Ferris v. Location 3 Corp.
804 N.W.2d 822
Wis. Ct. App.2011Background
- Ferris purchased property from Location 3 Corporation in 2006; after closing, Ferris learned an adjacent landfill was a Superfund site.
- Ferris sued Location 3 and individuals Lechner, Sauer, and Mason in 2009 for misrepresentation on a real estate condition report, alleging statutory violations §§ 895.446 and 943.20(1)(d).
- Defendants moved for partial summary judgment arguing the economic loss doctrine barred the claim and that veil piercing could not impose personal liability.
- Trial court denied the economic loss doctrine bar but dismissed Lechner, Sauer, and Mason as individuals for acting within Location 3’s scope, effectively shielding them.
- On appeal, the court held the economic loss doctrine does not bar the statutory misrepresentation claim, and, contrary to the trial court, held individuals may be personally liable for tortious conduct even when acting as corporate agents.
- The operative complaint was Ferris’s amended pleading, filed April 12, 2010, alleging Lechner signed the report after consulting with Sauer and Mason, and that misrepresentations occurred with intent to deceive and to defraud.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the statutory misrepresentation claim is barred by the economic loss doctrine | Ferris argues the claim is statutory, not purely economic, so doctrine does not apply | Sauer/Lechner/Mason contend the claim is barred as an economic loss arising from contract | No; economic loss doctrine does not bar the statutory claim |
| Whether Ferris adequately pleads conspiracy and misrepresentation with particularity | Ferris sufficiently alleges a concerted act and intent to deceive | Defendants argue lack of specificity under Wis. Stat. § 802.03(2) | Amended complaint satisfied particularity and conspiracy elements |
| Whether individuals may be held personally liable despite corporate veil | Oxmans’ rule allows personal liability for torts by corporate agents | Oxmans’ reasoning was not controlling; veil piercing not pled | Individuals may be personally liable for their own tortious conduct regardless of corporate role |
| Whether Ferris pled enough facts to avoid dismissal of conspiracy and misrepresentation claims | Claims alleged “in concert” and intentional misrepresentations establish elements | Record lacks specific facts supporting elements | Sufficient pleading found; no dismissal on this ground |
| Whether the economic loss doctrine applies to Wis. Stat. §§ 895.446 and 943.20(l)(d) claims | Statutory claims fall outside the doctrine’s reach | Doctrine precludes purely economic tort claims | Doctrine does not preclude the statutory claims |
Key Cases Cited
- Below v. Norton, 297 Wis. 2d 781 (Ct. App. 2006) (economic loss doctrine and contract/tort distinctions in Wisconsin)
- Below II, 310 Wis. 2d 713 (Wis. Supreme Court, 2007 or 2008) (reminder to apply Stuart framework to statutory claims)
- Oxmans',, 86 Wis. 2d 683 (Wis. 1979) (personal liability of individuals for torts as corporate agents)
- Hanmer v. DILHR, 92 Wis. 2d 90 (Wis. 1979) (application of corporate agent liability principles)
- Stuart v. Weisflog's Showroom Gallery, Inc., 308 Wis. 2d 103 (Wis. 2008) (economic loss doctrine does not apply to statutory claims)
- City of Milwaukee v. NL Indus., Inc., 278 Wis. 2d 313 (Wis. Ct. App. 2004) (conspiracy and agency principles in tort claims)
- Stuart, noted as above (Wis. 2008) (reiteration of statutory claim analysis under economic loss doctrine)
- Zarder v. Humana Ins. Co., 2010 WI 35 (Wis. 2010) (limits of treating court statements as dicta)
- Green Spring Farms v. Kersten, 136 Wis. 2d 304 (Wis. 1987) (pleading standards in fraud cases; liberality of pleading)
- Friends of Kenwood v. Green, 239 Wis.2d 78 (Wis. 2000) (pleading with particularity; who/what/when/how)
- Prah v. Maretti, 108 Wis.2d 223 (Wis. 1982) (liberal pleading standards under Wisconsin law)