Court Opinion

ID: 7875663
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:08:46.779815+00
Date Added: 2024-06-11T16:31:23.242411
License: Public Domain

FOLEY, Judge
(dissenting).
I respectfully dissent. In my view, the trial court’s attempt to reconcile the jury’s apportionment of fault in the special verdict was erroneous as a matter of law.
The majority holds that the negligence of Palmer and Cornell, Incorporated (Palmer & Cornell) was properly imputed to Fidelity since a principal is vicariously liable for the torts of its agents while acting within the scope of their authority. With all due respect, I think this result merely exalts form over substance and glosses over the effect of the Pierringer release here.
Despite Fidelity’s concession prior to and throughout the trial that Palmer & Cornell was its agent and was acting within the scope of its authority during negotiations with Reedon, the majority construes the Pierringer release as a discharge only of Palmer and Cornell’s liability as individuals. The only evidence in the case with respect to conduct by Palmer & Cornell, as it related to insurance coverage, was that as agent for Fidelity, a conceded fact. There was no independent conduct by Ralph Palmer as an individual on this issue.
The question in the special verdict relating to Palmer and Cornell’s individual negligence was erroneously submitted and could have no other effect on the jury except to cause confusion as to the effect of the Pierringer release. The distorted construction of the Pierringer release by the trial court overlooks the general rule that an agent, acting within the scope of his or her authority, is not personally liable on a contract entered into for a known principal. See Kost v. Peterson, 292 Minn. 46, 193 N.W.2d 291 (1971). It is equally settled that “a valid release or exoneration of the servant releases the master, the latter’s liability for a tort committed in the scope of employment being derivative only.” Serr v. Biwabik Concrete Aggregate Co., 202 Minn. 165, 177, 278 N.W. 355, 362 (1938). Further, an agent acting within the scope of authority may be held personally liable for conversion or false representation, neither of which is claimed in this case. See Northwestern Upholstering Co. v. First National Bank & Trust Co., 193 Minn. 333, 258 N.W. 724 (1935) (conversion); Erickson v. Mathwig, 226 Minn. 55, 31 N.W.2d 918 (1948) (fraud).
The Pierringer release in this case is not under attack in the same sense as in Serr, where the defendant sought to set a release aside. Nonetheless, the evidence here plainly established that the only relationship between Palmer & Cornell and Fidelity was that of agent and principal. It acted only as Fidelity’s agent.1 It is well-founded that the theory upon which a case is tried becomes the law of the case. Atlantic Mutual Insurance Co. v. Judd. Co., 380 N.W.2d 122, 124 (Minn.1986).
As the majority illustrates, Pierringer releases operate as “piecemeal” approaches to litigation by allowing a plaintiff to settle with some tortfeasors without destroying the joint liability of parties whose negligence concurs. See Hosley v. Armstrong Cork Co., 383 N.W.2d 289, 292 (Minn.1986); Bixler by Bixler v. J.C. Penney Co. Inc., 376 N.W.2d 209, 215 (Minn.1986). However, settlement in this manner “cannot be done to the prejudice of the remaining non-settling defendants.” Eckblad v. Farm Bureau Mutual Insurance Co., 371 N.W.2d 78, 81 (Minn.Ct.App.1985), pet. for *447rev. denied (Minn. Sept. 26, 1985). I believe such prejudice results here.
Unlike a covenant not to sue which discharges a settling defendant pro tanto from liability and leaves the door open to a contribution claim, see Gronquist v. Olson, 242 Minn. 119, 64 N.W.2d 159 (1954), a settling defendant under a Pierringer release “does not settle for less than his share, but precisely for his share — no less.” Simonett, Release of Joint Tortfeasors: Use of the Pierringer Release in Minnesota, 3 Wm. Mitchell L.Rev. 1, 18 (1977) [hereinafter Pierringer Release]. Since settlement under a Pierringer agreement is not less than the tortfeasor’s “fair share”, he or she is not affected by a subsequent finding of comparative fault. Likewise, a non-settling defendant, as here, is guaranteed that it will never pay more than its share — the percentage of causal negligence attributed to the non-settling defendant at trial. Id. (citing Pierringer v. Roger, 21 Wis.2d 182, 193, 124 N.W.2d 106, 112 (1963). See also Hosley v. Armstrong Cork Co., 364 N.W.2d 813 (Minn.Ct.App.1985), reversed on other grounds, 383. N.W.2d 289 (Minn.1986). In essence, a plaintiff who executes a Pierringer release agrees to indemnify the settling tortfeasor for any amount owed to the non-settling tortfeasor under a contribution judgment. See Pierringer Release at 19-20.
Since Fidelity conceded throughout this case that Palmer & Cornell was its agent and that it acted within the scope of its authority when the events giving rise to the litigation occurred, it logically follows that the Pierringer agreement executed by plaintiff released Palmer & Cornell entirely. Important language in the Pierringer release is as follows:
