Grams v. Milk Products, Inc.

Grams, and Joliene Gerald Grams Plaintiffs-Appellants-Petitioners,

v. Incorporated, Milk Products, Defendant-Respondent, Defendant. Cargill, Incorporated, Supreme Court argument No. 2003AP801. Oral March July Decided

2005 WI (Also 167.) N.W.2d reported plaintiffs-appellants-petitioners For there were by Christopher Rogers Rogers Westrick, briefs and & J. Atkinson, Tondre, Denver, Brice CO,

Fort and A. argument by oral A. Brice Tondre. defendant-respondent by

For the there was a brief Group S.C., S. Mark Henkel and First Law Stevens by argument Point, and oral Mark S. Henkel. by Campion

An brief amicus curiae was filed E. S.C., McKinnon, & Milwaukee, Kersten Kersten Gleisner, III, and William C. and Law William Officesof Gleisner, Milwaukee, on behalf of the Wisconsin Acad- emy Lawyers. Trial PROSSER, T. DAVID J. Petitioners Gerald (the Grams)

and Joliene Grams seek review of an un- published affirming appeals grant court of decision1 (Milk summary judgment Milk Inc. Products, Prod- ucts) County, the circuit court Rock John W Judge. appeals Roethe, affirmed the court circuit Prods., Inc., v. Milk Grams 2003AP801, unpublished No. (Wis. 2004). slip op. Ct. App. June economic loss doctrine determination that the

court's against Milk Products the Grams' claims barred Cargill, (Cargill). and Inc. judicial a doc 2. The economic loss doctrine is preserve distinction to the fundamental

trine intended Co. N. Am. v. Cease contract tort. Ins. between of Inc., Elec., 15, 276 Wis. 2004 WI party prevent to a contract N.W.2d462. It works compensate party employing the from tort remedies arising purely from the contract. economic losses exceptions. instance, are we nоted several There For years ago "The does economic loss doctrine not purchaser's personal injury preclude product of claims property the itself." other than County Corp., Tile, Inc. v. Concrete Wis. 2d Wausau added). (1999) (emphasis 235, 247, Over 593 N.W.2d property" parameters time, however, the of this "other exception proved case, In this we must have elusive. damages fall within decide whether the Grams' claimed exception. scope property" the of the "other damages are hold that if claimed We bargained-for disappointed expectations of a result ap- product's performance, the economic loss doctrine plaintiff plies plaintiffs to bar the tort claims rely upon In this case, must contractual remedies alone. object allege contract, tort that the the Grams replacer" nourishment, a "milk intended for livestock adequately did not their calves and that some nourish claim is, bottom, died. we find that this tort at Because disappointed performance expectations, on based we property" not hold that it does fit within "other exception economic and is therefore barred loss Accordingly, doctrine. we affirm the decision appeals. court

I. FACTS AND PROCEDURAL POSTURE ¶ 4. Because this case is before us on the defen- summary judgment, dants' motion for we take the Grams' version of the facts as true. specialized 5. Gerald and Joliene Grams have in

raising acquire calves since 1992. The Grams the calves they days when are between three and five old and raise they approximately them until are four old, months at they which dispute, time resell them. At the time of this raising approximately the Grams were 6000 calves each year.

¶ 6. For the first few weeks of their lives, the farming calves are fed a milk substitute in which, parlance, replacer." is called a "milk The Grams used a Cargill replacer prod- milk known as "Half-Time." This designed keep uct included medications the calves healthy during the first few lives, weeks of their systems critical time in which the calves' immune are developing. replacer The "Half-Time" milk was manu- Cargill by factured for Milk Products, Inc. Cargill November the Grams asked a

representative obtaining expensive about a less milk replacer. representative they The told the Grams that purchase replacer could milk "Half-Time" without medi- price cation at a lower than the medicated version. The began using Grams this non-medicated version in Janu- ary 2001. As with the medicated "Half-Time," the non- by Cargill medicated version was sold and manufac- tured Milk Products. they began using

¶ 8. Soon after the non- prob- medicated "Half-Time,"the noticed Grams certain developing Specifically, lems in their calves. the calves gaining weight properly appeared gaunt were not and hungry. mortality and In addition, the rate of the calves

tripled, average percent an of 9 before the new from high replacer percent of 34 the new was used to a after making replacer By June after was introduced. Cargill attempts remedy problems these with severed Products, and Milk the Grams discontinued later with using The "Half-Time." be- the non-medicated Grams poor content the non- lieved that nutritional damaged replacer immune medicated had calves' growth systems, poor caused the which turn higher mortality their rate. calves and Cargill against Milk The filed suit Grams They alleged 22, 2001. causes Products on October five (1) action, one in contract and in tort: four breach (3) (2) warranty; implied liability negligence; tort; strict (4) (5) misrepresentation; respon- strict intentional sibility misrepresentation. alleged all five Grams against "jointly severally" of action and the two causes defendants. granted summary judg- The circuit court 10. Cargill Milk on

ment and Products all four tort to both finding by claims, that those claims were barred granted economic loss The circuit court doctrine. also summary judgment Milk on Products the Grams' privity contract claim because there was no between the Milk Products, and it dismissed Milk Prod- Grams only ucts from the case. This left contract Grams' Cargill. against claim alleging appealed, The Grams that the cir- dismissing

cuit erred court their contract claim against Milk as well all their Products tort claims. appeals The on v. court affirmed both issues. Grams unpublished slip op. Inc., Prods., Milk 2003AP801, No. (Wis. 2004). App. granted 17, Ct. June We review to determine whether the Grams' tort claims are barred the economic loss doctrine.2

