Hoffmann v. Wiltscheck

• Decision Date: 15 September 1987
• Docket Number: No. C5-87-521,C5-87-521
• Citation: 411 N.W.2d 923
• Parties: Ronald HOFFMANN, Appellant, v. Gene WILTSCHECK, et al., Courtland Truck Center, et al., Respondents.
• Court: Minnesota Court of Appeals

Page 923

411 N.W.2d 923

Ronald HOFFMANN, Appellant, v. Gene WILTSCHECK, et al., Courtland Truck Center, et al.,

Respondents.

No. C5-87-521.

Court of Appeals of Minnesota.

Sept. 15, 1987.

Review Denied Nov. 13, 1987.

Syllabus by the Court

Following settlement and release of an injured party's claim against an active tortfeasor, accompanied by a promise to indemnify the settling defendant for any other claims brought against him, the injured party has no further cause of action against a defendant whose only liability is vicarious, premised on the negligence of the settling tortfeasor.

Ross Muir, Daniel J. Heuel, Rochester, for Hoffmann.

Richard T. Rodenberg, New Ulm, for Wiltscheck, et al.

William M. Schade, New Ulm, for Courtland Truck Center, et al.

Heard, considered and decided by CRIPPEN, P.J., and LESLIE and LOMMEN, ^* JJ.

OPINION

CRIPPEN, Judge.

Based on a Pierringer release of an active tortfeasor, the trial court granted summary judgment in favor of respondent Dave Machau, an alleged owner of the vehicle driven by the settling defendant. We affirm.

FACTS

In August 1983, when appellant Ronald Hoffmann was walking on a county road, he was severely and permanently injured after being struck by a truck driven by Gene Wiltscheck. Oscar Reinhart was the registered owner of the truck, but there is evidence that respondent Dave Machau had become the owner in fact of the vehicle. The record indicates that Machau's ownership arose in the course of doing business as Courtland Truck Center. For purposes of the summary judgment motion, respondent admits he was the owner of the vehicle and admits Wiltscheck was driving the truck at the time of the collision with respondent's consent. ¹

On September 9, 1986, appellant settled his claims against Gene Wiltscheck and Oscar Reinhart for $100,000, the total sum of insurance provided in a policy purchased by Reinhart for the vehicle. In a Pierringer release, appellant agreed he would not prosecute any claim against Wiltscheck, Reinhart or Reinhart's insurer. Appellant agreed that Reinhart and Wiltscheck were

discharged of their liability for contribution with respect to claims of Ronald Hoffmann to the extent of that percentage of their [sic] total claim for damages arising against all parties arising out of the accident of August 7, 1983, which shall hereafter, by further trial or other disposition of this or any other cause of action, be determined to be the percentage of causal negligence or causal responsibility for which Oscar Reinhart and/or Gene Wiltscheck are found to be liable.

In addition, the Pierringer release contained the following agreement for appellant's indemnification of Reinhart and Wiltscheck:

Ronald Hoffmann specifically agrees to hold Oscar Reinhart and Gene Wiltscheck harmless and specifically agrees to indemnify them from any claims, demands, or cause of action by David Machau and Courtland Truck Center for apportionment in District Court proceedings in Brown County District Court by way of contribution or indemnification whether such claim is alleged to arise by reason of judgment, settlement or otherwise.

The parties to the Pierringer release stated an intention to preserve appellant's claims against David Machau. The agreement provided:

This Pierringer Release and Indemnity Agreement is not entered into, nor in any way intended, to release any claim or cause of action by Ronald Hoffmann against David Machau or Courtland Truck Center or any other person, firms, contributions or entities except Oscar Reinhart and Gene Wiltscheck for damages sustained as a result of the August 7, 1983, accident.

There is evidence that David Machau's business carried a fleet policy of insurance providing $300,000 liability coverage for all owned vehicles. There is also evidence that appellant suffered damages much greater than the amount received in his settlement with Wiltscheck and Reinhart. Shortly after learning of the September settlement, however, respondent Machau moved for summary judgment, claiming that appellant's release agreement with Wiltscheck and Reinhart destroyed appellant's cause of action against Machau. On October 16, 1986, the trial court granted summary judgment for respondent.

The trial court adopted respondent's rationale:

Whatever judgment [appellant] obtains against him [Machau], he may recover from Wiltscheck by way of his right to indemnity and whatever Wiltscheck must pay him as indemnity [appellant] must pay to Wiltscheck by reason of the release.

The trial court observed that Machau's liability was wholly vicarious--that he was "only liable to the extent of Wiltscheck's liability." ² The court further noted that the parties to the release could not deny Machau his right for indemnification from Wiltscheck. The court noted that any liability of Machau for damages would necessarily deny him his right of indemnification.

