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Public Case Analysis

By: dmc-admin//June 28, 2006//

Public Case Analysis

By: dmc-admin//June 28, 2006//

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The case is noteworthy for its similarity to another case involving nearly identical facts, but which resulted in the opposite result, Mayville Die & Tool, Inc., v. Weller Machinery Co., 249 Wis.2d 490, 639 N.W.2d 224 (Table), 2001 WL 1512917 (Nov.29, 2001, Wis.App.)(unpublished).

In that case, Mayville asked Weller, a distributor, for assistance in locating a vertical boring mill. Weller contracted Fabricating & Production machinery, Inc. (FPM), which located a used vertical boring mill in Romania. Weller forwarded the specifications for the mill from FPM to Mayville, representing that the machine had been manufactured in the 1980s, and was in excellent condition.

Mayville agreed to buy the mill for $86,000, plus delivery charges. However, the mill had several missing or damaged parts, and components that predated the 1980s.

As in the case at bar, the parties had a pre-existing relationship, the plaintiff was the one initiating the contact, and the defendant was not the party in possession of the machinery.

Mayville sued FPM and Weller under several theories, including sec. 100.18. However, the circuit court dismissed Weller from the suit, and the court of appeals affirmed.

The court of appeals held that Mayville was not included in the statute’s definition of “the public,” reasoning, “Mayville and Weller had an ongoing business relationship which led Mayville to contact Weller for assistance in locating a vertical boring mill. We therefore conclude Mayville was not a member of the public within the meaning of the statute.”

This conclusion is directly contrary to the holding in the case at bar.

The court also addressed Mayville’s negligence claim, finding no causation, writing “the concession of Mayville’s representation that Mayville knew Weller had no more information about the boring mill than Mayville had precludes recovery. That is, because Mayville understood that the allegedly false statements or assertions were not being made by Weller based upon any independent observation it made of the machine, but were merely being forwarded by it, Mayville cannot be said to have relied upon representations made by Weller.”

As noted, this statement was made while addressing Mayville’s negligence claim, rather than its sec. 100.18 claim. However, it could be equally applicable to the element of actual reliance in the case at bar.

Also of interest in the Mayville decision is the court’s statement that, because of its holding that the plaintiff was not a member of “the public,” it need not address whether the cause of action would be precluded by the economic loss doctrine. The decision in the case at bar does not even address this issue.

Other courts have addressed the relationship between the economic loss doctrine and sec. 100.18 claims.

In Weather Shield Mfg. Inc., v. PPG Industries, Inc., 1998 WL 469913 (W.D.Wis., June 11, 1998)(unpublished), the court held, “As a matter of policy there is little reason to distinguish a sec. 100.18(1) claim from a common law misrepresentation claim. Section 100.18(1) is primarily a damage enhancement statute for existing common law misrepresentation claims. … Accordingly, the principles which support the economic loss doctrine apply with the same force to a sec. 100.18 claim between commercial purchasers.”

The court added, “exempting sec. 100.18 claims from the effects of the economic loss doctrine would virtually nullify the doctrine.”

That appears to be exactly what has happened in the case at bar; what is essentially a tort claim can proceed, despite the doctrine.

Current Wisconsin law appears to allow that, however. In Kailin v. Armstrong, 2002 WI App 70, 252 Wis.2d 676, 643 N.W.2d 132, 147-149, the court of appeals held that the economic loss doctrine does not bar sec. 100.18, a holding it reaffirmed in Tietsworth v. Harley-Davidson, Inc., 2003 WI App 75, 261 Wis.2d 755, 661 N.W.2d 450.

Tietsworth was reversed by the Supreme Court, 2004 WI 32, 270 Wis.2d 146, 677 N.W.2d 233, but the court held only that the plaintiff failed to state a claim under sec. 100.18; the court did not reverse the holding that the economic loss doctrine is inapplicable.

The only comment the Supreme Court has made on the issue is as follows: “the economic loss doctrine did not necessarily preclude other claims, e.g., (1) breach of contract; violation of Wis. Stat. sec. 100.18…” Van Lare v. Vogt, Inc., 2004 WI 110, 274 Wis.2d 631, 683 N.W.2d 46, 52.

Related Links

Wisconsin Court System

Related Article

‘Public’ in sec. 100.18 includes prior customers

Thus, the economic loss doctrine does not apply to sec. 100.18 under current law.

However, a case can be made that it should apply to cases such as the one at bar. In Kailin, Tietsworth, and Van Lare, the Uniform Commercial Code was indisputably not applicable.

It is not clear from the opinion in the case at bar whether the UCC applies or not, but where it does, these cases could be distinguished.

In Insurance Co. of N. Am. v. Cease Elec., Inc., 2004 WI 139, 276 Wis.2d 361, 688 N.W.2d 462, 468-469, the court held the doctrine inapplicable to a contract for services, and provided as its primary justification, the applicability of the UCC to products, but not services.

Thus, even if the doctrine does not “necessarily” bar sec. 100.18 claims, perhaps it could if the UCC applies to the transaction at issue.

– David Ziemer

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David Ziemer can be reached by email.

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