Voluntary Settlement Blocks Firefighters’ Subsequent Lawsuit

In 1998, a group of firefighters filed a lawsuit against the City of Milwaukee, Wisconsin, challenging the City’s failure to pay them lifetime disability benefits. A trial court determined that the City did not owe any of the firefighters lifetime benefits and granted summary judgment in favor of the City.

Five of the firefighters, referred to as the “Rehrauer Five,” appealed the grant of summary judgment. The remaining firefighters accepted a settlement under which the City provided them with limited term, rather than lifetime, duty disability payments, and also gave them lump-sum payments in amounts varying from $35,000 to $42,000.

The Rehrauer Five’s appeal was successful. In 2001, the Wisconsin Court of Appeals concluded that the firefighters were entitled to lifetime duty disability benefits because they “gained vested rights in the highest level of duty disability benefits that came to be contractually established during their years of active duty.” Since during at least some portion of the tenure of the Rehrauer Five as firefighters, the City had rules in place that called for lifetime disability benefits, the Court found that it was obliged to honor the promise that it made for such benefits.

Having prevailed in the Court of Appeals, the Rehrauer Five then filed a suit seeking the lump-sum payments that the non-appealing firefighters received as a result of the settlement agreement. The trial court agreed with the Rehrauer Five that they were entitled to the benefits. Unlike the non-appealing firefighters, the Rehrauer Five obtained both the benefit of the lump-sum payments in the settlement agreement and lifetime duty disability benefits.

In 2004, more than three and a half years after the entry of summary judgment, the non-appealing firefighters filed a motion for relief from the adverse summary judgment that preceded their decision to reach a settlement. The strategy of the non-appealing firefighters was to undo the summary judgment order and thus obtain a lifetime duty disability benefit. The Wisconsin Court of Appeals turned back this attempt by the non-appealing firefighters.

The Court found that there was unreasonable delay in the filing of the petition to overturn the summary judgment. The Court observed that “the Rehrauer Five declined to take the certainty of the lump-sum settlement and instead pursued an appeal from the summary judgment. The firefighters here opted for certain benefits over an uncertain outcome of the appeal. We find no evidence in the record where the firefighters showed that they were effectively forced to give something up for nothing, or to make a disproportionate exchange. Rather, the firefighters assert that they had to choose between a large unrelated benefit, the lump-sum cash payment, and pursuing an appeal of the summary judgment, a tradeoff that on its face does not present a disproportionate exchange.”

In the Court’s eyes, the three and a half year delay in seeking to undo the grant of summary judgment was simply an unacceptably long period of time. The Court observed that the firefighters made a “free choice” not to appeal, and were left with the consequences of that choice.

Rehrauer v. City of Milwaukee, 2005 WL 3543633 (Wis.App. 2005).

This article appears in the February 2006 issue