The trial court denied appellant's motion to reconsider and vacate its order for summary judgment. This appeal is from the summary judgment entered in December 1986.

ISSUE

Did the trial court err in concluding that appellant's release destroyed his cause of action against respondent?

ANALYSIS

We are to determine on appeal from a summary judgment whether there are any genuine issues of material fact and whether the trial court erred as a matter of law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). There were no disputed facts related to the trial court's summary judgment, and we must determine whether the court correctly determined the law of the case.

In concluding a settlement with the driver and registered owner of a motor vehicle, appellant agreed to indemnify them against any contribution or indemnity claims that others might assert against them. The Minnesota Supreme Court has approved this agreement, the so-called Pierringer release, as a means to permit trial of unsettled claims after dismissal of defendants who have settled. See Frey v. Snelgrove, 269 N.W.2d 918, 921-23 (Minn.1978). The plaintiff's indemnification of the settling tortfeasor is the indispensable characteristic of the Pierringer release because it protects the nonsettling defendant from having to pay more than its share of liability. Id. at 921; see Simonett, Release of Joint Tortfeasors: Use of the Pierringer Release in Minnesota, 3 Wm. Mitchell L.Rev. 1, 19-23 (1977).

It is unquestioned here that respondent's prospective liability is solely as the principal for the acts of an agent. See Minn.Stat. Sec. 170.54 (1982) (a vehicle operator is "deemed the agent" of an owner who consents to the operator's use of the vehicle). It is well-established in Minnesota that a principal who pays damages for the acts of an agent is entitled to indemnification from the agent. See Northern Pacific Railway Co. v. Minnesota Transfer Railway Co., 219 Minn. 8, 12, 16 N.W.2d 894, 896 (1944); see also Hendrickson v. Minnesota Power & Light Co., 258 Minn. 368, 372, 104 N.W.2d 843, 848 (1960) (indemnity rights of one with only a derivative or vicarious liability), overruled in part, Tolbert v. Gerber Industries, Inc., 255 N.W.2d 362 (Minn.1977). Also, an owner who pays damages under Minn.Stat. Sec. 170.54 is entitled to indemnity from the operator of the vehicle:

We therefore hold that, where the owner of an automobile has become liable to a third person injured by one to whom the owner has granted permission to drive his car solely by virtue of the Financial Responsibility Act (Minn.Stat. ch. 170) such owner is entitled to recover indemnity from the operator of the car in the absence of any active negligence chargeable to the owner.

Lunderberg v. Bierman, 241 Minn. 349, 355, 63 N.W.2d 355, 360 (1954), cited in Shore v. Minneapolis Auto Auction, Inc., 410 N.W.2d 862 (Minn.Ct.App.1987).

It follows, as the trial court reasoned, that appellant has defeated his claim against respondent. Because of appellant's release agreement, any indemnity claim paid by Wiltscheck is the responsibility of appellant. As a settled matter of law, respondent has a right of indemnification from Gene Wiltscheck for any damage claim respondent pays to appellant. Thus, any right appellant can establish to recover damages from respondent is offset by appellant's obligation to repay the same damages. ³ See Pischke v. Kellen, 384 N.W.2d 201, 205 (Minn.Ct.App.1986) (Pierringer release of employee precludes recovery from employer); Annotation, Release of, or Covenant not to Sue, One Precisely Liable for Tort, but Expressly Reserving Rights Against One Secondarily Liable, as Bar to Recovery Against Latter, 24 A.L.R.4th 547, 555-560 (1983); Annotation, Release of (or Covenant not to Sue) Master or Principal as Affecting Liability of Servant or Agent for Tort or Vice Versa, 92 A.L.R.2d 533 (1963).

The decision of the trial court does not come without warning. Since first used in Minnesota, it has been recognized that the Pierringer release poses the definite hazard that the claimant who uses the release with indemnification "bars himself" from collecting on an award he might otherwise obtain against a nonsettling tortfeasor who has vicarious liability based on negligence of the settling tortfeasor. Simonett at 24-25. See 24 A.L.R.4th at 553-55 (the plaintiff who desires to settle with some defendants has to consider the legal implications of the settlement in terms of defendants with vicarious liability). As is suggested by these authorities, respondent contends that appellant cannot make a final settlement with the driver and registered owner of a vehicle without sacrificing any prospective claim against a de facto owner.

Appellant states numerous contentions aimed at defeating the rationale of the trial court. To obtain relief from the judgment, appellant's arguments require that we accept one of three premises. First, appellant asks that we draw an exception to the law of indemnification for the vehicle owner. Second, he contends that the release...