875 N.W.2d 143
Wis. Ct. App.2015Background
- Bank of America acquired a foreclosed Menomonee Falls home that had suffered severe water damage and mold; internal reports and agent emails documented extensive flooding and remediation attempts.
- The Bank listed the property, performed partial trash-out, mold remediation, and cosmetic repairs, but agent testimony indicated remediation was incomplete and visible mold persisted.
- Buyer Catherine Fricano viewed the house, saw some basement mold, and submitted a competing offer that was increased to a counter-offer of $175,111; the Bank emailed an "accepted" notice attaching an Addendum and a Mold Disclosure/Release containing an "as is" clause and a statement that the Bank had "little or no direct knowledge" of the property condition.
- Fricano signed and closed; after closing she discovered pervasive mold necessitating full remediation and reconstruction, then sued under Wis. Stat. § 100.18(1) (deceptive trade practices), alleging the Bank knowingly misrepresented its knowledge of the property condition in the contract documents.
- At trial the jury found for Fricano and awarded $50,000; the Bank moved for judgment notwithstanding the verdict and to change the verdict, arguing the contractual "as is"/exculpatory clauses barred the claim, the statement was not made to "the public," and the misrepresentation did not materially induce purchase. The trial court denied the Bank’s motions and the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "as is" and exculpatory clauses bar a § 100.18(1) deceptive-practice claim based on a misrepresentation contained in the contract itself | Fricano: Clauses were induced by the Bank's affirmative misrepresentation that it had little/no knowledge; such clauses don’t bar statutory claims | Bank: Contractual disclaimers and waivers preclude liability as a matter of law | Held: Clauses do not bar a § 100.18(1) claim when the seller makes an affirmative deceptive representation in the contract that induced assent |
| Whether the Bank's statement was made to "the public" under § 100.18(1) | Fricano: No binding contract existed when the Bank sent the Addendum; she remained a member of the public | Bank: Negotiations/acceptance created a particularized relationship taking her out of "the public" | Held: No binding contract existed at the time; purchaser remained a member of the public for § 100.18(1) purposes |
| Whether there was legally sufficient evidence that the misrepresentation materially induced Fricano to purchase | Fricano: She relied on the Bank's statement when agreeing to waive protections and would not have proceeded absent it | Bank: Offer had been accepted (or negotiations created a particular relationship); inspections put buyer on notice making reliance unreasonable | Held: Sufficient credible evidence supported that the misrepresentation was a material inducement and reliance was not unreasonable as a matter of law |
| Whether there was sufficient evidence the Bank intended to induce purchase by the misrepresentation | Fricano: Bank knew of severe damage, performed cosmetic fixes instead of full remediation, and concealed condition to make property marketable | Bank: Timing and content of statement undermine intent to induce | Held: Evidence permitted a reasonable inference that the Bank intended to induce purchase by concealing knowledge and making cosmetic repairs |
Key Cases Cited
- Grube v. Daun, 173 Wis. 2d 30, 496 N.W.2d 106 (Ct. App.) (seller’s affirmative misrepresentations can defeat an "as is" defense in misrepresentation claims)
- K & S Tool & Die Corp. v. Perfection Mach. Sales, Inc., 301 Wis. 2d 109, 732 N.W.2d 792 (Wis.) (elements and "public" requirement for § 100.18(1) claims)
- Peterson v. Cornerstone Prop. Dev., LLC, 294 Wis. 2d 800, 720 N.W.2d 716 (Ct. App.) (integration/disclaimer clauses may bar claims when they clearly waive reliance on precontract representations)
- Kailin v. Armstrong, 252 Wis. 2d 676, 643 N.W.2d 132 (Ct. App.) (a statement to a single person can be to "the public"; purchaser remains public until a particular relationship exists)
- Novell, Inc. v. Migliaccio, 309 Wis. 2d 132, 749 N.W.2d 544 (Wis.) (reasonableness of reliance bears on material inducement element)
- Tim Torres Enters., Inc. v. Linscott, 142 Wis. 2d 56, 416 N.W.2d 670 (Ct. App.) (statute § 100.18 has broad remedial scope and consumer-protective purpose)