IN CONSIDERATION of the sum of Fifteen Thousand Dollars ($15,000), receipt of which is hereby acknowledged, the undersigned, Reedon of Faribault, Inc., d/b/a Best Western Galaxie Motor Lodge, does hereby release and forever discharge Palmer and Cornell, Inc., its agents, successors, heirs and assigns, of and from any claims, actions, causes of action, or any claim for loss or damage of any kind or nature whatsoever, which the undersigned now has, or may hereafter have, on account of, or in any way growing out of, any and all known and unknown, foreseen and unforeseen, property damage and personal injuries and consequences thereof, resulting or to result, or arising from or to arise from, the fire which occurred on or about September 25,1982, at or near the Best Western Galaxie Motor Lodge in the City of Fari-bault, County of Rice, State of Minnesota. (Emphasis supplied.)
I emphasize that the release discharges Palmer & Cornell from “any claims.” There were no words or phrases limiting the effect of the release to only personal liability of either Palmer & Cornell or the individual corporate members. If the Pier-ringer release includes a release of any potential claims of negligence by Reedon with respect to the conduct of Palmer & Cornell in contacting other insurance companies relative to coverage, the choice of the language in the release (any claims) selected by the plaintiff must, as a matter of law, be construed to include as well a release of Palmer & Cornell as Fidelity’s agent under the doctrine of vicarious liability, and thus a release of Fidelity under that doctrine.2 Thus, even when the jury found causal negligence against Palmer & Cornell as Fidelity’s agent, Fidelity, under the principles of Pierringer v. Hoger, was given assurance as the non-settling defendant that it would be protected from the effects of actionable negligence of its agent Palmer & Cornell for any uncovered loss sustained by the plaintiff under the doctrine of vicarious liability. As stated by now Justice Simonett in his often cited law review article:
There would not seem, * * * to be any incentive for plaintiff to give defendant A a Pierringer release so as to continue his lawsuit against defendant B alone, if *448B’s exposure is solely vicarious and depends on A being found negligent. To give A a Pierringer release in that situation is also to release B. On the other hand, if B’s status as a true vicarious indemnity is in dispute, plaintiff might chance giving A a modified Pierringer and hope to recover from B by showing B ’s liability is not vicarious.
Pierringer Release at 25 (emphasis supplied).
The majority relies on language in the Pierringer as follows: “The undersigned expressly reserves all its rights to the balance of the whole cause of action arising out of the above event, which it may have against Fidelity and Guaranty Insurance Underwriters, Inc.” The only reasonable construction that can be given to this quoted section of the release is that Reedon, the plaintiff, could pursue a claim against Fidelity for any independent causal negligence apart from the principal/agent relationship.
In addition to the trial court’s interpretation of the Pierringer release is the troubling manner in which the case was submitted to the jury. Although the trial court spends almost three full pages of the transcript instructing the jury on breach of contract, not a single question was asked concerning breach of contract on the special verdict form. The trial court seemingly wanders through the law of contracts, and ends the journey with negligence without any instruction whatever on direct cause, an undeniably crucial element of actionable negligence.
The only possible reconciliation of the verdict, as a matter of law, is to find Fidelity liable for only 45% of the loss, the amount of its independent negligence. The judgment based upon the special verdict is erroneous and should be reversed so as to require Fidelity to pay only this amount.
A copy of the special verdict returned by the jury in this case is attached hereto. I note that in question No. 11 references made to Ralph Palmer could only have been meant to refer to Palmer & Cornell, the corporate entity, since Ralph Palmer only acted as a corporate representative of Palmer & Cornell. The same error was made in the comparative fault question No. 15(c) at the end of the special verdict. The question should have referred to Palmer & Cornell as agent, not Ralph Palmer as agent.
The parties had stipulated that “uncovered losses” of plaintiff amounted to $49,-643.83, which rendered question No. 1 totally unnecessary. The amount of loss sustained by plaintiff was not in issue — the legal cause of loss, however, was vigorously contested. By wording question No. 1 as the trial court did, “damages resulting from inadequate insurance” seems to presuppose a finding of negligence against Fidelity or its agent, when the parties’s stipulation merely referred to “uncovered losses.” These terms have an entirely different meaning, but the jury was not told the difference.3
Upon a total consideration of the case, the judgment should be modified to hold Fidelity liable for only 45% of the uncovered loss.
[[Image here]]
*449[[Image here]]
*450[[Image here]]
*451[[Image here]]

. There is no evidence to suggest that in contacting any other insurance companies relative to coverage for Reedon, Palmer & Cornell committed any negligent acts. It is their conduct as agent for Fidelity that is in issue here.

. If the Pierringer release is ambiguous in any material respect, the document should be construed against the plaintiff, whose counsel drafted it.

. In its instructions, the trial court referred to “uncovered losses” and not "inadequate damages,” the phrase used in question No. 1 of the special verdict.