2019 WI 70 

SUPREME COURT OF WISCONSIN

CASE NO.: 2016AP001837 

COMPLETE TITLE: Rural Mutual Insurance Company, 

 Plaintiff-Appellant-Petitioner, 

 v. 

Lester Buildings, LLC and The Phoenix Insurance 

Company, 

 Defendants-Third-Party 

 Plaintiffs-Respondents, 

West Bend Mutual Insurance Company, 

 Defendant-Respondent, 

Jim Herman, Inc., 

 Defendant-Co-Appellant, 

 v. 

Van Wyks, Inc., 

 Third-Party Defendant-Respondent. 

REVIEW OF DECISION OF THE COURT OF APPEALS 

Reported at 382 Wis. 2d 269,915 N.W.2d 729 

(2018 – unpublished) 

OPINION FILED: June 18, 2019 

SUBMITTED ON BRIEFS: 

ORAL ARGUMENT: March 20, 2019 

SOURCE OF APPEAL: 

 COURT: Circuit 

 COUNTY: Dane 

 JUDGE: Maryann Sumi & Valerie Bailey-Rihn 

 

JUSTICES: 

 CONCURRED: 

 DISSENTED: KELLY, J. dissents, joined by A.W. BRADLEY, J. 

(opinion filed). 

 NOT PARTICIPATING: ABRAHAMSON, J. did not participate, 

ZIEGLER, J. withdrew from participation. 

 

ATTORNEYS: 

For the plaintiff-appellant-petitioner, there were briefs 

filed by Monte E. Weiss, Charles W. Kramer, and Weiss Law 

Offices S.C., Mequon. There was oral argument by Monte E. Weiss. 

For the defendant-third-party-plaintiff-respondent, there 

was a brief filed by Kevin A. Christensen, Patricia A. Stone, 
2

and Wilson Elser Moskowitz Edelman & Dicker, LLP, Milwaukee. 

There was oral argument by Kevin A. Christensen. 

For the third-party-defendant-respondent, there was a brief 

filed by Eugene M. LaFlamme, Esq., Michael A. Snider, Esq., and 

McCoy Leavitt Laskey LLC, Waukesha. There was oral argument by 

Eugene M. LaFlamme. 

For the defendant-respondent, there was a brief filed by 

Jeffrey Leavell, Danielle N. Rousset, and Jeffrey Leavell, S.C., 

Racine. There was oral argument by Jeffrey Leavell. 
2019 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. 2016AP1837 

(L.C. No. 2014CV1354) 

STATE OF WISCONSIN : IN SUPREME COURT 

Rural Mutual Insurance Company,

 Plaintiff-Appellant-Petitioner, 

 v. 

Lester Buildings, LLC and The Phoenix Insurance 

Company, 

 Defendants-Third-Party 

 Plaintiffs-Respondents, 

West Bend Mutual Insurance Company, 

 Defendant-Respondent, 

Jim Herman, Inc., 

 Defendant-Co-Appellant, 

 v. 

Van Wyks, Inc., 

 Third-Party Defendant-Respondent. 

FILED 

JUN 18, 2019 

Sheila T. Reiff 

Clerk of Supreme Court 

REVIEW of a decision of the Court of Appeals. Affirmed. 

¶1 REBECCA FRANK DALLET, J. Rural Mutual Insurance 

Company seeks review of an unpublished per curiam decision of 
No. 2016AP1837 

2 

the court of appeals1 affirming the circuit court's grant of 

summary judgment dismissing Rural Mutual's subrogation claims.2 

The circuit court determined that Rural Mutual's claims against 

Lester Buildings, LLC, Phoenix Insurance Company, Van Wyks, 

Inc., and West Bend Mutual Insurance Company were barred 

pursuant to a subrogation waiver contained in a Lester 

Buildings' contract with Rural Mutual's insured, Jim Herman, 

Inc. ("Herman"). The circuit court also found that Wis. Stat. 

§ 895.447 did not void that subrogation waiver.3

¶2 The court of appeals affirmed the circuit court and 

dismissed Rural Mutual's claims. However, the court of appeals 

declined to address whether Wis. Stat. § 895.447 voided the 

subrogation waiver, reasoning that the argument was 

insufficiently developed. We granted review as to two issues: 

Does § 895.447 void the subrogation waiver at issue? And was 

the subrogation waiver an unenforceable exculpatory contract 

contrary to public policy? 

¶3 We conclude that Wis. Stat. § 895.447 does not void 

the subrogation waiver in Lester Buildings' contract because the 

waiver does not limit or eliminate tort liability. We also 

 

1 Rural Mut. Ins. Co. v. Lester Buildings, LLC, No. 

2016AP1837, unpublished slip op. (Wis. Ct. App. Apr. 26, 2018). 

2 Judges Maryann Sumi and Valerie Bailey-Rihn of Dane County 

Circuit Court presided. 

3 All subsequent references to the Wisconsin Statutes are to 

the 2017-18 version unless otherwise indicated. 
No. 2016AP1837 

3 

conclude that the subrogation waiver is not an unenforceable 

exculpatory contract contrary to public policy. We therefore 

affirm the court of appeals. 

