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Christensen and Stone Prevail at the Wisconsin Supreme Court on the Validity of Waiver of Subrogation Clauses

June 25, 2019

Kevin A. Christensen (Partner-Milwaukee) and Patricia A. Stone (Associate-Milwaukee), after obtaining a summary judgment at the circuit court, successfully defended a barn building contractor before the Wisconsin Court of Appeals and, most recently, the Wisconsin Supreme Court. The case, which addressed the enforceability of a waiver of subrogation provision in the contractor’s contract with the barn owner, challenged the enforceability of the provision on public policy grounds and on a Wisconsin statute that precludes any “limits or elimination” of tort liability in a construction contract. The plaintiff, the barn owner’s property insurer, sought subrogation from the contractor for payments it made to its insured for property damage when the barn collapsed, allegedly due to the contractor’s negligence. The waiver of subrogation provision in the contract between the client and the property owner barred such recovery. Nonetheless, the plaintiff sought to invalidate the waiver arguing it was exculpatory and in violation of the Wisconsin statute. All three courts disagreed. The Wisconsin Supreme Court ruled the waiver provision neither violated public policy as an exculpatory contract nor the Wisconsin statute as the clause did not limit or eliminate tort liability. Given this successful defense, the client avoided a substantial damage exposure and is entitled to all taxable fees and costs associated with defending this action.

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