Government Immunity for Professional Independent Contractors

By Jeffrey L. Janik & W. Wayne Siesennop

Editor's Note: To view Wisconsin statutory materials referenced in this article you must have and/or install Adobe Acrobat Reader 3.0 on your computer.

In a case of first impression, the Wisconsin Court of Appeals extended governmental immunity to an independent contractor, insulating it from liability for injuries alleged to have been caused by defective design work performed on a public roadway and bridge project.¹ This decision provides protection to professional independent contractors performing work on public improvement projects for state and local governments when reasonably precise aspects of the work are directed by the government principal after reviewing potential dangers. To avail themselves of this defense, however, contractors must properly document and inform the government principal of their concerns at the time of the project.

The Lyons claim

In Estate of Lyons v. CNA Insurance Companies the plaintiffs were victims of an automobile accident that occurred when an uninsured driver failed to stop at a stop sign and collided with the Lyons' vehicle in an intersection in Walworth County. Theresa Lyons suffered serious injuries and died after an extended period in a coma. Her estate and her widower brought a tort action against the other driver, the State of Wisconsin, and the municipal subdivisions. All of the governmental defendants were dismissed, leaving the uninsured driver as the sole defendant.

Plaintiffs were granted leave to amend their complaint and implead Strand Associates Inc., a private engineering and design firm that had designed the replacement roadway and bridge in 1978-79. Plaintiffs argued that Strand negligently designed the bridge that the uninsured driver crossed just before the intersection where the accident occurred. Plaintiffs' expert opined that the bridge design was contrary to standards promulgated by the American Association of State Highway and Transportation Officials (AASHTO) concerning vertical curves and lines-of-sight. Plaintiffs contended that the design of the bridge's vertical curve ­ a measurement reflecting an engineered hill's length and height ­ was too short and high for its proximity to the intersection, thereby blocking the uninsured driver's view of the intersection.

Strand denied the allegations of negligence, denied that the cited standard was applicable to the intersection, affirmatively alleged it was entitled to governmental immunity for the alleged design flaw, and entitled to immunity under Wisconsin law as an agent of the government as that term is used in the statute.²

The design work

Strand was hired by the municipal subdivisions in 1978 to design a bridge and roadway to replace a dilapidated bridge that spanned a set of railroad tracks. Evidence showed that the existing bridge was severely in need of replacement. The municipalities secured federal highway money for the project, which was administered and distributed by the Wisconsin Department of Transportation (DOT). Strand's contract defined it as an independent contractor and required it to abide by existing design standards, wherever feasible, and DOT requirements.

The design of the bridge height initially was constrained by the requirements for spanning the railroad tracks. A variance was secured allowing a bridge 18 feet above the tracks instead of the 22 feet required under the existing standard.

Following the variance, Strand submitted its initial design to the DOT and municipalities. This design provided a bridge with a 150-foot vertical curve. To effect this design, portions of the roadway and adjacent intersection would have needed razing, filling, and repaving.

In May 1979 Strand met with DOT and municipal government officials at the proposed construction site. The DOT recognized that the 150-foot vertical curve bridge design would have resulted in significant additional costs associated with raising the elevation of the adjoining roadways. To control taxpayer expense, the DOT directed Strand to submit a new bridge design with a shorter vertical curve, thereby eliminating the need for elevating the adjacent roadways. Strand responded by reminding the DOT that it followed the 150-foot vertical curve criteria for the roadway, and, with the nearby intersection, a reduced roadway speed ­ from 40 m.p.h. to 25 m.p.h. ­ was appropriate. Strand also indicated that it was submitting a new design with a 70-foot vertical curve, based on the directives of DOT officials, and as a further exception to design criteria.

The DOT approved the revised plans, and the bridge was constructed with a 70-foot vertical curve ­ an engineered hill with a shorter length and steeper grade than the 150-foot original design.