I. FACTUAL BACKGROUND AND PROCEDURAL POSTURE 

¶4 As the court of appeals correctly noted, "[t]he 

procedural history of this case is lengthy and complicated." 

Rural Mut. Ins. Co. v. Lester Buildings, LLC, No. 2016AP1837, 

unpublished slip op., ¶2 (Wis. Ct. App. Apr. 26, 2018). In 

2009, Herman entered into a contract with Lester Buildings for 

the design and construction of a barn on its property. The 

contract included the following language: 

Both parties waive all rights against each other 

and any of their respective contractors, 

subcontractors and suppliers of any tier and any 

design professional engaged with respect to the 

Project, for recovery of any damages caused by 

casualty or other perils to the extent covered by 

property insurance applicable to the Work or the 

Project, except such rights as they have to the 

proceeds of such property insurance and to the extent 

necessary to recover amounts relating to deductibles 

of self-insured retentions applicable to insured 

losses. . . . This waiver of subrogation shall be 

effective notwithstanding allegations of fault, 

negligence, or indemnity obligation of any party 

seeking the benefit or production of such waiver. 

¶5 Herman's barn required concrete in several areas, 

including the foundation, walls, and piers that supported the 

roof. The specifications for the concrete were provided by 

Lester Buildings, but Herman entered into a separate contract 
No. 2016AP1837 

4 

with Van Wyks in May 2010 to provide the concrete.4 The barn 

that Lester Buildings and Van Wyks constructed was covered by 

Herman's insurance policy with Rural Mutual. In that policy, 

Rural Mutual explicitly allowed its insured, Herman, to waive 

its rights without interfering with Rural Mutual's insurance 

coverage: "You may waive your right of recovery in writing 

before a loss occurs without voiding the coverage." 

¶6 The barn was completed in June 2010. In May 2013, one 

half of the barn collapsed due to strong winds, killing or 

causing catastrophic injuries to a large number of Herman's 

cattle. Rural Mutual asserts that the barn collapsed due to the 

improper installation of steel rebar cages in the concrete piers 

supporting the barn's roof. The cages were allegedly installed 

by Van Wyks several inches below where Lester Buildings' design 

had called for them to be installed, which led to the column 

tops cracking from the strong winds.5 Rural Mutual paid 

approximately $607,000 to rebuild Herman's barn and 

approximately $51,000 for the losses related to cattle and other 

miscellaneous damages. 

 

4 The Van Wyks' contract also contained a waiver of claims, 

similar to that found in the Lester Buildings' contract, which 

read: "Both parties waive all rights against each other and any 

of their respective contractors, subcontractors and suppliers 

. . . ." Van Wyks' contract is not at issue on appeal. 

5 The parties dispute who is at fault regarding where the 

rebar cages were ultimately placed. 
No. 2016AP1837 

5 

¶7 In 2014, Rural Mutual brought a subrogation action 

against Lester Buildings and its insurer, Phoenix, alleging that 

Lester Buildings had breached its contract with Herman and had 

been negligent in placing the rebar cages lower than where the 

specifications required. Lester Buildings and Phoenix then 

filed third-party cross-claims against Van Wyks and its insurer, 

West Bend, alleging that if Lester Buildings was liable to Rural 

Mutual, then Van Wyks would be responsible for any damages owed. 

Rural Mutual filed an amended complaint which included a count 

against West Bend, pursuant to Wisconsin's direct action 

statute, Wis. Stat. § 632.24.6 Lester Buildings also moved to 

join Herman as a defendant in the case. Lester Buildings and 

Van Wyks, and their respective insurers (collectively the 

"Contractors"), filed separate motions for summary judgment 

against Rural Mutual. The Contractors asserted that the 

subrogation waiver in the Lester Buildings' contract barred 

Rural Mutual's claims against all of them. 

¶8 The circuit court granted summary judgment to the 

Contractors on all of Rural Mutual's claims, reasoning that the 

 

6 Wisconsin Stat. § 632.24 reads: 

Any bond or policy of insurance covering 

liability to others for negligence makes the insurer 

liable, up to the amounts stated in the bond or 

policy, to the persons entitled to recover against the 

insured for the death of any person or for injury to 

persons or property, irrespective of whether the 

liability is presently established or is contingent 

and to become fixed or certain by final judgment 

against the insured. 
No. 2016AP1837 

6 

subrogation waiver was enforceable and precluded Rural Mutual's 

claims. The circuit court determined that Gerdmann and Dykstra 

controlled its interpretation of Wis. Stat. § 895.447 and 

resolved the claims against Rural Mutual. Gerdmann v. United 

States Fire Ins. Co., 119 Wis. 2d 367, 350 N.W.2d 730 (Ct. App. 

1984); Dykstra v. Arthur G. McKee & Co., 100 Wis. 2d 120, 301 

N.W.2d 201 (1981). In affirming the circuit court's decision, 

the court of appeals did not address Rural Mutual's argument 

that § 895.447 barred the subrogation waiver because it found 

Rural Mutual's argument regarding the specific waiver to be 

"woefully insufficient." Rural Mut., No. 2016AP1837, ¶20.7 

Rural Mutual filed a motion to reconsider, which was denied. 

