Kellen v. Mathias, C7-93-2411

• Decision Date: 12 July 1994
• Docket Number: No. C7-93-2411,C7-93-2411
• Citation: 519 N.W.2d 218
• Parties: David KELLEN, Appellant, v. John MATHIAS, Respondent.
• Court: Minnesota Court of Appeals

Page 218

519 N.W.2d 218

David KELLEN, Appellant, v. John MATHIAS, Respondent.

No. C7-93-2411.

Court of Appeals of Minnesota.

July 12, 1994.

Syllabus by the Court

In the absence of an independent indemnity obligation, a Pierringer release between a plaintiff and a defendant who is vicariously liable for the acts of a nonsettling defendant does not release the nonsettling defendant from liability.

Roger C. Justin, Rinke-Noonan, St. Cloud, for appellant.

Kent D. Mattson, H. Morrison Kershner, Pemberton, Sorlie, Sefkow, Rufer & Kershner, Fergus Falls, for respondent.

Considered and decided by HUSPENI, P.J., and KALITOWSKI and AMUNDSON, JJ.

OPINION

AMUNDSON, Judge.

Appellant argues the district court erred in determining that a nonsettling defendant was released from liability where the settling defendants were vicariously liable for the acts of the nonsettling defendant.

We reverse and remand.

FACTS

Appellant David Kellen owns farmland in Traverse County and grows sugar beets. David and Daniel Miller own adjacent farmland and grow soybeans. Respondent John Mathias owns and operates an aerial chemical application service. In June 1991, the Millers contracted with Mathias to spray a chemical herbicide on their soybean crop.

Kellen claims that during the chemical application, the herbicide strayed onto his land and came to rest on portions of his sugar beet crop. As a result, Kellen claims he suffered a diminished sugar beet yield. Consequently, Kellen commenced an action against the Millers and Mathias for his alleged loss.

Appellant asserted liability under four different theories: (1) violation of Minn.Stat. § 18B.07 (1990) ¹ (2) chemical trespass; (3) strict liability; and (4) negligence. The Millers and Mathias answered the complaint and filed cross-claims against each other seeking indemnity and/or contribution from the other if any damages were awarded.

Kellen settled his claim in full against the Millers for $25,000 and they entered into a Pierringer release. ² Mathias then moved for summary judgment, arguing that the effect of the Pierringer release was to release him from liability. Mathias argued that because the Millers were vicariously liable for his actions, the settlement by the Millers settled the entire dispute. In other words, respondent claimed the release of a vicariously liable party also releases the primary tortfeasor.

The district court essentially agreed with Mathias and granted his summary judgment motion. Judgment was entered and this appeal followed.

ISSUE

Did the district court err in determining that the Pierringer release between Kellen and the Millers, who were vicariously liable for the acts of the nonsettling defendant Mathias, also released Mathias from liability?

ANALYSIS

On appeal from summary judgment, the role of the reviewing court is to review the record for the purpose of answering two questions: (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of the law. Offerdahl v. University of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn.1988). Summary judgment is proper when no genuine issues of material fact exist and one party is entitled to judgment as a matter of law. Minn.R.Civ.P. 56.03.

This court is essentially being asked to interpret the effect of a contract between the parties. The construction and effect of a contract present a question of law, unless an ambiguity exists. Trondson v. Janikula, 458 N.W.2d 679, 681 (Minn.1990). Therefore, since the district court determined a purely legal question, we need not give deference to its decision. See Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn.1984).

The settlement agreement and release provided in part:

The Kellens specifically agree to hold the Millers harmless, and specifically agree to indemnify them for any claims, demands or causes of action by John Mathias, for contribution or indemnity * * * By this Agreement, the Millers are discharged from their liability, if any, for contribution or indemnity with respect to the claim for damages from the Kellens, and the claims of the Kellens are satisfied to the extent of that percentage of their total claim for damages against the Millers arising out of the incident of June 17, 1991, 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 fault or causal responsibility, if any, whether for negligence or any other liability, for which the Millers are found to be liable. This payment by the Millers is not intended as full compensation for the alleged damages claimed by the Kellens arising from the incident of June 17, 1991.

