988 N.W.2d 606
Wis.2023Background
- Louis (Elias) Pagoudis is sole member of Sead Properties, LLC (Sead) and Kearns Management, LLC (Kearns); Pagoudis negotiated the purchase and signed the offer; Amy Keidl prepared and signed a Real Estate Condition Report (RECR).
- Sead executed the purchase contract and took title from the Keidls; within six months Sead assigned the Property to Kearns, which held title when suit was filed.
- Plaintiffs alleged undisclosed material defects (water/mildew, insects, etc.) and sued the Keidls for breach of contract (warranty), intentional and strict misrepresentation, criminally-derived misrepresentation, and §100.18 false-advertising.
- Amy Keidl moved to dismiss for failure to state a claim; the circuit court dismissed all plaintiffs for lack of standing; the court of appeals reversed and remanded for further factual development.
- The Wisconsin Supreme Court treated the motion as a sufficiency-of-complaint issue focused on each plaintiff’s distinct legal interest and held only Sead adequately pled claims; claims by Pagoudis (individually) and Kearns were dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pagoudis (individually) stated breach/misrep claims | Pagoudis signed the offer and used personal funds, so he was the purchaser and suffered injury | He never took title; either acted as Sead’s agent or assigned rights to Sead; no contract or damages in his individual capacity | Dismissed — complaint fails to show a contract or damages in Pagoudis’s personal capacity |
| Whether Sead stated breach/misrep claims | Sead was the contracting party, received the RECR, relied on representations, purchased and suffered damages | (Defendant argued lack of standing because Sead later transferred title) | Survived — Sead pleaded contract and all misrepresentation elements plausibly; damages alleged at point of sale |
| Whether Kearns (current titleholder) stated breach/misrep claims | Kearns, as current owner, suffered loss and can sue | Kearns was not party to the contract, received no representations from the Keidls, and cannot rely as a third party | Dismissed — Kearns lacks privity and no direct representations; third-party reliance rejected on these facts |
| Applicability of third‑party reliance / RECR scope and §100.18 false‑advertising | Plaintiffs argued third‑party reliance or public-directed representation could support Kearns’ claims | RECR statutes and practice limit reasonable expectation of reliance to the prospective buyer in that transaction; §100.18 requires communication to the public | Court rejected Restatement §533 application here and limited RECR reliance to the prospective buyer in the transaction; Sead’s §100.18 claim survived while Kearns’ did not (one justice dissented on §100.18 scope) |
Key Cases Cited
- Colectivo Coffee Roasters, Inc. v. Soc'y Ins., 401 Wis. 2d 660 (2022) (motion‑to‑dismiss standard: accept well‑pleaded facts and reasonable inferences)
- Chimekas v. Marvin, 25 Wis. 2d 630 (1964) (tort claims for deceit inducing a conveyance survive and are assignable unless assigned)
- Tullgren v. Sch. Dist. No. 1 of Vill. of Whitefish Bay, 16 Wis. 2d 135 (1962) (unqualified assignment of contract rights generally extinguishes assignor's contractual claims)
- Tietsworth v. Harley‑Davidson, Inc., 270 Wis. 2d 146 (2004) (elements of intentional misrepresentation)
- Ollerman v. O'Rourke Co. Inc., 94 Wis. 2d 17 (1980) (elements of strict‑liability misrepresentation)
- Below v. Norton, 310 Wis. 2d 713 (2008) (interpretation of §100.18 and prior treatment of seller statements to a potential purchaser)
- Gottsacker v. Monnier, 281 Wis. 2d 361 (2005) (LLC entity theory: LLCs are legally distinct from their members)
- Brew City Redev. Grp., LLC v. The Ferchill Grp., 289 Wis. 2d 795 (2006) (basic elements of breach of contract)