Rural Mutual then petitioned this court for review. 

II. STANDARD OF REVIEW 

¶9 We review a decision on summary judgment using the 

same methodology as the circuit court. Green Spring Farms v. 

Kersten, 136 Wis. 2d 304, 314-15, 401 N.W.2d 816 (1987). 

Summary judgment shall be granted where the record demonstrates 

 

7 However, in a footnote, the court of appeals stated that 

if it had reached the issue, it would have concluded that Wis. 

Stat. § 895.447 did not void the subrogation waiver. Rural 

Mut., No. 2016AP1837, ¶23 n.6. The court of appeals observed 

that the subrogation waiver does not limit Herman from 

recovering against Lester Buildings in all circumstances. Id. 

Instead, it limits Herman from recovering damages from Lester 

Buildings that were covered by insurance and limits recovery by 

the insurer for damages paid under the insurance policy. Id. 

For example, the court of appeals discerned that if the collapse 

was not covered by an insurance policy, there would be no limit 

on Lester Buildings' tort liability. Id. 
No. 2016AP1837 

7 

"that there is no genuine issue as to any material fact and that 

the moving party is entitled to a judgment as a matter of law." 

Wis. Stat. § 802.08(2). The facts related to this issue are not 

in dispute and therefore only questions of law remain. 

Statutory interpretation and the interpretation of an insurance 

policy present questions of law that this court reviews de novo. 

Mau v. North Dakota Ins. Reserve Fund, 2001 WI 134, ¶¶12, 28, 

248 Wis. 2d 1031, 637 N.W.2d 45. 

III. ANALYSIS 

¶10 This case involves the validity of a subrogation 

waiver contained in Lester Buildings' contract with Rural 

Mutual's insured, Herman. The Contractors argue that Rural 

Mutual's subrogation claims are entirely precluded by the 

subrogation waiver in Lester Buildings' contract with Herman. 

Rural Mutual asserts that Wis. Stat. § 895.447 voids the 

subrogation waiver. In the alternative, Rural Mutual asserts 

that the subrogation waiver is an unenforceable exculpatory 

contract contrary to public policy.8 

A. Wisconsin Stat. § 895.447 does not void the 

subrogation waiver. 

¶11 We first interpret Wis. Stat. § 895.447 to determine 

whether it voids the subrogation waiver. Statutory 

interpretation begins with the language of the statute and if 

the meaning is plain, the inquiry ordinarily ends. State ex 

 

8 Rural Mutual concedes that if the subrogation waiver is 

valid, all of its claims would be extinguished. 
No. 2016AP1837 

8 

rel. Kalal v. Circuit Court for Dane Cty., 2004 WI 58, ¶45, 271 

Wis. 2d 633, 681 N.W.2d 110. "A statute's purpose or scope may 

be readily apparent from its plain language or its relationship 

to surrounding or closely-related statutes——that is, from its 

context or the structure of the statute as a coherent whole." 

Id., ¶49. 

¶12 We begin with an examination of the plain language of 

Wis. Stat. § 895.447, which reads: 

Any provision to limit or eliminate tort 

liability as a part of or in connection with any 

contract, covenant or agreement relating to the 

construction, alteration, repair or maintenance of a 

building, structure, or other work related to 

construction, including any moving, demolition or 

excavation, is against public policy and void. 

(Emphasis added.) Neither § 895.447 nor surrounding statutes 

define the term "tort liability." "Statutory language is given 

its common, ordinary, and accepted meaning, except that 

technical or specially defined words or phrases are given their 

technical or special definitional meaning." Kalal, 271 Wis. 2d 

633, ¶45. "Technical terms or legal terms of art appearing in a 

statute are given their accepted technical or legal 

definitions . . . ." See Bosco v. LIRC, 2004 WI 77, ¶23, 272 

Wis. 2d 586, 681 N.W.2d 157; see also Wis. Stat. § 990.01(1). 

¶13 The dispute lies in whether the subrogation waiver 

here limits or eliminates "tort liability" and is therefore 

void. Due to the absence of a statutory definition for the 

legal term "tort liability," we look to Black's Law Dictionary 

for assistance. A "tort" is defined as a "civil wrong . . . for 
No. 2016AP1837 

9 

which a remedy may be obtained." Tort, Black's Law Dictionary 

1717 (10th ed. 2014); see also Curda-Derickson v. Derickson, 

2003 WI App 167, ¶17, 266 Wis. 2d 453, 668 N.W.2d 736 (citing to 

Black's Law Dictionary for the definition of tort). "Liability" 

is defined as "[t]he quality, state, or condition of being 

legally obligated or accountable; legal responsibility to 

another or to society, enforceable by civil remedy or criminal 

punishment." Liability, Black's Law Dictionary 1053 (10th ed. 

2014). Taken together, "tort liability" is the legal obligation 

or responsibility to another resulting from a civil wrong or 

injury for which a remedy may be obtained.9 

¶14 Rural Mutual selectively reads the words "waive all 

rights against each other" together with the words 

"notwithstanding allegations of fault, negligence, or 

indemnity," in the Lester Buildings' contract and concludes that 

this language eliminates tort liability in violation of Wis. 