II. STANDARDOF REVIEW summary ¶ 12. This court reviews motions for judgment using methodology novo, de the same as the circuit Winkelman, court. Town v. 2004 WI of Delafield Summary ¶17, 2d 109, 269 Wis. N.W.2d judgment appropriate pleadings, deposi when "the interrogatories, tions, answers to and admissions on together any, file, affidavits, with the if show that there genuine any is no moving party issue as to material fact and that the judgment

is entitled to a as a matter of 802.08(2) (2001-02).3 § interpreta law."Wis. Stat. question tion of the economic loss doctrine is a of law Sunnyslope Grading, that this court reviews de novo. Risberg, Miller, Inc., Inc. v. & 148 Wis. 2d Bradford (1989). 915, 437 N.W.2d

III. ANALYSIS A. The Economic Loss Doctrine judicially

¶ 13. The economic loss doctrine is boundary preserve created doctrine intended to between illustrate, contract. To the commer- purchaser product may cial of a not recover from the negligence seller, manufacturer or under or strict liabil- 2 The circuit court's dismissal Grams' contract claim against Milk Products is not before us.

3 All subsequent the references to Wisconsin Statutes are to the 2001-02 version unless otherwise indicated.

519 arising solely ity from that economic losses theories, warranty given especially product. a true when This is recovery precludes by specifically the the manufacturer Vogt, damages. Inc., 110, v. 2004 WI Van Lare of such ¶ Wisconsin, 631, 2d 683 N.W.2d 274 Wis. fundamental based on three loss doctrine is economic "(1) premises. fundamental to maintain the It seeks (2) law; law and contract tort distinction between parties' protect to allocate eco freedom commercial (3) encourage party by contract; and nomic risk [that loss, the risk of economic to assess best situated purchaser, allocate, or assume, is,] commercial (quoting against ¶ Id., Daanen & that risk." 17 insure Cedarapids, Inc., Janssen, 395, 403, Inc. v. 216 Wis. (1998)). 573 N.W.2d842 array" generally offers a "broader 14. Tort law

damages Elec., 2d. Cease 276 Wis. than contract.4 many liability plaintiffs products result, aAs prefer It said that without to sue tort. has been would maintaining boundary the distinction between the a in a sea of tort." State two, "contract law would drown Co., Motor 225 Wis. 2d Farm Mut. Auto. Ins. Co. v. Ford (1999) (quoting E. River S.S. 305, 320, N.W.2d Corp. Delaval, Inc., 858, 476 U.S. v. Transamerica (1986)). superior recognized abil- has 15. Wisconsin particular

ity law, and in the Uniform of contract damages attorney fees are punitive For example, actions, be had generally in tort but cannot sometimes available an give рarties in breach of contract claims. Contracts Further, liability. scope limit the and amount of opportunity to claim, contract, may affect whether the nature of entity eligible as a defendant and person or particular claim is covered insurance. particular whether a (UCC), Commercial Code to deal with certain kinds of disputes. Elec., Cease 276 Wis. 2d In 33. Cease apply Electric, however, we declined to the economic Id., ¶ loss doctrine to contracts for services. 2. Central body to our decision was the fact that no of law similar applies recog- to the UCC for contracts services. We provides "comprehensive system nized that the UCC a compensating arising consumers for economic loss purchase products." from the Id., of defective 342.) (citing Farm, State 2dWis. at When a proves aggrieved defective, to be the UCC allows the (under buyer warranty to sue for breach or certain circumstances) goods to return the and sue for breach §§ Id., ¶ of contract. 29. See also Wis. Stat. 402.313 warranties), (express (implied 402.314, 402.315 war- ranties), tance). (rejection), (revoking accep- 402.602 402.608 duplicating overriding

