and assert E&B's right against Excel to 
the $2.5 million Secura contributed.  Federal Insurance, on the 
other hand, is not a party in the present lawsuit and does not 
intend to exercise its subrogation rights against Excel.  Issue 
four, the indemnification reduction issue, focuses on whether 
Excel must indemnify E&B for the $1 million that Federal 
Insurance paid to the non-Kriefall plaintiffs on E&B's behalf.   
¶92 Nothing in the Hold Harmless Agreement addresses 
subrogation.  Despite having emphasized that the only limitation 
on Excel's contractual indemnification duties is the extent to 
which E&B's negligence caused the claims, the majority reads 
into the Hold Harmless Agreement another limitation on Excel's 
obligation to indemnify E&B.  The majority concludes that Excel 
is not obligated to indemnify E&B for the $1 million provided by 
Federal Insurance because Federal Insurance is not exercising 
its subrogation rights.  Majority op., ¶¶64-68. 
¶93 According to the majority, because Federal is not 
exercising its subrogation rights, "E&B made no payment in 
satisfaction of a judgment, or as damages, fines, costs or 
expenses. . . . Accordingly E&B has no contractual right to be 
indemnified for the $1 million payment that Federal Insurance 
made."  Majority op., ¶68.  I disagree with the majority's 
analysis and conclusion.   
¶94 E&B was liable to satisfy the settlement.  It was E&B, 
not E&B's insurers, who entered into a settlement with the non-
No.  2009AP1212 & 2010AP491.ssa 
 
4 
 
Kriefall plaintiffs.  As the majority explains, "E&B was forced 
to pay [$3.5 million] to the non-Kriefall plaintiffs . . . for 
settlement of the tort claims against it . . . ."  Majority op., 
¶62 (emphases added).   
¶95 The Hold Harmless Agreement provides that Excel would 
indemnify 
E&B 
from 
"all 
actions, 
suits, 
claims, 
and 
proceedings" . . . from "any judgments, damages, fines, costs 
and expenses" (emphases added).  The $3.5 million settlement, 
including Federal Insurance's $1 million dollar payment on 
behalf of E&B, falls directly within the text and reach of the 
Agreement.  
¶96 Nothing in the Hold Harmless Agreement turns on 
whether E&B personally made payment from its resources to settle 
the claims against it or whether another entity made payment on 
behalf of E&B.  Pursuant to the Hold Harmless Agreement, Excel 
is contractually obligated to indemnify E&B from any claims 
against E&B and any judgments and expenses that result from 
those claims.       
¶97 Thus, when E&B was forced to enter into a $3.5 million 
settlement to address claims that were covered by the Hold 
Harmless Agreement, E&B obtained a contractual right from Excel 
to 
be 
indemnified 
for 
that 
amount. 
 
E&B's 
right 
to 
indemnification from Excel does not hinge on whether E&B's 
various insurers paid E&B's obligations or planned to exercise 
their separate subrogation rights. 
¶98 The majority interprets the Hold Harmless Agreement as 
if E&B is entitled to indemnification from Excel when, and only 
No.  2009AP1212 & 2010AP491.ssa 
 
5 
 
when, E&B's insurers exercise their subrogation rights.  In 
fact, the opposite is true.  E&B's insurers are entitled to 
exercise subrogation rights when, and only when, E&B is entitled 
to indemnification from Excel.  If an insurer waives its 
subrogation rights, E&B's underlying right to indemnification 
(which created the possibility of a subrogation right for the 
insurer in the first place) does not disappear.      
¶99 The majority seemingly reads language into the Hold 
Harmless Agreement.  Under the majority's reading, Excel is 
obligated to indemnify E&B from claims against it and judgments 
and expenses that result from those claims, but only if either 
E&B pays those judgments and expenses out of its own pocket or 
one of E&B's insurers covers the judgments and expenses and then 
exercises its subrogation rights.  The emphasized language does 
not appear in the Hold Harmless Agreement, but under the 
majority's 
interpretation, 
the 
clause 
is 
read 
into 
the 
Agreement.  The majority opinion gives us no reason for 
rewriting the parties' Agreement.  This court should hold the 
parties to their Agreement.      
¶100 Thus, I believe the majority misinterprets the Hold 
Harmless 
Agreement. 
 
Further, 
this 
court 
has 
held 
that 
indemnification agreements "are liberally construed when they 
deal with the negligence of the indemnitor [Excel here], but are 
strictly construed when the indemnitee [E&B here] seeks to be 
indemnified for his own negligence."2  Here, the agreement deals 
                                                 
2 Bialas v. Portage Cnty., 70 Wis. 2d 910, 912, 236 
N.W.2d 18 (1975). 
No.  2009AP1212 & 2010AP491.ssa 
 
6 
 
with 
the 
negligence 
of 
the 
indemnitor 
(Excel), 
and 
the 
indemnitee (E&B) does not seek indemnification for its own 20% 
causal negligence.  Under these circumstances, our case law 
commands a liberal construction of the Hold Harmless Agreement, 
which further supports my conclusion. 
¶101 Therefore, I resolve this issue on the basis of the 
language of the Hold Harmless Agreement.  The parties and the 
majority opinion also discuss the application of the collateral 
source rule to this contract dispute.  Majority op., ¶¶69-70.  
The collateral source rule is generally associated with tort 
law.  This fourth issue, which is a contract dispute, becomes 
more difficult when the collateral source rule is considered.  
The analysis of the parties and the majority regarding the 
collateral source rule is undeveloped, and I will touch on this 
issue only briefly. 
¶102 The application of the collateral source rule to 
contracts cases is a complex subject.  "Whether the collateral 
source rule applies in 'contract' cases is subject to some 
dispute. . . . Possibly the right answer depends somewhat on the 
equities or economic concerns in the individual case. . . . "3   
                                                 
