Gonzalez v. City of Franklin

• Decision Date: 10 April 1987
• Docket Number: No. 84-1733,84-1733
• Citation: 403 N.W.2d 747,137 Wis.2d 109
• Parties: Miguel GONZALEZ, Sr., Esperanza Gonzalez and Miguel Gonzalez, Jr., by his Guardian ad Litem, Robert H. Bichler, Plaintiffs-Respondents and Cross-Appellants-Petitioners, v. The CITY OF FRANKLIN, a municipal corporation, and The Home Indemnity Company, an insurance corporation, Defendants-Appellants, Cross-Respondents and Cross-Petitioners.
• Court: Wisconsin Supreme Court

Page 747

403 N.W.2d 747

137 Wis.2d 109

Miguel GONZALEZ, Sr., Esperanza Gonzalez and Miguel

Gonzalez, Jr., by his Guardian ad Litem, Robert H.

Bichler, Plaintiffs-Respondents and Cross-Appellants-Petitioners, v. The CITY OF FRANKLIN, a municipal corporation, and The Home

Indemnity Company, an insurance corporation,

Defendants-Appellants, Cross-Respondents

and Cross-Petitioners.

No. 84-1733.

Supreme Court of Wisconsin.

Argued March 2, 1987.

Decided April 10, 1987.

Robert H. Bichler argued, and Thompson & Coates, Ltd., Racine, for plaintiffs-respondents and cross-appellants-petitioners.

Rocke A. Calvelli argued, Douglas H. Starck argued, and Prosser, Wiedabach & Quale, S.C., Milwaukee, for defendants-appellants, cross-respondents and cross-petitioners.

CECI, Justice.

This is a review of a decision of the court of appeals, Gonzalez v. City of Franklin, 128 Wis.2d 485, 383 N.W.2d 907 (Ct.App.1986), which reversed, in part, a judgment of the circuit court for Racine county, Karl Peplau, Reserve Judge, awarding $500,000 in damages to members of the Gonzalez family. The trial court judgment was entered against the city of Franklin and its insurer, The Home Indemnity Company. The appeals court reduced the $500,000 award, holding that recovery was limited by Section 893.80(3), Stats., ¹ to $50,000 per plaintiff. The appellate court further held that the city of Franklin (City) had not waived the statutorily imposed municipal liability limit of $50,000 simply by contracting with The Home Indemnity Company (Home Indemnity) for insurance coverage in excess of the statutory limit. The plaintiffs in the trial court (Miguel Gonzalez, Sr., Esperanza Gonzalez, and Miguel Gonzalez, Jr. by his guardian ad litem, Robert H. Bichler) petitioned this court for review of the appeals court decision, which petition was granted on June 10, 1986.

Two issues are raised pursuant to the petition of the Gonzalez family (the Gonzalez):

(1) Despite the existence of a $50,000 per person statutory cap of municipal liability protecting the City, may the Gonzalez recover directly from the liability insurer, Home Indemnity, in an amount in excess of the liability limits placed on the insured, the City; and

(2) Did the City implicitly waive the $50,000 per person liability cap by contracting with Home Indemnity for insurance coverage in excess of the statutory cap, when the applicable insurance policy states that persons injured in Wisconsin will be entitled to recover "to the extent of the insurance afforded by this policy"?

The City and Home Indemnity petitioned this court for cross-review of the remainder of the appeals court decision which affirmed various evidentiary rulings of the trial court as well as the jury determination of liability, which apportioned 100 per cent of the causal negligence to the City. The petition for cross-review was also granted on June 10, 1986.

We affirm the decision of the court of appeals on both the issue dealing with direct recovery against the insurer for an amount in excess of the statutory liability limits and the waiver issue. We further affirm the appeals court's disposition of the remaining issues, each of which will be discussed in more detail below. We now turn to the facts of this case.

I.

On August 1, 1982, the Gonzalez family went to Lions Legend Park, a park owned by the City, to celebrate Miguel, Jr.'s seventh birthday. While at the park, Miguel, Jr. found a ball-like object on the ground, which he believed to be a smoke bomb. He picked up the ball and took it home with him when his family left the park for the day. The boy hid the ball from his parents, believing that his parents would confiscate it if they knew he had it. Once home, again without his parents' knowledge, Miguel, Jr. attempted to ignite the object with matches. When that failed, he obtained a cigarette lighter from the Gonzalez home and used it to ignite the ball. By this time, Miguel, Sr. noticed what his son had done. He shouted for the children to stay clear and reached for the ball to throw it out of the way. However, it exploded as he was reaching for it. Miguel, Sr. lost his right hand as a result of the explosion, and Miguel, Jr. suffered an open fracture of his right leg and serious burns on both his legs and body.