¶ 16. Concern about or provisions important UCC was an reason this court adopt chose to the economic loss doctrine in the first place. Sunnyslope, 148 2d at In cаse, Wis. that we plaintiff warranty refused through allow ‍​‌​​​​‌‌​​‌‌‌‌‌‌‌‌​​​​​‌‌‌‌​​‌​​‌​‌‌​​​‌​‌​​​​​​‍the to circumvent a reasoning "protections a claim, tort that the granted by [UCC] are not to be buttressed (internal recovery." principles and Id. citations omit- ted). addition, In contract law tort law em-

body distinctly approaches sharing. different to risk provides encourages parties The UCC a structure that given ato contract to allocate the economic risks of a among transaction or between themselves. Daanen & especially Janssen, 216 Wis. 2d at 407. This is true produces part component when a manufacturer a variety ways. case, that can be used in a supply party the ultimate chain—often down the purchaser may to assess the risk be best situated — warranty, buying by securing guard against insur- it ways. allocating at 411. risk in other Id. ance, or permit not ¶ law, contract, unlike does 18. Tort obligations. sharing. imposes Tort law is de- It risk society against signed "protect the unreasonable risk to unexpected injury." Cease of harm from accidental product poses a Elec., 39. When 276 Wis. society, "public policy types demands to these of risks responsibility it will most effec- be fixed wherever that tively health inherent in the hazards to life and

reduce products River, 476 that reach the market." E. defective omitted). (internal a manu- at citations When U.S. poses designs produces product or a that such facturer resulting injuries responsibility risk, for the will redound to the manufacturer. rationale breaks down when loss 19. This tort parties roughly equal purely

is economic. When through negotia- bargaining power of loss allocate risks overturning society special tion, has no interest buyers purely Id. at 873. If could recover allocation. through suits, tort manufacturers economic losses they negotiated rely could never on the risk allocations through Instead, end users could circumvent contract. by suing simply a manufacturer unfavorable warranties warranty up production negotiate for no at chain, rely on tort law as their insurer. Daanen & all contrary Janssen, 2d at 408. This would be to 216 Wis. lays public policy UCC, which out a embodied carefully to allow constructed framework of warranties negotiate risk. id. limits on their See manufacturers 402.719(3) (seller § (citing can at 407-408 Wis. Stat. long consequential damages limitation is limit as as the unconscionable)). recovery purely economic Tort not policy. contrary economic to sound also be losses would always products insure its must If a manufacturer against trans- manufacturers will be loss, all economic seemingly unlimited with formed "into insurers liability." ability their risk no to share Id. at 412. With product, manufacturers users of with commercial produce understandably certain reluctant to be would prevented They products. from would be at 408. also Id. willing parties products providing lower cost of certain losses. assume the risk dif- doctrine, therefore, loss economic risk losses, for which economic ferentiates between per- encouraged, sharing losses, such as and other sharing injury is undesirable losses, where risk sonal public policy. a matter Exception Property" Economic to the

B. The "Other Loss Doctrine traced doctrine has been The economic loss Supreme by the California decision

to a landmark (Cal. Seely Co., P.2d 145 Motor Court, v. White 1965), involving allowed truck. The court a defective warranty express recovery refused but of an for breach liability. product recovery of strict on the basis to allow can be held liable manufacturer that a The court said "by requiring injuries by his physical caused defects safety of goods in terms of defined match a standard to harm. He risks of unreasonable that create conditions performance of his of the level cannot be held for agrees he products unless business in the consumer's designed product meet the consumer's to was at 151. demands." Id. 22. The following Seely law was summarized by

Professor K. William Jones Columbia University in School Law 1990: product

If a properly, buyer fails function usually in expenses repairing replacing incurs addition, product. buyer's may In business he disrupted, resulting profits. Such lost "eсonomic generally losses" cannot be recovered in tort actions alleging negligence If, product liability. or strict how- ever, the defect in the product physical injury causes property, tort remedies are available. The distinction is easy apply cases, poses some but it difficul- severe ties in others. Jones, K. William Product Causing Commercial Defects Tort,

Loss: The Ascendancy Contract over 44 U. (1990) added). Miami L. Rev. 747-48 (emphasis case, the East River the Supreme Court embraced the economic loss doctrine but it, expanded indicating that to the physical damage product itself was covered the doctrine. by The Court stated:

We realize that the [to the product] defective may be qualitative, occurring through gradual deterio- ration or internal breakage. may Or it be calamitous. way, But either since person definition no or other property damaged, the resulting purely loss is eco- nomic. Even when the harm to the itself occurs through event, an abrupt, accident-like the resulting costs, value, loss due to repair decreased profits and lost is essentially the failure of purchaser to receive the benefit of bargain traditionally its the core concern of — contract law. added). Id. at 870 (emphasis 24. This court has recognized the "other prop- erty" excеption Janssen, Wisconsin. Daanen & 216 ("The Wis. 2d at 402 economic loss doctrine .. . does not

