Tort Counterclaims – Economic Loss Doctrine

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WI Court of Appeals – District IV

Case Name: Garon A. Reinke v. Timothy W. Jacobson, et al.
Case No.: 2016AP002197

Officials: Lundsten, P.J., Sherman and Blanchard, JJ.

Focus: Tort Counterclaims – Economic Loss Doctrine

Timothy Jacobson and T.C. Products Co., Inc., appeal the circuit court’s order granting summary judgment in favor of Garon Reinke and effectively dismissing their tort counterclaims against Reinke. The claims relate to several 2012 agreements between the parties, including an agreement titled “Stock Purchase Agreement” under which Reinke sold his T.C. Products stock to Jacobson. For purposes here, there is no dispute that Jacobson and T.C. Products breached one or more of the agreements. At issue is whether their tort counterclaims against Reinke are barred by the economic loss doctrine.

As we understand it, Jacobson and T.C. Products make four arguments: (1) the economic loss doctrine does not apply because the predominant purpose of the parties’ agreements was the provision of services; (2) the economic loss doctrine should never be applied to stock purchases; (3) regardless of arguments (1) and (2), the economic loss doctrine does not bar Jacobson’s and T.C. Products’ breach of fiduciary duty claims; and (4) the fraud in the inducement exception to the economic loss doctrine applies. None of these arguments persuade us that the circuit court erred in applying the economic loss doctrine to effectively dismiss the tort counterclaims. Accordingly, we affirm.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.