Immunity

Strand moved for summary judgment at the trial court, arguing that it should be immune for merely implementing in a nonnegligent manner a governmental decision made by immune state officials entrusted with the duty to make such discretionary decisions for the good of the citizens. In the alternative, Strand argued that it should be afforded statutory immunity as a government agent for performing a quasi-judicial or quasi-legislative function, ³ and should be dismissed for plaintiffs' failure to name Strand in the requisite Notice of Claim. ⁴

Plaintiffs argued that, as a professional designer, Strand had a professional duty to design the bridge and roadway to then-existing standards. Plaintiffs' expert opined that Strand had a duty "not to proceed" with a design that did not comply with professional standards. Plaintiffs also contended that no governmental immunity should be available to Strand. Citing A.E. Investment Corp. v. Link Builders Inc., ⁵ plaintiffs argued that Strand was a private entity with a professional duty to the public, and its status as a professional independent contractor took it out of the realm of a master-servant relationship with the government. Plaintiffs cited the fact that no previous Wisconsin decision has ever extended governmental immunity to a private independent contractor.

The Hon. John R. Race, Walworth County circuit court judge, granted summary judgment to Strand, finding no dispute on the material fact that plaintiffs' only criticism of Strand's design work involved the use of a 70-foot rather than a 150-foot vertical curve. The court also found no dispute concerning the fact that Strand submitted an original design with a 150-foot vertical curve, but was directed by the DOT to redesign the bridge with a shorter vertical curve.

The trial court explored Wisconsin precedent holding government officials immune for discretionary decisions made in the course of their government employment. The court cited Pavlik v. Kinsey ⁶ for the rule that public officers are immune for injuries resulting from their discretionary official acts. The immunity rationale, the court reiterated, is to avoid influencing government officials' performance with the threat of lawsuits, avoid the deterrent effect for those considering public service, avoid having public officials use their official time responding to and defending lawsuits, unfairness in subjecting government officers to liability for their subordinates' actions, and that the ballot box is the proper forum for dealing with official misconduct. ⁷

The trial court held that the decision to design the bridge with a shorter vertical curve was an immune discretionary decision made by a government official, and plaintiffs were attempting to impute onto Strand this allegedly negligent discretionary governmental decision. Therefore, the court held, Strand was entitled to immunity "when faithfully executing the discretionary act of the state." ⁸

Plaintiffs appealed the granting of summary judgment and Strand cross-appealed on the undecided issue of whether it was a government agent for purposes of the statutory Notice of Claim requirements.

Three-part test

The Wisconsin Court of Appeals affirmed the trial court. In doing so, it adopted for Wisconsin a three-part test similar to that annunciated by the U.S. Supreme Court in Boyle v. United Technologies Corp., ⁹ under federal tort statutes. Strand had cited to Boyle as persuasive authority in both the trial court and court of appeals.

In Boyle plaintiff attempted to sue the designer of a military helicopter after an accident in which a helicopter crashed into water. The occupant could not extract himself because the escape hatch opened outward and was blocked by the water's pressure. The defendant designer argued that it should be entitled to immunity for the design decision because the military dictated the specifications of the escape hatch. Instead of announcing a blanket rule extending immunity to all aspects of work performed by government contractors, the court set forth a three-part test that contractors must meet to be conferred with governmental immunity under federal tort statutes: 1) the U.S. approved reasonably precise specifications; 2) the equipment conformed to those specifications; and 3) the supplier warned the U.S. about dangers in the use of the equipment that were known to the supplier but not to the United States. ¹⁰

Following the rationale of Boyle, the District II Wisconsin Court of Appeals, in an opinion written by Judge Richard Brown, "adopt[ed] a form of governmental contractor immunity applicable to parties who contract with municipal or state authorities and are directed to perform certain tasks under that contract." ¹¹ The court held that "an independent professional contractor who follows official directives is an 'agent' for the purposes of § 893.80(4), Stats., or is entitled to common law immunity" ¹² provided the professional contractor can meet a three-part test similar to that used for claims against federal contractors. To avail themselves of the defense, contractors must show that: 1) the governmental authority approved reasonably precise specifications; 2) the contractor's actions conformed to those specifications; and 3) the contractor warned the supervising governmental authority about the possible dangers associated with those specifications that were known to the contractor but not to the government officials. ¹³ The court affirmed the summary judgment granted to Strand.

Cause and effect

During the various arguments in Estate of Lyons, the parties, including the DOT as amicus curiae, discussed the effect of granting the design firm immunity rather than having it answer in court for the decision to reduce the length of the vertical curve for the bridge design.

The DOT objected to a blanket holding that contractors performing work for governmental entities are always "agents" as that term is used in the governmental immunity statute. The DOT expressed concerns that a broad ruling that contractors are agents would implicate the government and taxpayers with duties to both represent and indemnify independent contractors in civil suits. Having hired an independent firm to exercise and implement these governmental decisions, the government would, in a sense, be insuring the contractor's work. This was a duty the taxpayers did not want to assume.