524 personal purchaser's on claims based a commercial bar product, damage property injury or other than the or alleged in combination that are loss claims economic cases). losses.") (citing It has also with noneconomic acknowledged, did, that "distin- Professor Jones physical guishing harm to economic loss between property often a difficult itself is other than Northridge Co.,& 162 Wis. Co. v. W.R.Grace task . . .." (1991). 932, 471 N.W.2d 179 ap doctrine has been The economic loss throughout jurisdictions majority proved in the body Consequently, there is substantial States. United showing have defined how various states of law exception. property" Minnesota the "other dealt with study. Jacquelyn interesting presents K. See an case and Times The Brunmeier, Death Footnote: Life Doctrine, Mitchell Loss 19 Wm. Minnesota's Economic (1993). adopted the economic 871 Minnesota L. Rev. Corp. Superwood v. Siem in 1981 in loss doctrine 1981). (Minn. Corp., pelkamp The court 159 311 N.W.2d "[W]e out of that arise hold that economic losses stated: involving per except those transactions, commercial property, injury are not recov to other sonal negligence or strict the tort theories erable under (em liability." Superwood, products at N.W.2d added). phasis later, however, а decade Less than concluding Superwood, that the UCC overruled court exclusively alleging only property dam controls claims Paquin Hapka age v. commercial transaction. in a 1990). (Minn. case, which Farms, 458 N.W.2d effectively potatoes, eliminated seed involved diseased property" exception in Minnesota.5 the "other ensued of the doctrine struggle scope to define the A Minnesota Su- Legislature and the the Minnesota between years Michigan adopted later, 26. Two when Neibarger Coops, economic loss in doctrine v. Universal (Mich. 1992), Michigan Inc., 486 N.W.2d 612 Su preme rejected approach Court this court took in Sunnyslope ap and instead embraced Minnesota's proach Hapka. Michigan court stated: "Where damage property by to other was caused the failure of a product purchased purposes perform for commercial expected, damage as and this was within the contem plation parties agreement, to the the occurrence subject negotia of such could have been the parties." Neibarger, tions between the at N.W.2d 620. See Christian Fabian, Note, W. Case 70 U. Det. (1993) Mercy (discussing Neibarger). L. Rev. 513 ¶ 27. state, this the evolution of the economic loss doctrine has been slower than in Minnesota and Michigan; appellate rеpeatedly our decisions have used techniques scope property" to limit the of the "other exception eliminating many without it. Like other incorporated concept states, we have of an "inte- grated system." "product" If the at issue is a defective (created preme § Court. See by Minn. Stat. 604.10 1991 Minn. 352) (statutorily Farms, Laws c. reversing v. Hapka Paquin (Minn. 1990)); Den-Tal-Ez, N.W.2d 683 Lloyd F. Smith Co. v. (Minn. Inc., 1992) 491 N.W.2d 11 (discussing scope economic relying loss doctrine and on Hapka rather than Minn. Stat. (as 604.10); § § Minn. Stat. 604.10 by revised 1993 Minn. Laws (created 91); § c. Minn. Stat. 604.101 2000 Minn. c. Laws 358) ("Abuyer may bring not claim product defect tort against a seller for compensatory damages goods unless defect in the sold or leased caused harm buyer's tangible to the personal .."). property goods other than the .. Hapka merely

We cite example as an potentially scope broad of the economic doctrine. loss components larger "system," component the other ain legal property" regarded sense, in a "other are not property they in a literal sense. are different even if principle This Tile: was stated Wausau integrated component "Damage by anof a defective system system system or other as whole to either the damage property' components which to 'other is not precludes application ecоnomic loss doctrine." Thus, a manufacturer Tile, 2d at 249.6 226 Wis. Wausau permitted pavers two of its to sue was not of concrete suppliers allegedly supplying ce- defective aggregate aggregate. were The cement and ment complete product, components of a more deemed explained system." "integrated that when The court product, component of a from a defective harm results product the harm. to have caused itself is deemed Fishing (citing Saratoga Martinac Co. v. J.M. Id. at 250 (1997)).7 Co., 875, & 520 U.S. 883 integrated applied appeals The court of Bay building system principle Breeze to construction Inc., Windows, 2002 WI Ass'n v. Norco Condominium App 738, a case 511, 651 N.W.2d 205, 257 2d Wis. involving in a condo- that were installed windows complex. association sued The condominium minium problems claiming numerous the window manufacturer 6 Inc., Delaval, Corp. v. Transamerica also E. River S.S. See Airways, Inc. Helicopters Midwest (1986); 858, U.S. 867-68 476 (E.D. 1994); 666, 671-72 Aircraft, Wis. Sikorsky v. Supp. 849 F. 'l, 456, 463, 591 v.Am. Int 224 2d N.W.2d Cincinnati Ins. Co. Wis. Indus., Clayton Co. v. (Ct. 157 1999); Midwhey Powder App. 869 1990). (Ct. 585, 590-91, App. 2d 460 N.W.2d Wis. Charley Top Ass'n v. Clara Condominium also Casa See (Fla. 1993); Trans Sons, Inc., & pino 620 So. Canada, Inc., 682 N.E.2d Whitney v. Pratt & States Airlines 1997). (Ill. including leakage related windows into the units rotting and walls around the windows and and deterio- ration of wood window casements and frames. The circuit court dismissed association's tort claims though prove damage even the association could propеrty other than the windows. appeals

