Wisconsin justices to consider several construction issues

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Uncollectable legal judgments, government immunity for private contractors and “puffery” are at the core of three cases the Wisconsin Supreme Court will hear in the current session, each possibly affecting the construction industry in different ways.

The first case, Showers Appraisals LLC v. Musson Brothers, challenges how far government immunity should extend to private contractors. The issue arose from work Musson Bros. did during a 2008 job for the state of Wisconsin.

While replacing certain Oshkosh sanitary and sewer mains, the contractor decided to disconnect all storm sewers at the same time, according to case documents. From June 8 to June 12, 2008, rain pounded the Oshkosh area. Roads and properties throughout the city were flooded.

Oshkosh business owner Mark Showers sued the private contractor and the city of Oshkosh, claiming his business, Showers Appraisals LLC, was inundated with more than 7 feet of water and he suffered more than $140,000 in uninsured damages due to poor water drainage.

Contractors working for the government are granted immunity from liability for intentional torts while on the job under certain conditions. As long as the work contract is based on “reasonably precise” specifications, and the government has control and oversight, immunity may be granted.

Owner Mark Showers claims that the contract was not sufficiently specific, in particular noting that Musson, by contract, was “solely responsible for the means, methods, techniques, sequences and procedures of construction.” This left enough leeway for Musson to make certain decisions, which Showers Appraisals felt caused damages and should trigger a loss of government immunity. The trial court disagreed, and dismissed both Musson Bros. and the city of Oshkosh as defendants.

The appellate court affirmed the trial court’s ruling, suggesting that existing caselaw in Estate of Lyons v. CNA Insurance directed the court’s decision, and that Musson Bros. was well within the contract specifications, even if their decision may have aggravated damages to private property.

If the state Supreme Court reverses, it could affect both the process of contract formation and the oversight required for government contractors, potentially adding cost and time to major government projects.

Case 2: garnishing accounts

Another case, Paul Davis Restoration of SE Wisconsin v. Paul Davis Restoration of NE Wisconsin will see the justices considering whether a legal judgment against a doing business as company can be used to garnish the bank account of the doing business as owner if the owner was not named individually in the judgment.

Binding arbitration suggested that Paul Davis NE had violated the business territory restrictions of its national franchise agreement by taking a client from another territory. The value of the work was pegged at $101,693 and judgment was entered against the defendant, Paul Davis Restoration of NE Wisconsin.

When Paul Davis SE tried to garnish the bank account of Paul Davis Restoration of NE Wisconsin, co-account holder Matthew Everett argued that the garnishment was void and unenforceable because it was only in the name of the doing business as company. Although the trial court allowed the garnishment, the appellate court reversed, saying that the judgment against a doing business as designee only was unenforceable.

Depending on the final decision of the Wisconsin Supreme Court, the result of this decision could compel attorneys in construction cases to earlier re-verify for all arbitration and trial court litigation any possible underlying individuals or entities not named and served in a lawsuit, so final judgments conform to the needs of judgment collection.

Case 3: puffery

When a general contractor’s representative says that his company’s work is “the best” or widely considered to be “the finest,” most courts would call this “puffery.” Basically, it’s the kind of language that any buyer should know only represents the opinion of the seller.

But in the case of United Concrete & Construction Inc. v. Red-D Mix Concrete Inc., assurances allegedly made by Red-D Mix’s sales representative to the president of United Concrete may have gone far beyond puffery.

Red-D Mix provided concrete to United in 2002 and 2003 for customer flatwork such as patios and driveways. But United terminated the relationship when numerous customers complained that the finished concrete had excess bleed water, sometimes leading to scaling, pitting or crumbling.

United considered restarting its relationship with Red-D Mix in 2007, but its president sought assurances that the previous bleeding problems had been fixed. In an hour-long meeting, Red-D Mix’s salesman assured United that a new concrete plant was in place, according to court documents.

By the end of the 2007 season, however, the concrete water bleeding problems were back. After telling its customers that the problems were due to “defective concrete,” United gathered assignments of right to sue from 22 homeowners and filed suit against Red-D Mix based on breach of contract, negligence, warranty and other claims.

The trial court dismissed the case on summary judgment, saying statements made to United were “puffery,” United’s own damages were speculative and that existing caselaw from Linden v. Cascade Stone prevented customers from bringing suit against subcontractors.

In reversing the trial court’s summary judgment, the appellate court emphasized that “puffery” is an issue of fact. Additionally, United’s damage estimates and assessments were sufficient to at least go to a jury or trier of fact.