Stat. § 895.447. The subrogation waiver must be read in its 

entirety, however, to understand exactly what is being waived: 

"Both parties waive all rights against each other . . . for 

recovery of any damages . . . to the extent covered by property 

insurance . . . . This waiver of subrogation shall be effective 

 

9 The Supreme Court of Michigan recently took a similar 

approach in defining the term "tort liability" when there was no 

statutory definition or case law defining the term. See In re 

Bradley Estate, 835 N.W.2d 545, 555 (Mich. 2013). 
No. 2016AP1837 

10 

notwithstanding allegations of fault, negligence, or indemnity 

obligation of any party . . . ." (Emphasis added.)10

¶15 The subrogation waiver does not limit or eliminate the 

legal responsibility of the Contractors to Herman for the 

collapse of Herman's barn. The Contractors and any other 

subcontractors or suppliers who constructed the barn are still 

liable to Herman for their negligent acts.11 Instead, the 

subrogation waiver waives Herman's right to recover damages from 

the Contractors for their wrongful acts to the extent those 

damages are covered by a property insurance policy such as the 

one between Herman and Rural Mutual. Responsibility for payment 

of damages, the remedy for tort liability, has shifted from the 

Contractors to Rural Mutual.12 The dissent improperly equates 

collection of damages with liability and asserts that if Herman 

cannot collect all of its damages from the Contractors, then the 

 

10 Contrary to Rural Mutual's assertion, the language 

"notwithstanding [any] allegations of fault, negligence, or 

indemnity" does not broaden the subrogation waiver; rather, it 

is illustrative of the types of claims that may be brought. 

11 The waiver stated that Lester Buildings and Herman "waive 

all rights against each other and any of their respective 

contractors, subcontractors and suppliers of any tier" and do so 

"notwithstanding allegations of fault, negligence . . . ." The 

waiver therefore unambiguously applies to all of the 

"contractors, subcontractors and suppliers of any tier." As a 

contractor to Herman, Van Wyks was included within this 

provision. 

12 Tort liability, "the legal obligation or responsibility 

to another resulting from a civil wrong or injury for which a 

remedy may be obtained," does not specify from whom the remedy 

may be obtained. 
No. 2016AP1837 

11 

Contractors' liability is limited.13 However, the Contractors 

could be 100 percent liable for wrongful conduct but, based on 

the subrogation waiver expressly allowed by Rural Mutual's 

policy, Rural Mutual could be responsible for paying damages to 

Herman for property loss. 

¶16 Moreover, the remedy that may be obtained as a result 

of the Contractors' civil wrong is not limited because Herman 

may still recover damages that are not covered by its policy 

with Rural Mutual, including any deductibles applicable to its 

losses.14 In fact, Herman pursued and ultimately resolved its 

claims against the Contractors for uncovered losses they 

allegedly caused.15 

¶17 Lastly, we examine prior case law interpreting Wis. 

Stat. § 895.447 to corroborate its plain meaning. See Legue v. 

City of Racine, 2014 WI 92, ¶61, 357 Wis. 2d 50, 849 N.W.2d 837; 

Force ex rel. Welcenbach v. American Family Mut. Ins. Co., 2014 

WI 82, ¶31, 356 Wis. 2d 582, 850 N.W.2d 866. Only one case has 

applied the plain language of Wis. Stat. § 895.447, Gerdmann, 

 

13 The dissent writes: "[o]f course the Contractors' tort 

liability to Herman is limited——the subrogation clause made it 

responsible for only 20 percent of the damage it caused." 

Dissent, ¶39. 

14 The subrogation waiver provides an exception for rights 

to the proceeds of the property insurance and, as necessary, to 

recover amounts relating to deductibles. 

15 Herman was ultimately made whole through a combination of 

its policy with Rural Mutual and its ability to sue the 

Contractors for damages not covered by that policy. 
No. 2016AP1837 

12 

119 Wis. 2d 367, and it supports our conclusion regarding the 

subrogation waiver at issue. In Gerdmann, the court of appeals 

held that an indemnity clause between Roen, a contractor, and 

Manitowoc, the property owner, was not void under Wis. Stat. 

§ 895.49, the statutory precursor to § 895.447.16 Gerdmann, 119 

Wis. 2d at 374. The Gerdmann court reasoned that the indemnity 

agreement at issue "neither limits nor eliminates Manitowoc's 

tort liability to third parties [Gerdmann]. Rather, it makes 

Roen the insurer should damages result." Id. The Gerdmann 

court relied on this court's decision in Dykstra, 100 

Wis. 2d 120, which upheld an indemnification agreement executed 

prior to the codification of the precursor to § 895.447. In a 

footnote the court stated: "[w]e note in passing, however, that 

 

16 The indemnity agreement in Gerdmann read: 

Contractor shall indemnify the Owner and Engineer 

against and hold the Owner and Engineer harmless from 

any and all liability for damages on account of 

injury, including death, to persons, including 

employees of Contractor, or damage to property 

resulting from or arising out of or in any way 

connected with the performance of work under this 

Contract by Contractor or any Subcontractor. In 

addition, Contractor shall reimburse Owner for all 

costs, expenses, and loss incurred by them in 

consequence of any claims, demands, and causes of 

action, whether meritorious or not, which may be 

brought against them and arising out of the operations 

covered by the Contract. . . . Contractor shall pay 

any costs, including Attorney's fees, that may be 

incurred by Owner in enforcing this indemnity. . . . 