¶ 30. When the court of affirmed, it ac knowledged that the economic loss doctrine "does not apply... damage property if the is to other than the Id., ¶ defective However, itself." the court applies concluded that the economic loss doctrine building prod construction defects when the defective component part integrated uct is a of an structure or product. [Condo finished "The law of Casa Clara Charley Toppino minium Sons, Inc., Association v. & (Fla. 1993)] 620 So. 2d 1244 is consistent with Wiscon precedent addressing component parts sin that cause integrated product, only to an which results in integral Id., ¶ economic loss." 26. "Because of the relationship between the windows, the casements and surrounding simply part the walls, the windows are a single system having apart or structure, no function buildings they from the for which were manufactured." Bay Breeze, 257 511, Wis. 2d "integrated system" concept 31. The does not involving property translate well to all situations dam- age logically ap- to which the economic loss doctrine plies. expla- To address situations in which different delimiting property nation is needed for the other exception, appeals adopted "disap- the court of the pointed expectations" concept which entails a different аnalysis. concept governs This situations in which a property damage commercial causes but the damage scope bargaining, was within the or as the Michigan Supreme reasoned, Court "the occurrence of

528 subject negotiations the have been could such at 620.8 486 N.W.2d Neibarger, the parties." between the that we "fabricate" Contrary to the assertion dissent's Justice Abrahamson's concept, Chief disappointed expectations twenty more than dissent, 62, has existed for concept the the other courts. As by numerous years, adopted and has been South Carolina observed: Court for United States District emerging transaction appears that in a commercial [A] rule to be belonging property the equal parties, to to loss two between product... contem- plaintiff flowing within the contract's from a prod- reasonably should the plation foreseeable as a result recovery support prove in tort because not uct . . . defective will been, by contemplated, have injury property or should is such therefore, corollary agreement. the term parties As a the to the subject it property" appears construction that to be to the "other belonging plaintiff outside the the risk to which is property to the contemplation of the contract. reasоnable Co., Supp. Elec. 843 F. Corp. v. Emerson Myrtle Pipeline Beach (D.S.C. Mfg. Co. v. Nat'l 1027, 1993); see also Moorman (Ill. Laubmeier, 1982);John J. Co., 443, 451-52 Tank N.E.2d Doctrine, Loss Comment, Wisconsin's Economic Demystifying ("The economic loss 225, idea behind the 2005 Wis. L. Rev. something that fails purchases that if someone doctrine is remedy sole should purchaser's expectations, his or her meet theoreti- which was remedy bargained parties, be Fox & purchase price."); in the into account cally a factor taken Economic Loss East River: Loftus, Riding Choppy Waters of (1997). Later, J. 265-66 64 Def. Couns. Ten Years Doctrine 1980s. In Wisconsin, to the late concept dates back Even Farms, Hopkins Inc. v. Tony Spychalla for review in petition his 444 N.W.2d 151 Wis. Company, Chemical Agricultural (Ct. asked this court 1989),Attorney Russell T. Golla App. "if the... lost exception property the other apply decline to purchas expectations failed plaintiffs from the profits!] result Third Circuit's decision Attorney cited the ing Golla product." 1988) (cert. (3d denied, Hilton-Davis, 1047 Cir. 855 F.2d King v. (Jan. barred 17, 1989)). King, In the Third Circuit 488 U.S. 1030 on the Spychalla made in nearly to the one claim identical a tort "disappointed expectations" concept ¶ 32. The is grounded principles bargaining in contract and risk sharing, property." not on a redefinition of "other The particular damage qualifies determination ‍​‌​​​​‌‌​​‌‌‌‌‌‌‌‌​​​​​‌‌‌‌​​‌​​‌​‌‌​​​‌​‌​​​​​​‍of whether damage property" parties' to "other turns on the expectations bargained-for prod- of the function of the Corp. Supp. Kemutec, Inc., uct. See Rich Prods. v. 66 F. (E.D. 1999) (citing Wis. Dakota Gasification (8th 1996)). Bldg. Sys., Co. v. Pascoe 91 F.3d 1094 Cir. "disappointed expectations" concept The appeals. illustrated in two cases from the court of D'Huyvetter Products, v. A.O. Smith Harvestore (Ct. 1990), App. 306, 317, Wis. 2d 475 N.W.2d587 plaintiff purchased grain system a "Harvestore" silo According D'Huyvetter, from the defendant. the silo operate properly protect failed to because it did not integrity compromised of the stored feed. The feed damage D'Huyvetter's including caused livestock production, profits reduced milk loss of from sale of cattle, and the death and illness of some of the livestock. Id. at 326. appeals court of held that the

