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Statutory Interpretation – Economic Loss Doctrine

By: Derek Hawkins//February 5, 2020//

Statutory Interpretation – Economic Loss Doctrine

By: Derek Hawkins//February 5, 2020//

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WI Supreme Court

Case Name: Chris Hinrichs, et al. v. The DOW Chemical Company d/b/a Dow Automotive

Case No.: 2020 WI 2

Focus: Statutory Interpretation – Economic Loss Doctrine

In this case we are asked to address a multitude of issues that arise out of common law and statutory misrepresentation claims. Along the way, we discuss the economic loss doctrine together with its exceptions and examine statutes and their applications. Both parties to this case seek review of aspects of an unpublished, per curiam decision of the court of appeals. The court of appeals affirmed the circuit court’s dismissal of Chris Hinrichs and Autovation Limited’s (collectively, Hinrichs) common law misrepresentation claims against the DOW Chemical Company (Dow) and reversed the circuit court’s dismissal of Hinrichs’ statutory claim made pursuant to Wis. Stat. § 100.18 (2015-16). Hinrichs appeals the dismissal of his common law misrepresentation claims. Specifically, he contends that the court of appeals erred by applying the economic loss doctrine to bar such claims. He argues that the “fraud in the inducement” and “other property” exceptions to the economic loss doctrine apply and that as a result his common law claims should go forward.

Dow cross-petitioned for review of the court of appeals’ determination that Hinrichs’ Wis. Stat. § 100.18 claim survives its motion to dismiss. It asserts first that Hinrichs’ statutory claim is barred by the economic loss doctrine. Next, it contends that Hinrichs is not “the public” within the meaning of § 100.18 and that this court should overrule its previous decision in State v. Automatic Merchs. of Am., Inc., 64 Wis. 2d 659, 221 N.W.2d 683 (1974). Finally, Dow contends that the heightened pleading standard set forth by Wis. Stat. § 802.03(2) for claims of fraud applies to claims made under § 100.18, and that Hinrichs’ complaint fails to meet those heightened standards. In examining Hinrichs’ common law claims, we conclude that the “fraud in the inducement” exception to the economic loss doctrine does not apply to allow Hinrichs’ common law claims to go forward because the alleged misrepresentation is related to the quality and characteristics of the product in question and is thus not extraneous to the contract. We further conclude that the “other property” exception to the economic loss doctrine does not apply to allow Hinrichs’ common law claims to go forward because the JeeTops and adhesive are components of an integrated system.

With regard to Hinrichs’ statutory claim, we conclude first that the economic loss doctrine does not serve as a bar to claims made under Wis. Stat. § 100.18. We conclude second that one person can be “the public” for purposes of Wis. Stat. § 100.18(1) and decline Dow’s invitation to overrule Automatic Merchandisers. The court of appeals correctly determined that dismissal for failure to meet “the public” component of a § 100.18 claim in this case was in error. Finally, we conclude that the heightened pleading standard set forth by Wis. Stat. § 802.03(2) for claims of fraud does not apply to claims made under Wis. Stat. § 100.18 and that Hinrichs’ complaint states a claim under the general pleading standard. Accordingly, we affirm the decision of the court of appeals.

Affirmed

Concur: REBECCA GRASSL BRADLEY, J., filed an opinion concurring in part and dissenting in part.

Dissent: REBECCA GRASSL BRADLEY, J., filed an opinion concurring in part and dissenting in part.

 

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.

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