Gerdmann v. United States Fire Ins. Co., 119 Wis. 2d 367, 374, 

350 N.W.2d 730 (Ct. App. 1984). 
No. 2016AP1837 

13 

it does not appear that this statute [§ 895.447] necessarily 

outlaws indemnity agreements of the kind with which this opinion 

is concerned." Dykstra, 100 Wis. 2d at 130 n.4. The Gerdmann 

court characterized this court's observation in Dykstra as 

"important" because it indicated that this court "did not 

believe that the statute clearly voids such indemnity 

agreements." Gerdmann, 119 Wis. 2d at 374. As in Gerdmann, the 

subrogation waiver neither limits nor eliminates the 

Contractors' tort liability, it simply makes Rural Mutual the 

insurer should property damage result. Therefore, we conclude 

that § 895.447 does not void the subrogation waiver here because 

it does not limit or eliminate tort liability. 

B. The subrogation waiver does not relieve a party from 

liability for harm caused by its own negligence and therefore it 

is not an unenforceable exculpatory contract. 

¶18 Rural Mutual asserts that the subrogation waiver is an 

unenforceable exculpatory contract that is contrary to public 

policy. While Rural Mutual did not brief this argument to the 

court of appeals, we will nonetheless consider it.17 To the 

extent that Rural Mutual argues that Wisconsin law prohibits the 

enforcement of exculpatory contracts for reckless conduct, there 

is no evidence in the record to establish reckless conduct on 

 

17 See e.g., Hopper v. City of Madison, 79 Wis. 2d 120, 137, 

256 N.W.2d 139 (1977) (noting that whether this court will 

consider an issue not raised before the circuit court "depends 

upon the facts and circumstances of each case."). 
No. 2016AP1837 

14 

the part of the Contractors, and therefore we will not reach 

that issue.18 

¶19 In Merten v. Nathan, 108 Wis. 2d 205, 210, 321 

N.W.2d 173 (1982), we defined an exculpatory contract as one 

which "relieve[s] a party from liability for harm caused by his 

or her own negligence." In its oral ruling in this case, the 

circuit court held that the subrogation waiver was not an allencompassing avoidance of liability and therefore did not meet 

the definition of an exculpatory contract.19 The circuit court 

relied upon Rainbow Country Rentals & Retail, Inc. v. Ameritech 

Publishing, Inc., 2005 WI 153, 286 Wis. 2d 170, 706 N.W.2d 95, 

where this court held that a contract restricting recoverable 

damages, but not releasing a party from liability, did not meet 

the operational definition of an exculpatory contract. 

¶20 We agree with the circuit court's conclusion. As 

detailed above, the subrogation waiver in this case did not 

exculpate the Contractors from liability, it merely shifted the 

responsibility for payment of damages. If the Contractors were 

negligent or otherwise at fault, the subrogation waiver shifted 

recovery of damages for property loss to Herman's insurer, Rural 

 

18 We decline to answer a question unsupported by the facts 

of the case or to render an advisory opinion on an issue that is 

not ripe for adjudication. See Tammi v. Porsche Cars N. Am., 

Inc., 2009 WI 83, ¶3, 320 Wis. 2d 45, 768 N.W.2d 783. 

19 The circuit court also relied on the equal bargaining 

positions of the parties; however, we can identify no authority 

to support the consideration of bargaining positions when 

deciding if a contract meets the definition of exculpatory. 
No. 2016AP1837 

15 

Mutual, only to the extent covered by Herman's policy with Rural 

Mutual. Herman could still recover damages not covered by its 

policy with Rural Mutual from the Contractors, including any 

deductibles. 

¶21 We also observe that the court of appeals rejected a 

public policy challenge to a contractual subrogation waiver in a 

similar situation involving sophisticated parties where the 

waiver was expressly authorized by the insurer in its policy. 

See Factory Mut. Ins. Co. v. Citizens Ins. Co. of America, 2006 

WI App 16, ¶20, 288 Wis. 2d 730, 709 N.W.2d 82. Here, Rural 

Mutual expressly anticipated and allowed for this outcome, as 

evidenced by its policy language permitting Herman to "waive 

[its] right of recovery in writing before a loss occurs without 

voiding the coverage." Rural Mutual received a benefit, in the 

form of premium payments, for expressly allowing its insured to 

allocate risk in this way. We will not rewrite Rural Mutual's 

policy to exonerate it from a risk that it contemplated and for 

which it received a premium. See Algrem v. Nowlan, 37 

Wis. 2d 70, 79, 154 N.W.2d 217 (1967) ("'when parties to a 

contract adopt a provision . . . which contains no element of 

ambiguity, the court has no right, by a process of 

interpretation to relieve one of them from any disadvantageous 

terms which [it] has actually made'") (quoted source omitted). 