D'Huyvetter's livestock did not come within the "other property" exception to the economic loss doctrine. The "[t]he expected court reasoned that function of the providing Harvestore feed, was to enrich the enhanced damages nutrition for the cows. The stem from the perform expected.'" failure the Harvestore to 'as Id. at 328.9

grounds Kings that "The expected performance lost the seed potatoes, no more and no King, less." 855 F.2d at 1052. Agristor See also Leasing Guggisberg, v. Supp. 617 F. (D. 1985) ("[We] 908 Minn. [ conclude ] as matter of law that alleged damage to the alfalfa feed and the Holstein cows is appeals applied a similar "dis The of 35. court expectations" appointed in Selzer v.Brunsell Broth test App Ltd., ers, 232, 257 652 N.W.2d 2002 WI Wis. plaintiff bought Selzer, that the windows 806. In perma "deep-treated to warranted be defendant decay." protect against nently Id., ¶ 5. Seven rot and plaintiff years installed, the after the windows were rotting, and the rot that noticed that the windows were siding spread Id., to the around windows. had damage siding argued the rot in the was Selzer that property" economic loss doctrine "other and thus the tort claim. would not bar his disagreed. appeals It of observed 36. The court disap- [involved] bottom, "at this a loss that

that was expectations." pointed performance Id., ¶ 36. Selzer they expecting bought resist that would the windows They rot that the to do The court reasoned rot. failed so. consequence surrounding of a direct wood was Id., ¶ themselves. the rot in the windows expecta- disappointed part of rot was Selzer's collateral prove not Selzer did court said that because tions. The expectations, beyond disappointed any he was harm recovery precluded pursuing in tort. The court from spontane- but resisted rot added: "Had the windows adja- glass spewing ously an into shattered, shards might argue the defective well that Picasso, cent Selzer entirely painting damaged unantici- in an windows pated his perform going beyond a failure to as manner, well remedy." pursue entitling expected a tort Id. him to The Harvestore structure.. . non-recoverable economic loss. Guggis- storing feed for the purchased purpose was The essence of commercial venture. dairy operation, a bergs' perform that the Harvestore failed complaint their "). expected ... picturesque hypothetical

¶ 37. The court's was designed corollary disappointed to show the expectations namely, concept, a situation in which the damage property" to "other and the risk entirely unanticipated. was Tony Spychalla

¶ Farms, 38. The of 1989 case Inc. Agricultural Hopkins Company, v. Chemical 151 Wis. (Ct. App. 1989), 431, 444 N.W.2d743 is often as cited prime example corollary principle "flip the of the . .. the D'Huyvetter. Supp. side" of Prods., See Rich 66 F. 2d at Spychalla, plaintiff potato 975. In the treated his seed designed prevent awith chemical dust to rot. The correctly performed chemical that function, it but also petrified Spychalla's resulting significantly seed, in a crop. Spychalla reduced 151 Wis. 2d at 435. filed suit against the of manufacturer the chemical dust a under theory liability alleging of tort, strict chemical that the unreasonably dangerous jury was to the seed. Id. The Spychalla found for on his claim and awarded him damages. Spychalla, $225,000 more than in 151 Wis. 2d at 434. appeals concluding 39. The affirmed, court of

that the economic loss doctrine did bar not plaintiffs tort claim. The court asserted that the chemi- Spychalla purchased dangerous cal dust that was a product. Spychalla expected protect had the chemical to crop by preventing rot, his and it had done its work regard. that Id. at 438. it However, inflicted unanticipated unanticipated damage an manner. This property," to "other id. at was deemed outside the economic loss doctrine. Accepting Spychalla reported, the facts in wholly incompatible decision is court's not with the

economic loss doctrine. Nonetheless, it must be remem- bered that the trial in that case occurred on June formally years before Wisconsin 1987, almost two adopted There is a chance loss doctrine. the economic differently today, be decided a similar case would that realizing subject a transaction would be that similar for the UCC, it not be unreasonable and that would the parties anticipate a chemical dust could risk that the damage potato could turn case, In a new the result seed. product, purchasing purpose the reason- on the product's anticipating failed a risk ableness availability performance, or risk shar- of warranties extremity ing of the facts. mechanisms, and the Seely, years ago, court the California held for the level "cannot be said that a defendant products performance of in the consumer's business his designed agrees meet was he unless Seely, "Level P.2d at 151. demands." the consumer's performance" to include now understood should be setting, Today performance. commercial in a failed anticipate buyer sophisticated the risk that must performance product disappoint purchased in its will accordingly against protect entirely, himself fail and economic loss. adopted at bot- in Selzer—whether test performance disappointed claim involves

tom, the analytic appropriate expectations to deter- an tool —is exception applies. property other mine whether the certainly in- test Selzer, 36. This 257 Wis. purpose of the the or thrust of cludes consideration parties. expectations bargain of the contractual and the exploring parameters the "other In exception property" doctrine, we loss to the economic concept "disappointed expecta- incorporate this will integratеd system analysis, as the our as well tions" into concept. principles This does not mean that contract envelop damages will all foreseeable "in a remote or general Supp. Prods., sense." Rich 66 F. 2d at 975. apply Rather, the economic loss doctrine will when "prevention subject of the one risk was of the contrac- expectations motivating purchase tual of the defec- product." tive Id. urge

