02-2095 Harley-Davidson Motor Co., Inc., v. Powersports, Inc.

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“In addition to the well-established Wisconsin precedent recognizing the existence of a contract misrepresentation action for rescission, the rationale behind Wisconsin’s economic loss doctrine does not support a rule barring misrepresentation claims for rescission.”

“[T]he economic loss doctrine is intended to keep a party from effecting an ‘end run around contract law’ to recover under tort law what it could not recover under contract law and through contract remedies. Daanen & Janssen, 573 N.W.2d at 850. Here Harley-Davidson is not seeking to ‘end run around contract law,’ id.; rather, it is seeking a remedy expressly given to it through contract law-rescission of contract as expounded in Notte. Harley-Davidson’s claim for rescission does not give it something in tort that was unavailable to it in contract. Accordingly, we conclude that, although the question of whether Wisconsin will apply the economic loss doctrine to bar intentional misrepresentation claims for damages is still an open question, we do not believe that this unsettled question places in doubt the well-established Wisconsin precedent that a party may bring a contract action for rescission on the ground that the party entered into the contractual relationship because of fraud or material misrepresentation. In our view, the holdings of the Supreme Court of Wisconsin in Whipp and in Notte make it quite clear that the Supreme Court of Wisconsin would take this approach rather than allow the economic loss doctrine to spread its dominion to a situation that simply does not implicate the policy concerns behind that doctrine.

“In Weiss, the Supreme Court of Wisconsin recognized that even when both tort and contract theories of recovery were available, punitive damages were not allowed unless actual damages had been awarded under the tort theory of recovery. See Weiss, 541 N.W.2d at 763-64. Here, as explained above, if Harley-Davidson seeks rescission, its claim for damages under a tort theory is not available as an inconsistent remedy. Thus Harley-Davidson cannot recover punitive damages below.

“It is undisputed that (1) Harley-Davidson informed PowerSports that it would give its answer on January 5th; (2) Harley-Davidson repeatedly had requested in the prior two months documents concerning, and information about, PowerSports’ business plans, particularly about their plans for the Fern Park dealership and any possible plans to go public; (3) PowerSports mailed the draft memorandum overnight delivery on January 4th, knowing that it would arrive the day that Harley-Davidson was delivering its decision; and (4) the draft memorandum remained in Harley-Davidson’s mailroom until January 6th and thus was not seen until after Harley-Davidson had granted approval.

“From these facts, a fact-finder would be entitled to determine that PowerSports timely disclosed the memorandum. However, drawing all inferences in the light most favorable to the nonmoving party, as we must, a fact finder also could infer reasonably that PowerSports intentionally or negligently delivered the memorandum in such a way and at such a time that the relevant individuals at Harley-Davidson would become aware of its contents only after they already had given PowerSports approval. Harley-Davidson technically would have received the memorandum in its mailroom at the same time or slightly before the approval was given. In short, the facts support an inference of actionable conduct, if the trier of fact wishes to make certain permissible inferences from the established adjudicative facts. There are no established facts that make such an inference unreasonable or demonstrate that PowerSports made any attempts to ensure that the relevant individuals at Harley- Davidson actually had received and had time to evaluate the contents of the memorandum before Harley-Davidson gave its approval. Because there are conflicting inferences concerning whether or not PowerSports timely disclosed its business plans, summary judgment is not appropriate.”

Reversed and remanded.

Appeal from the United States District Court for the Eastern District of Wisconsin, Stadtmueller, J., Ripple, J.