¶22 The subrogation waiver in this case does not immunize 

the allegedly negligent parties from liability or require the 

injured party to go uncompensated, and thus it is not an 

unenforceable exculpatory contract contrary to public policy. 
No. 2016AP1837 

16 

IV. CONCLUSION 

¶23 We conclude that Wis. Stat. § 895.447 does not void 

the subrogation waiver in Lester Buildings' contract because the 

waiver does not limit or eliminate tort liability. We also 

conclude that the subrogation waiver is not an unenforceable 

exculpatory contract contrary to public policy. We therefore 

affirm the court of appeals and uphold the grant of summary 

judgment. 

By the Court.—The decision of the court of appeals is 

affirmed. 

¶24 SHIRLEY S. ABRAHAMSON, J., withdrew from 

participation. 

¶25 ANNETTE KINGSLAND ZIEGLER, J., did not participate. 
No. 2016AP1837.dk 

1 

¶26 DANIEL KELLY, J. (dissenting). The court's error is 

really pretty simple. Where the Legislature said that a 

contract may not limit a tortfeasor's liability, the court heard 

that a contract may not limit the victim's right to be made 

whole. These are not the same things. Because the court said 

they are, I respectfully dissent. 

¶27 Demonstrating where the court's analysis stopped 

tracking Wis. Stat. § 895.447 requires some table-setting. So 

I'll start with the central parties and some hypothetical 

numbers. Jim Herman, Inc. ("Herman") hired Lester Buildings, 

LLC, and others ("the Contractors") to build a barn. The barn 

failed because of the Contractors' (alleged) negligence, causing 

Herman significant damages. Rural Mutual Insurance Company 

("Rural") paid Herman for most of the damage he suffered, and 

the Contractors paid the balance. For the sake of simplicity, 

I'll say the total damages were $100,000, Rural paid $80,000 of 

that, and because of the contract clause at issue in this case, 

the Contractors paid $20,000. 

¶28 Next we need to know what we mean when we talk about 

"tort liability." The court provided a workable definition——it 

is "the legal obligation or responsibility to another resulting 

from a civil wrong or injury for which a remedy may be 

obtained." Majority op., ¶13. In this case, therefore, when we 

speak of tort liability we are speaking of "[the Contractors'] 

legal obligation or responsibility to [Herman] resulting from a 

civil wrong or injury for which a remedy may be obtained." Id. 

That is to say, we look at this from the perspective of what the 

Contractors owe Herman for their tortious behavior. 
No. 2016AP1837.dk 

2 

¶29 Now we are ready to assess the contract's impact on 

the tort liability involved in this case. Without Rural's 

insurance payment and the contract's subrogation waiver, the 

Contractors would be liable to Herman for $100,000. But with 

the insurance payment and subrogation waiver, the Contractors 

are liable to Herman for only $20,000. In either scenario, 

Herman still receives $100,000. The question is whether the 

latter scenario represents the limitation or elimination of tort 

liability. 

¶30 The court sees no difference in tort liability between 

these two scenarios. In fact, it says "[t] he subrogation 

waiver does not limit or eliminate the legal responsibility of 

the Contractors to Herman for the collapse of Herman's barn. 

The Contractors and any other subcontractors or suppliers who 

constructed the barn are still liable to Herman for their 

negligent acts." Id., ¶15 (footnote omitted). But how can that 

be true if the duty to pay Herman has decreased from $100,000 to 

$20,000? The court does not explain, but does give some insight 

into the nature of its error. 

¶31 I think the court's misunderstanding stems from the 

following four errors: (1) its basic misunderstanding of tort 

law; (2) its failure to distinguish between casualty insurance 

policies and commercial general liability ("CGL") insurance 

policies; (3) its conflation of contract and tort liability; and 

(4) its shift in focus from liability to wholeness. 

¶32 The court's first error goes to the very concept of 

torts. The raison d'être of tort law is holding tortfeasors 

responsible for the damages they cause. The court, however, 
No. 2016AP1837.dk 

3 

isn't so sure. It says: "Tort liability, 'the legal obligation 

or responsibility to another resulting from a civil wrong or 

injury for which a remedy may be obtained,' does not specify 

from whom the remedy may be obtained." Id., ¶15 n.12. Yes, 

actually it does. The remedy may be obtained from the 

tortfeasor. The court's own definition of "tort liability" 

should have informed it that we really do know the identity of 

the one against whom a remedy may be had. The "legal 

obligation" and the "remedy" to which the court refers are 

reciprocals. The one with the right to a remedy is the one to 

whom the legal obligation is owed. Inversely, the one with a 

legal obligation owes it to the one with a remedy. So if a 

civil wrong gives rise to a legal obligation to someone else, 

the "someone else" is the person who has the right to pursue the 

remedy. And that person may pursue the remedy against the one 

who owes the legal obligation. So the court cannot maintain its 

definition of "tort liability" while professing agnosticism 

about the target of the remedy. 