¶ 44. The Grams this court to resolve the property" by adopting "bright "other conundrum a new physical damage anything rule," line other than damage the property" itself would be considered to "other subject

and therefore tort, to suit in and this argument attracts the dissent. See Chief Justice ¶¶ dissent, Abrahamson's 80. The Grams concede proposal that this would obliterate the distinction be- property" legal property" tween literal "other "other discussed in the case law. Suits tort would be allowed beyond physical whenever extends dimen- purchased product. sions of the If such a rule were applied to case, this the Grams' tort claims could proceed property because calves were different from replacer. adopt pro-

¶ 45. We decline to such rule. The posed reject inquiry scope rule would into the bargain replace overly it with an formalistic dis- proрerty tinction based on the kind harmed. Such inevitably distinction would cause the erosion of the UCC. The "fundamental distinction" between contract espoused and in our cases would be lost.10 10The heavily dissent relies on Saratoga Fishing Co. J.M. v. Co.,& (1997), Martinac 520 U.S. 875 but that case is distin guishable. Saratoga, products added a ship to after it was skiff, (e.g. net, manufactured a a and and communications electronics) navigational destroyed along were ship with the hydraulic ship's system when the A failed. divided Court held product UCC, warranties are Under the limiting necessary important for a and vehicles liability the for risks associated with manufacturer's possible just product, diminution in value uses of a not product product a to is intended be itself. When system, integrated part integrated the of an used as system the risk the manufacturer to share rule allows damage system. product rest the See will the that its adopting the Tile, 226 2d at 258-59. Wausau Wis. recognized "[s]ince system concept, integrated that we component very simplest of have machines all but the holding component parts, of a machine was a property' that a finding require 'property would 'other damage' virtually every product where a dam- case holding ages eliminate the distinc- would itself. Such liability." products warranty and Id. tion strict between 883). Fishing (quoting Saratoga Co., at 520 U.S. at 250 prod- appliеs rationale here. If a 47. The same expected with other and intended interact uct is naturally products property, that it follows damage adversely and even that could affect recovery property. what A based on rule allows damaged, risk of that rather than whether bargain, scope would was within for leave little room contract. adopt Accordingly, the Grams' we decline using proceed

proposed this case the facts of rule, expectations disappointed test. and that the loss property" "other products that the added were simply for in tort. That is could be sued property" of the "other bargained milk for a non-medicated a different case. The Grams not been it, and should have replacer, paid price a lower expensive the more did not as well as surprised perform that it product. medicated

IV APPLICATION ¶ 49. The Grams claim the that non-medicated replacer they bought Cargill damaged milk from their systems, leading poor growth calves' immune and higher mortality. foregoing analy- Consistent with the sis, disappointment whether, ask bottom, we at this claim involves replacer's performance

in the milk and product of failure the to fulfill the Grams' contractual expectations. step inquiry

¶ 50. The first in our is to determine expectations what inquiry those were. This necessitatеs an purpose into the substance and the expected transaction. The record shows the that func- replacer provide tion the of milk was to sustenance for expected the Grams' The calves. Grams that the "Half- replacer properly Time" non-medicated would nourish replacer calves, the much as the old had, so that the grow. bargain milk calves would This was not about replacer per product it a se; was about that would foster healthy development growth young the of calves. step inquire

¶ 51. The next is to whether the disappointment expec- Grams' claim about with those replacer properly case, tations. this the milk did not the nourishment nourish calves. Poor a led to number consequences including of calves, the weakened systems immune and for some, even death. The re- placer parties expected did not do what do, toit sought this caused the exact result the Grams to avoid. example disap- It is difficult think better pointed expectations expected than that is nourish but animals leaves them malnourished. The expectations disappointed; Grams' were the fact that they severely disappointed change were does not analysis. argue like that this case is 52. The Grams replacer

Spychalla; was caused only replacer expectations. The not than failed worse growth, it killed some them. the calves' stunted argue replacer killed some of the that when Grams entirely unanticipated, similar calves, the result was Spychalla. petrification of the seed in the argument ignores na- ¶ the intertwined 53. This mortality. nutrition, The health, of calf Grams ture bargained replacer that nourish the calves a would high quality grow. medicated make them Even with mortality replacer, rate of the Grams' calves milk the percent. A farmer would know ran about 9 reasonable replacer switching an unmedicated milk could that mortality. only question in calf The some increase cause expected Obviously, the lower was how much. Grams mortality actually occurred, in than but increase calf change fact nutrition does not the that the calves' that unfortunately, at heart of malnutrition —was the —or, bargain consis- made. think this is the Grams We teaching Spychalla. of tent with the acknowledge determining whether 54. We that expectations disappointed performance one a case is of simple always it is here. It will not as will be necessarily interpretation purpose require of a of product. expected of a uses While transaction and inquiry undertaking should be mindful courts this they drowning prevent of tort," from in sea "contract drowning prevent in a sea also tort from should Sullivan, R. Thomas Cane & Sheila contract.11 See Wisconsin, Wis- loss doctrine economic future 11The conclusions that the economic loss doctrine dissent's claims, or that "threatens hypothetical certain it would bar see liability doctrine," Justice products Chief strict 2005, at Lawyer, May consin believe the We disap- will pointed expectations concept useful strik- prove an balance. ing appropriate

