963 N.W.2d 803
Wis. Ct. App.2021Background
- Louis Pagoudis signed an offer to purchase a house from Amy and Marcus Keidl that was expressly between the Keidls and Louis "or assigns." Louis relied on a real estate condition report signed by Amy.
- Louis assigned the purchase to Sead Properties, LLC (Sead), which closed using Louis’s funds; Sead later conveyed the property to Kearns Management, LLC (Kearns), another Louis-controlled entity.
- After discovering undisclosed defects, Louis, his wife Hanna, Sead, and Kearns sued Amy for breach of contract (express warranty), false advertising (Wis. Stat. § 100.18), theft-by-fraud civil remedy (Wis. Stat. § 895.446), and strict‑responsibility misrepresentation.
- Amy moved to dismiss for lack of standing: she argued Louis and Sead lacked standing because they no longer owned the property, and Kearns lacked standing because it was not a party to the original transaction. The circuit court dismissed all claims with prejudice.
- The Court of Appeals reversed and remanded, holding that the transfers did not automatically destroy standing; which plaintiff(s) may sue depends on facts about who suffered compensable injury and which claims are assignable or limited to immediate parties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Louis (the signatory) has standing | Louis argues he contracted to purchase (or acted in a role giving him personal rights) and may have a personal stake | Amy argues Louis assigned away rights and no longer owns the property so lacks standing | Court: Unclear from pleadings; Louis may lack independent standing if he only contracted as assignee; factual development on remand required |
| Whether Sead lost standing by conveying the property to Kearns | Sead argues an accrued cause of action for property-related harm survives transfer and it can recover for losses it incurred | Amy argues Sead no longer owns the property so cannot sue | Court: Transfer alone does not automatically destroy Sead’s standing; if Sead suffered compensable injury it may sue; remand to develop facts |
| Whether Kearns (subsequent owner) can sue for seller’s misrepresentations | Plaintiffs argue Kearns may recover where the seller expected or should have expected representations to be repeated to or relied on by assignees/related transferees | Amy argues Kearns was not a party to original transaction and cannot assert contract claims against her | Court: Kearns cannot bring contract claims against a remote seller, but may have standing in tort/statutory claims (e.g., theft-by-fraud, §100.18) under third‑party liability principles if defendant intended or should have expected reliance by parties like Kearns |
| Whether strict‑responsibility misrepresentation extends to subsequent buyers | Plaintiffs seek to include strict‑responsibility claim for all plaintiffs | Amy contends strict‑responsibility misrep is limited to immediate parties | Court: Strict‑responsibility misrepresentation is generally limited to immediate parties; only the party to the transaction with Amy (Sead) can bring that claim absent assignment |
Key Cases Cited
- McConkey v. Van Hollen, 326 Wis. 2d 1 (de novo review standard for dismissal on pleadings)
- Foley‑Ciccantelli v. Bishop’s Grove Condo. Ass’n, 333 Wis. 2d 402 (standing requires a personal stake; courts construe standing broadly for access)
- Marx v. Morris, 386 Wis. 2d 122 (limits and context for LLC‑member suits and injury to LLC)
- Peterson v. Johnson, 56 Wis. 2d 145 (assignee steps into buyer’s shoes after assignment)
- Malzewski v. Rapkin, 296 Wis. 2d 98 (elements of express warranty and fraud‑type claims in real estate sales)
- Vaughn v. Dame Constr. Co., 223 Cal. App. 3d 144 (cause of action for injury to property is a personal right that may survive conveyance)
- Geernaert v. Mitchell, 31 Cal. App. 4th 601 (permitting suit by subsequent owners under Restatement §533 theory for remote misrepresentations)
- Rhee v. Highland Dev. Corp., 958 A.2d 385 (policy supporting liability to later purchasers when defects are fraudulently concealed)
- Grube v. Daun, 173 Wis. 2d 30 (strict‑responsibility misrepresentation generally limited to immediate parties)
- State ex rel. State Bar of Wis. v. Bonded Collections, Inc., 36 Wis. 2d 643 (purpose of real‑party‑in‑interest rule to prevent multiplicity of suits)