However, the DOT supported Strand on its argument that immunity should apply in this case. To hold Strand liable for merely facilitating a governmental directive for which the directing state officer was immune could effectively remove the benefits of governmental immunity granted to the governmental officers making a discretionary decision. State and local governments make widespread use of independent contractors to execute certain governmental functions. The immunity for government officers making discretionary decisions could effectively be removed if independent contractors facilitating such decisions can be held liable in tort. As the appeals court noted, if the contractors facilitating a governmental directive can be held liable for a discretionary governmental act, the contractors would be subjected to increased risks and associated costs, and ultimately would pass those costs on to the contracting government, effectively eliminating the taxpayer benefits secured by the immunity statutes. ¹⁴ The court also cited the fact that it would be "fundamentally unfair" to hold a contractor liable for injuries caused by a defective design when the governmental authority was responsible for its development. ¹⁵

In practice

Attorneys should advise clients doing work as government contractors to document well any deviation from existing standards or practices. This would include identifying the existing standard or practice, identifying the specific deviation from the standard or practice requested by the government principal, outlining potential costs and risks associated with such deviation, and obtaining a written directive from the government principal for the deviation.

In Lyons the claim involved problems with the vertical curve standards and lines-of-sight. There, the cost issue concerned additional fill and work on the adjoining roadways. In other instances the need to condemn additional real estate may be required to design a roadway for the "proper" travel speed, or, with respect to jails, the "best" prison locks/doors may be prohibitively expensive. These may be costs government representatives do not wish the public to incur. A designer in that situation should work closely with the government and carefully document its files to show consideration of alternatives. If the government chooses a less expensive alternative in writing, the designer will have a well-documented file to show that different alternatives were explored, and government officials entrusted with the power to make decisions in their quasi-legislative capacity made the discretionary (and immune) decision to deviate from the standard or state-of-the-art. This documentation also will alert the government principal to take safety precautions, such as a sign warning drivers that an upcoming curve must be negotiated at a slower than normal travel speed for that roadway.

Most design decisions involve costs and benefits. To implement the "safest" design may be cost-prohibitive. This is especially true for public improvements. Certainly, topography and land ownership constrain the government's ability to have the "safest" possible road, with no hills or curves. Thus, safety benefits must necessarily be traded for making the project cost-feasible. A contractor involved with such a project should thoroughly document the standards, alternatives, and safety concerns at the time of the project to avail itself of this extension of immunity.

Conclusion

For the first time under Wisconsin law, governmental immunities were extended to shield a professional independent contractor from liability for work performed on a government project. Government officers entrusted to make cost-benefit decisions for the good of the citizens have immunity for their official acts as a matter of law. A professional independent contractor implementing a reasonably precise governmental directive can document its concerns with the government principal and enjoy the same immunity given the government officer. By merely implementing an otherwise immune governmental decision, the contractor will not have to risk liability solely because of its status as a private entity.

Endnotes

¹ Estate of Lyons v. CNA Ins. Cos., 207 Wis. 2d 448 (Ct. App. 1996), rev. denied.

²Wis. Stat. § 893.80(4).

³ Wis. Stat. § 893.80(4). ("No suit may be brought against . . . [government] officers, officials, agents or employees for acts done in the exercise of legislative, quasi-legislative, judicial or quasi-judicial functions.") (Emphasis and bracketed material added.)

⁴See Wis. Stat. §§ 893.80(l) (a), 893.82(3); Smith v. Wisconsin Physician's Serv., 152 Wis. 2d 25 (Ct. App. 1989).

⁵ 52 Wis. 2d 479 (1974).

⁶81 Wis. 2d 42 (1977).

⁷ Lister v. Bd. of Regents, 72 Wis. 2d 282, 299 (1976).

⁸ Slip Op. at 11, Circuit Court of Walworth Co., Case No. 93-CV-122.

⁹ 487 U.S. 500 (1988).

¹⁰ Id. at 512.

¹¹ Estate of Lyons, supra note 1 at 459.

¹² Id. at 459-60.

¹³ Id.

¹⁴ Id. at 457 (citing Vanchieri v. New Jersey Sports and Exposition Auth., 104 N.J. 80, 514 A.2d 1323 (1986)).

¹⁵ Id.

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