3 3 Dan B. Dobbs, Dobbs Law of Remedies § 12.6(4) at 154-55 
(2d ed. 1993). 
For articles discussing the collateral source rule in 
contract cases, as well as the relevance of subrogation (or the 
lack of subrogation) in these cases, see Joseph M. Perillo, The 
Collateral Source Rule in Contract Cases, 46 San Diego L. Rev. 
705 (2009), and John G. Fleming, The Collateral Source Rule and 
Contract Damages, 71 Cal. L. Rev. 56 (1983). 
No.  2009AP1212 & 2010AP491.ssa 
 
7 
 
¶103 The collateral source rule is an equitable doctrine, 
as the majority notes.  Majority op., ¶69.  Each case has to be 
analyzed, as I see it, by asking how the various policies 
underlying the collateral source rule apply in the particular 
case, depending on whether the parties are connected by 
contract, tort, or some combination of the two.  The unique 
circumstances 
of 
each 
particular 
case 
must 
be 
carefully 
considered.   
¶104 The majority opinion disposes of the collateral source 
rule by simply characterizing E&B as a tortfeasor——because E&B 
was adjudged 20% causally negligent with respect to the non-
Kriefall 
plaintiffs——and 
stating 
that 
"the 
policies 
that 
underlie the collateral source rule support its use to benefit 
only injured plaintiffs."  Majority op, ¶70.   
¶105 The 
majority's 
reasoning 
oversimplifies 
or 
mischaracterizes the present case.  The present lawsuit is a 
contract dispute in which E&B is an injured plaintiff and Excel 
is a defendant.  E&B is suing Excel to recover under the Hold 
Harmless Agreement.  It was in the underlying lawsuit against 
                                                                                                                                                             
The Restatement (Second) of Contracts briefly alludes to 
the collateral source rule and does not take a position on its 
applicability, but states that "[t]he principle that a party's 
liability is not reduced by payments or other benefits received 
by the injured party from collateral sources is less compelling 
in the case of a breach of contract than in the case of a tort." 
Restatement (Second) of Contracts § 347 cmt. e (1981).   
Professors Perillo and Fleming are both somewhat critical 
of the Restatement's limited analysis.  See Perillo, supra, at 
706; Fleming, supra, at 79.  
No.  2009AP1212 & 2010AP491.ssa 
 
8 
 
the non-Kriefall plaintiffs that E&B was a 20% responsible 
tortfeasor and Excel was an 80% responsible tortfeasor.   
¶106 Here, 
the 
court 
should 
balance 
equitable 
considerations and the policies behind the collateral source 
rule to determine whether the breaching defendant (Excel) or the 
plaintiff (E&B), who was insured by Federal Insurance, should 
benefit from the payments made by Federal Insurance that Federal 
Insurance does not seek to recover.4 
¶107 In 
the 
present 
case, 
under 
the 
Agreement, 
E&B 
shoulders the damages its conduct caused and Excel shoulders the 
damages its conduct caused.  Applying the collateral source rule 
would ensure that Excel is not relieved from shouldering the 
damage its conduct caused just because E&B had the foresight to 
                                                 
4 This court has addressed similar questions in tort suits 
when an insurer waives its subrogation rights or is unable to 
pursue them.  In Voge v. Anderson, 181 Wis. 2d 726, 512 
N.W.2d 749 (1994), the plaintiff's insurer had waived its 
subrogation rights, id. at 728, and the court held that the 
collateral source rule was still applicable.  Id. at 732.  The 
court explained: 
The collateral source rule does not allow a tortfeasor 
to reduce his or her liability for personal injury by 
benefits that the injured person receives from one 
acting 
on 
the 
tortfeasor's 
behalf. 
Rather, 
the 
collateral source rule requires that the tortfeasor be 
held responsible for his conduct by requiring the 
tortfeasor to compensate the injured party the full 
amount of damages.  
We recognize that the results in this case allow the 
injured party a double recovery. However, a contrary 
conclusion would result in giving the tortfeasor a 
windfall . . . .   
Voge, 181 Wis. 2d at 732-33. 
No.  2009AP1212 & 2010AP491.ssa 
 
9 
 
voluntarily pay premiums over the years in order to maintain 
insurance.5  I therefore would apply the collateral source rule 
in the present case.  
¶108 For the reasons stated above, I disagree with the 
majority's resolution of the "indemnification reduction" issue 
and dissent with respect to that issue. 
¶109 I am authorized to state that Justice ANN WALSH 
BRADLEY joins this concurrence/dissent. 
                                                 
5 According to Professor Fleming, "In the tort context, it 
has been consistently considered decisive that if the plaintiff 
himself procured insurance through his own initiative and at his 
own cost, the defendant is not entitled to benefit from the 
insurance by a reduction of damages.  As it is commonly put, the 
plaintiff is free to 'bargain for double recovery' even 
when . . . the 
insurer is not entitled to reimbursement."  
Fleming, supra note 3, at 81.  
See also Leitinger v. DBart, Inc., 2007 WI 84, ¶28, 302 
Wis. 2d 110, 736 N.W.2d 1 ("The tortfeasor who is legally 
responsible for causing injury is not relieved of his obligation 
to the victim simply because the victim had the foresight to 
arrange, or good fortune to receive, benefits from a collateral 
source 
for 
injuries 
and 
expenses" 
(quoting 
Ellsworth 
v. 
Schelbrock, 2000 WI 63, ¶7, 235 Wis. 2d 678, 611 N.W.2d 764).). 
No.  2009AP1212 & 2010AP491.ssa 
 
 
 
1