The explosive device had apparently been left over from a Fourth of July fireworks display sponsored by the City in Lions Legend Park. The fireworks display had been staged by Galaxy Fireworks Manufacturing Company (Galaxy) pursuant to a contract entered into between it and the City. The fireworks used at the Fourth of July celebration were provided to Galaxy, in part, by Pyro-Science Development Corporation (Pyro). Galaxy representatives, however, were in charge of actually lighting the fireworks.

After the fireworks display, Galaxy employees cleaned and checked the display area for unexploded shells. They raked the fireworks launching pad area and illuminated the area with flashlights and car headlights to aid their observation for stray shells. The Galaxy crew found nothing. Although Galaxy performed a general cleanup of the park area, they did not make any representations, either written or oral, regarding the adequacy of their cleanup efforts. Furthermore, unauthorized fireworks were shot off later that night at the park. In any event, the City conceded that it had full responsibility for the cleanup operation. The following day, a City fire department employee also inspected the area, but again no stray shells were found.

The record does not indicate with any degree of certainty whether the explosive which caused the injuries originated either with Pyro or with Galaxy.

The Gonzalez family brought suit ² on March 16, 1983, against the City; the City's insurer, Home Indemnity; and Galaxy and its insurer. ³ An amended complaint additionally named Pyro as a defendant. The original complaint charged Galaxy with negligence in the preparation and the display of the fireworks program. Galaxy was also charged with negligence in its cleanup efforts after the fireworks display had ended. The City was charged with negligence in the supervision of the fireworks display and the care, supervision and maintenance of the premises both during and after the fireworks program. The claim against Home Indemnity was based upon its direct liability as an insurer to the plaintiffs under Section 632.24, Stats., ⁴ and on a clause in its liability policy which authorized recovery up to the policy amount ($500,000). In the amended complaint, Pyro was charged with negligence in the manufacture, sale, and distribution of the explosive device.

Prior to trial, Pierringer -type releases were executed in favor of defendants Galaxy and Pyro. A jury trial was held on May 7-14, 1984. The jury, in a special verdict, found the City 100 per cent negligent for the plaintiffs' injuries and awarded $694,973.82 in damages, which included $350,000.00 for Miguel, Sr.'s future loss of earning capacity. On June 21, 1984, pursuant to motions after verdict, the trial court approved the jury determination of negligence, but reduced the recovery to conform to the $500,000 liability limit contained in the Home Indemnity policy. ⁵ In so holding the trial court relied heavily upon the terms of the policy. ⁶ The trial court reasoned that, by virtue of the policy language, the insurer expressly agreed to be directly responsible for damages up to the stated $500,000 policy limit in those cases where, as here, the injured parties obtained a judgment against the insured. The court further held that the existence of an insurance policy providing for coverage in excess of the statutory limit, in and of itself, constituted a waiver of the $50,000 limit contained in Section 893.80(3), Stats. The trial court believed that absent an express limitation on liability, the statutory limit was waived. Further, the existence of the insurance contract served to extend the recovery limit to $500,000 per occurrence. Accordingly, the trial court ordered judgment against both the City and Home Indemnity in the amount of $500,000. The City and Home Indemnity appealed from this judgment.

On appeal, the court of appeals reversed the trial court on the limited issue of whether the existence of excess liability coverage operated to waive the $50,000 municipal liability limit contained in Section 893.80(3). It therefore remanded the case for entry of an award of damages which conformed with the statutory limit. The appeals court believed that any inferences of the existence of a waiver were weak at best and, relying on this court's decisions in Marshall v. Green Bay, 18 Wis.2d 496, 118 N.W.2d 715 (1963); Sambs v. Brookfield, 66 Wis.2d 296, 224 N.W.2d 582 (1975); and Stanhope v. Brown County, 90 Wis.2d 823, 280 N.W.2d 711 (1979), held that for waiver to lie, more than "a merely inferential statement of waiver" was required. 128 Wis.2d at 492, 383 N.W.2d 907. The court stated that its interpretation of case law, especially Sambs and Stanhope, indicated to it that a waiver must be "specific or express." Id. at 494, 383 N.W.2d 907. Since the insurance policy made no explicit reference to governmental functions or to the desirability of a waiver, the court held that the policy language did not constitute a waiver of governmental liability limits. It therefore limited plaintiffs' recovery to the statutory limit of $50,000. Plaintiffs petitioned this court for review of that portion of the appeals court decision which so limited the recovery.

The court of appeals also addressed the contention made by the City and Home Indemnity that the trial court had ruled incorrectly on a number of evidentiary challenges raised at trial. For example, the trial court had granted the Gonzalez' motion in limine which prohibited Home Indemnity from introducing evidence which would have identified Miguel, Sr. as an illegal alien. ⁷ The appeals court affirmed the trial court's ruling...