¶33 We used to know this. "An individual is personally 

responsible for his own tortious conduct." Oxmans' Erwin Meat 

Co. v. Blacketer, 86 Wis. 2d 683, 692, 273 N.W.2d 285 (1979). 

That is to say, the injured person has a remedy against the 

tortfeasor. We have recognized this as a basic proposition as 

recently as 2001: "It is a basic principle of law, as well as 

common sense, that one is typically liable only for his or her 

own acts, not the acts of others." Lewis v. Physicians Ins. Co. 

of Wisconsin, 2001 WI 60, ¶11, 243 Wis. 2d 648, 627 N.W.2d 484 

(footnote omitted). For what is a tortfeasor liable? Damages, 
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of course: "Tort law has generally been viewed as serving three 

broad social purposes: (1) as a matter of justice, tort law 

shifts the losses caused by a personal injury to the one at 

fault . . . ." CLL Assocs. Ltd. P'ship v. Arrowhead Pac. Corp., 

174 Wis. 2d 604, 610, 497 N.W.2d 115 (1993) (emphasis added). 

The tortfeasor's responsibility for the damages he causes is so 

basic that over a century ago Justice Oliver Wendell Holmes 

thought we were all agreed on this proposition. "I assume that 

common-sense is opposed to making one man pay for another man's 

wrong, unless he actually has brought the wrong to pass 

according to the ordinary canons of legal responsibility." 

Oliver Wendell Holmes Jr., Agency, 5 Harv. L. Rev. 1, 14 (1891). 

¶34 Although we used to know this, we have apparently 

forgotten. So now we say that "the Contractors could be 100 

percent liable for wrongful conduct but . . . Rural Mutual could 

be responsible for paying damages to Herman for property loss." 

Majority op., ¶15.1 What would Justice Holmes say about this? 

He would say "I assume that common-sense is opposed to making 

[Rural] pay for [the Contractors'] wrong, unless [Rural] 

actually has brought the wrong to pass according to the ordinary 

canons of legal responsibility." Holmes, supra at 14. We used 

to say the same thing. See Oxmans' Erwin Meat Co., 86 

Wis. 2d at 692; CLL Assocs. Ltd. P'ship, 174 Wis. 2d at 610. 

 

1 The phrase I elided from my quote of the court's opinion 

was this: "based on the subrogation waiver expressly allowed by 

Rural Mutual's policy . . . ." Majority op., ¶15. The efficacy 

of that waiver depends on the enforceability of the subrogation 

waiver. If Wis. Stat. § 895.447 invalidates the subrogation 

waiver, then the fact that the policy allows for such a waiver 

is entirely irrelevant. 
No. 2016AP1837.dk 

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¶35 The court's second through fourth errors all fluoresce 

in this single sentence: "Responsibility for payment of 

damages, the remedy for tort liability, has shifted from the 

Contractors to Rural Mutual." Majority op., ¶15. The court's 

second error was conflating casualty and CGL insurance policies. 

CGL policies insure against, inter alia, the insured's tort 

liability. Casualty policies, generally speaking, pay for loss 

without respect to anyone's tort liability. So when the court 

casually says the responsibility to pay for Herman's losses 

"shifted" from the Contractors to Rural, it means that a 

casualty insurer, instead of a CGL insurer, was responsible for 

paying for the loss. This is significant because a casualty 

insurer does not promise to pay for someone's torts; it promises 

to pay for property loss. So payments made pursuant to Rural's 

policy have nothing to do with tort liability. The court's 

error on this point feeds directly into its third error——the 

failure to distinguish between tort and contract liability. 

¶36 To accurately determine whether the subrogation clause 

limited tort liability, we must account for the nature of the 

obligations that brought $100,000 into Herman's hands. Rural 

paid $80,000 to Herman. But it did not do so because it 

committed a tort against Herman. It did so because it issued a 

casualty insurance policy in which it promised to pay Herman for 

certain property losses. In other words, Rural was liable to 

Herman in contract, not tort. The Contractors, on the other 

hand, paid $20,000 based on their tort liability to Herman. So 

Herman received $80,000 based on contract liability and $20,000 

based on tort liability. Therefore, by "shifting" to Rural the 
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Contractor's responsibility to pay Herman for the damage it 

caused, the subrogation clause converted $80,000 of tort 

liability into contract liability. So the court's statement 

that "[t]he Contractors could therefore be 100 percent liable 

for wrongful conduct but, based on the subrogation waiver 

expressly allowed by Rural Mutual's policy, Rural Mutual could 

be responsible for paying damages to Herman for property loss" 

cannot possibly be true. Majority op., ¶15. The "shift" made 

the Contractors only 20 percent liable for their tort. 

¶37 The court says this conclusion is a result of my 

mistaken equation of "tort liability" and "damages": "The 

dissent improperly equates collection of damages with liability 

and asserts that if Herman cannot collect all of its damages 

from the Contractors, then the Contractors' liability is 

limited."2 Id. But I made no such equation. All I have done is 

repeat the age-old understanding that there is a necessary and 

inextricable link between tort liability and damages. It is 

necessary and inextricable because "damages" are part of the 

very definition of a tort. "Tort claims comprise the familiar 

elements of duty, breach, causation, and damage." Springer v. 