The agreement stated that the payment by the Millers "is not intended as full compensation" for the damages claimed by Kellen. The agreement further provided that it "is specifically understood that this is not an agreement to dismiss the suit now pending against John Mathias" and that the agreement "is only intended to release all claims against the Millers." The parties' intent, however, is not necessarily controlling. See Hoffmann v. Wiltscheck, 411 N.W.2d 923, 927 (Minn.App.1987) (in determining the effect of a Pierringer release, the intention of the settling parties "did not empower them to alter the Minnesota law of indemnity"), Pet. for rev. denied (Minn. Nov. 13, 1987). Thus, we need to look to the effect of the release rather than the parties' intent.

In its simplest form, a Pierringer release

(1) releases the settling defendant from the lawsuit and discharges a part of the cause of action equal to the part attributable to the settling joint tortfeasor's causal negligence, (2) reserves "the balance of the whole cause of action" against the non-settling joint tortfeasors, and (3) contains an agreement whereby the plaintiff indemnifies the settling defendant from any claims of contribution made by the non-settling parties and agrees to satisfy any judgment he obtains from the non-settling tortfeasors to the extent the settling tortfeasor has been released.

John E. Simonett, Release of Joint Tortfeasors: Use of the Pierringer Release in Minnesota, 3 Wm. Mitchell L.Rev. 1, 3 (1977) (footnote omitted).

The Minnesota Supreme Court has approved of the 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).

To illustrate the use of a Pierringer release, we use the following examples. Assume the plaintiff is injured by joint tortfeasors A and B. The case proceeds to trial and the jury apportions A's and B's negligence at 50% each and finds damages of $100,000. The plaintiff can collect $100,000 from either A or B. If the plaintiff collected $100,000 from B, B would have a right of contribution against A for $50,000. Therefore, A and B will ultimately be responsible for $50,000 each.

Using the same facts, now assume that the plaintiff settled with A prior to trial for $10,000 and they entered into a Pierringer release. Theoretically, the plaintiff could collect $90,000 from B. B would then have an action for contribution against A for $40,000. Via the Pierringer release, however, the plaintiff has agreed to indemnify A for any contribution, thus A can seek the $40,000 from the plaintiff. The ultimate effect is that the plaintiff will receive only $60,000 and will therefore be undercompensated. See, e.g., Frederickson v. Alton M. Johnson Co., 402 N.W.2d 794, 796-97 (Minn.1987) (trial court properly reduced the jury verdict by the proportion of fault attributable to the settling defendant; plaintiff received $20,000 for Pierringer release from defendant to whom jury allocated 40% of the fault for $800,000 in damages).

Again applying the same fact situation, assume that the plaintiff settles with A for $90,000. B would still be liable for $50,000. There would be no contribution or indemnity actions available to any party. Thus, the plaintiff would receive a total of $140,000, or a windfall of $40,000. See, e.g., Rambaum v. Swisher, 435 N.W.2d 19, 22-23 (Minn.1989) (plaintiff overcompensated where amount paid to settle claim was in excess of jury verdict attributable to the settling defendant).

As in accepting any settlement, the plaintiff accepts the risk of being overcompensated as well as being undercompensated. Id. at 23. If subsequent events sometimes result in a so-called "windfall" for the plaintiff, that result is acceptable within the context of the law's strong policy to encourage the settlement of disputes. Id. The equitable principle of contribution that each defendant pay its fair share is not offended, but, indeed, reinforced by the Pierringer arrangement. Id. Whether or not the plaintiff is overcompensated or undercompensated, the nonsettling tortfeasor is assured that it will not pay more than its fair share of the yet-to-be-determined plaintiff's award. Id. at 22.

In the present case, we recognize there are fact issues concerning whether Mathias was an agent. See Dalager v. Montgomery Ward & Co., 350 N.W.2d 391, 394 (Minn.App.1984) (whether an agency relationship exists is usually a fact question for the jury unless the evidence is conclusive one way or the other). Nevertheless, in reviewing the district court's decision, we accept the court's finding that Mathias was acting as the agent of the Millers. This determination is not critical since we also accept the parties' assumption that the Millers are vicariously liable for Mathias' acts.

Assuming, as Kellen avers in his complaint, that aerial spraying is an "ultra-hazardous" activity, it follows that one who employs another to engage in an ultrahazardous activity is vicariously liable for any loss. See Restatement (Second) of Torts § 427A (1965); see also Lawler v. Skelton, 241 Miss. 274, 130 So.2d 565, 569 (1961) (owner of farmland may not delegate work...