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High court rules concrete claims went beyond puffery (UPDATE)

By: Dan Shaw, [email protected]//July 12, 2013//

High court rules concrete claims went beyond puffery (UPDATE)

By: Dan Shaw, [email protected]//July 12, 2013//

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By Dan Shaw

A group of homeowners could be left empty-handed after a Wisconsin Supreme Court decision that removed them from a lawsuit over faulty concrete work.

In United Concrete & Construction Inc. v. Red-D Mix Concrete Inc., the court ruled Friday that the economic-loss doctrine bars homeowners from suing Green Bay-based Red-D-Mix Concrete. The doctrine stipulates a plaintiff making a complaint about a particular product can have recourse to only the legal remedies spelled out in a contract.

According to a majority opinion attributed to Justice Michael Gableman, the homeowners had no direct contract with Red-D-Mix, which only supplied the concrete that another company, Appleton-based United Concrete, used in the installation of driveways, patios and similar structures. The homeowners, according to the opinion, are barred by the economic-loss doctrine from suing Red-D-Mix.

The Supreme Court sent the case back to the trial court, where United Concrete will be free to pursue any claims it has left against Red-D-Mix after the homeowners’ invalid claims have been dropped.

According to the opinion, the 22 homeowners had assigned to United Concrete their rights to sue over the defective concrete by signing an agreement that, according to the document’s language, “fully and forever extinguishes any and all claims which he/she has or might have had against any company for the supply of defective concrete.”

Roger Sage, a Madison lawyer who works with contractors but has no connection to the case, said that agreement, coupled with the Supreme Court’s decision, might have ended the homeowners’ chances of gaining compensation from Red-D-Mix.

supcourt1“If you assigned all your rights,” he said, “it would be difficult to undo that later.”

The Supreme Court’s decision noted that one of the homeowners had insisted on retaining certain rights in return for signing the assignment agreement, and another signed as part of a settlement of a small-claims case against United Concrete.

None of the homeowners could be immediately reached for comment Friday afternoon.

Valerie Revnew, a lawyer who represented United Concrete in the case, said the Supreme Court’s ruling will make it difficult for homeowners to gain compensation for faulty construction products. She said the awards in such cases often are too small for people to pursue individually, which is why they sometimes assign their right to sue to a larger party.

Frank Kowalkowski, a lawyer representing Red-D-Mix in the case, said he was pleased the Supreme Court’s decision would not allow “United to proceed on all of the claims that it was asserting.”

The Supreme Court’s decision also upheld an appellate court’s ruling that claims Red-D-Mix had made about its product went beyond what is legally protected as “puffery,” or expected exaggerations in advertising. After an earlier contract with United had been severed after complaints of faulty concrete, Red-D-Mix managed to win United’s business again in 2007 through assurances that the flaws had been eliminated.

By the end of that year, though, the concrete sold by Red-D-Mix was “bleeding” water once again, a condition that can lead to crumbling and pitting.

Rather than the puffery decision, though, Sage said the Supreme Court’s ruling probably will be remembered for adding another precedent that lawyers will have to consult when trying to interpret the economic-loss doctrine.

The complexities of these matters even led the Supreme Court to a play on words with the opening passage in its opinion: “There are many vagaries in the law. However, we deal here with the concrete. Specifically, certain batches of concrete that United Concrete … now claims were defective.”

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