Nohl Elec. Prod. Corp., 2018 WI 48, ¶36, 381 Wis. 2d 438, 912 

N.W.2d 1; see also United States v. Burke, 504 U.S. 229, 234 

(1992) ("A 'tort' has been defined broadly as a 'civil wrong, 

 

2 This statement is actually a little ironic because it is 

the court's focus on Herman's ability to collect rather than the 

Contractor's liability to pay that forms one of its fundamental 

errors. See infra, ¶14. My analysis has nothing to do with 

anyone's ability to collect anything. It is entirely about the 

tortfeasor's legal obligation to pay. 
No. 2016AP1837.dk 

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other than breach of contract, for which the court will provide 

a remedy in the form of an action for damages.'") (quoted source 

omitted); Anderson v. Green Bay & W.R.R., 99 Wis. 2d 514, 516, 

299 N.W.2d 615 (Ct. App. 1980) ("Before a cause of action for 

negligence can be successfully alleged, there must exist a duty 

of care on the part of the defendant, a breach of that duty, a 

causal connection between the conduct and the injury, and an 

actual loss or damage as a result of the injury.") (footnote 

omitted); and Coffey v. City of Milwaukee, 74 Wis. 2d 526, 531, 

247 N.W.2d 132 (1976) ("In order to constitute a cause of action 

for negligence there must exist: (1) A duty of care on the part 

of the defendant; (2) a breach of that duty; (3) a causal 

connection between the conduct and the injury; and (4) an actual 

loss or damage as a result of the injury."). 

¶38 So there can be no tort liability without damages. 

And as the court's own definition says, to be liable for a tort 

means to owe a "legal obligation or responsibility" to the 

injured party. What is the nature of that "obligation or 

responsibility"? To pay damages. And if the person is relieved 

of the responsibility for some of those damages, it necessarily 

follows that his tort liability has been, in the words of the 
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statute, "limited."3 And this has nothing to do with Herman's 

collection of damages; it relates entirely to the tortfeasor's 

liability for them, which leads to the court's fourth error. 

¶39 The court's analysis is inaccurate because the 

provisions of Wis. Stat. § 895.447 are directed at the 

Contractors and their liability, whereas the court is focused on 

Herman and its wholeness. The statute does not prohibit 

contract clauses that prevent a tort victim from being made 

whole. It prohibits contract provisions that limit or eliminate 

the tortfeasor's liability. The court sees no difference 

between the two, which is why it can say "the remedy that may be 

obtained as a result of the Contractors' civil wrong is not 

limited because Herman may still recover damages that are not 

covered by its policy with Rural Mutual." Majority op., ¶16. 

 

3 Neither Gerdmann v. United States Fire Ins. Co., 119 

Wis. 2d 367, 350 N.W.2d 730 (Ct. App. 1984), nor Dykstra v. 

Arthur G. McKee & Co., 100 Wis. 2d 120, 301 N.W.2d 201 (1981), 

support the majority's position. Nor are they inconsistent with 

mine. Both the Gerdmann and Dykstra courts addressed indemnity 

agreements, not subrogation waivers. In an indemnity agreement, 

one contracting party stands in relation to the other as an 

insurer of tort liability, as does an insurer who issues a CGL 

policy. A tortfeasor with a CGL policy is still entirely liable 

to the injured party for damages; the insurance policy simply 

makes a contracted-for pool of resources available to satisfy 

the judgment. An indemnity agreement performs largely the same 

function——that is, it does not shift liability, it just makes 

someone else's resources available to satisfy the judgment. We 

know Wis. Stat. § 895.447 does not forbid insurance for tort 

liability because the statute says so: "This section does not 

apply to any insurance contract." § 895.447(2). On the other 

hand, a subrogation waiver is not an agreement to act as the 

tortfeasor's liability insurer. It simply eliminates part of 

the tortfeasor's legal responsibility to pay damages to the 

injured party. 
No. 2016AP1837.dk 

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Of course the Contractors' tort liability to Herman is limited——

the subrogation clause made it responsible for only 20 percent 

of the damage it caused. That is the statute's focus, not 

Herman's full recovery. Yes, Herman can turn to its own 

casualty insurer to obtain a contract-based recovery for its 

loss. But the statute has nothing to say about that. The 

statute says the construction contract may not limit the 

Contractors' tort-based liability to Herman. By "shifting" 

responsibility for its tort liability to Herman's casualty 

insurer, the subrogation clause quite obviously limited the 

Contractors' tort-based liability to Herman. 

¶40 Finally, there is this. The court does not explain 

what Wis. Stat. § 895.447 actually does. Presumably, the court 

would agree that the statute must prohibit some type of 

contractual provision that operates against one of the four 

elements of a tort (duty, breach, causation, damage). It 

concludes today that the statute does not refer to provisions 

that reduce the tortfeasor's legal obligation to pay damages to 

the victim. But it says nothing about which tort element the 

statute does immunize against contractual revision. For all of 

these reasons, I respectfully dissent. 

¶41 I am authorized to state that Justice ANN WALSH 

BRADLEY joins this dissent. 
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