V CONCLUSION 55. The a contractually Grams have rooted claim against Cargill for breach of implied warranty remains to be at resolved the circuit court.12 are, bottom, Because their tort claims at on based their with the disappointment performance of the non- medicated milk replacer, their contract claim is the vehicle for proper resolving dispute. this We therefore affirm the court appeals. the Court. —The decision

By of the court of appeals is affirmed. BRADLEY, J., 56. ANN WALSH withdrew from

participation. dissent, 63, 76-79, Abrahamson's give the doctrine a ¶¶ far expansive reading more than is opinion. warranted this 12 alleged Cargill Both of the Grams that a representative losses, told "compute them to our them Cargill submit and Cargill remand, would take care of On us." the Grams will have a pursue chance to such contractual remedies.

The dissent laments the fact that "[the Grams] cannot suе Milk dissent, Products at all." Chief Justice Abrahamson's 64. gives reason, however, The dissent no the Grams cannot be fully compensated through against Cargill. their contract claim turn, Cargill may Milk Thus, choose to sue Products. the are ‍​‌​​​​‌‌​​‌‌‌‌‌‌‌‌​​​​​‌‌‌‌​​‌​​‌​‌‌​​​‌​‌​​​​​​‍prevented Grams not and recovery from Milk Products is protected liability. not from prevented, however, The are Grams making from an "end run" Cargill. around their contract with exactly This purpose the which the economic loss doctrine designed. Janssen, Inc., was Daanen Cedarapids, See & Inc. v. (1998). 407, 395, 216 2dWis. 573 842 N.W.2d 538 (dissent- ABRAHAMSON, C.J. S. SHIRLEY " expanding and quickly confoundingly [T]he most ing). rule."1 Like the ... the economic loss doctrine is legal portrayed alien life form all-consuming ever-expanding, Blob, economic loss in 1958 B-movie classic The the the globule on the swelling legal seems to be doctrine commentator, According one landscape of this state. doctrine has been an issue in the economic loss the court 47 supreme times appeals Wisconsin court At current the economic pace, 2000-2004.2 the during much law if left doctrine consume of tort may loss unchecked.3 majority and other Courtesy opinion this modest, court, with legal of this this doctrine

opinions Taking is fast beginnings, growing.5 or even "obscure"4 in of the economic increasing scope a further step in the case delivers doctrine, instant majority loss 1 The Outbreak: The Schwiep, Paul J. Economic Loss Rule Torts, B.J., 1995, Fla. at 34. Ate Commercial Nov. Monster That 2 Laubmeier, Comment, Demystifying Wisconsin's John J. Doctrine, 225, L. 225 Wis. Rev. n.3. Economic Loss 2005 3 ("[W]hat 1, supra at 40 is needed is Schwiep, See note analysis than place application, rather critical rule's tide of commercial trivial of the rule to stem the invocation reform."). attempt judicial at tort litigation, apparent in an 4 2, Laubmeier, supra at 225. note 5 can be traced to California economic loss doctrine Co., P.2d reasoning Seely v. WhiteMotor Court's Supreme (Cal. 1965). Supreme adopted The United States Court Corp. Tran reasoning in East River S.S. v. California court's Delaval, Inc., (1986), court and this samerica 476 U.S. reasoning Grading, Inc. v. adopted Sunnyslope the East River Inc., Miller, Risberg, & Wis. N.W.2d Bradford (1989), limiting liability prod tort for defective expressly 213 persons damage property or caused injury caused to ucts product than itself. other the defective significant vitality property" blow to the of the "other exception to the economic loss doctrine. recovery 59. The economic loss doctrine bars damage product

tort for economic "to a itself or mon- etary by product, loss caused the defective which does personal injury not cause property."6 or to other Although simple meaning to state, the doctrine's application confounding litigants, lawyers, are their and the courts.7 property" exception It is the "other to the

economic loss doctrine that is at issue in the instant " '[0]ther property' legal case. is a term of art."8 majority opinion 61. The takes two actions with respect property" exception. to the "other First, it reaffirms this court's endorsement and use of the "in- tegrated system" concept evaluating when whether a Tile, Wausau County Inc. v. Concrete Corp., 226 Wis. 2d 235, (1999) 247, omitted). 593 N.W.2d 445 (quoted source (Third) (1998)

Restatement § of Torts provides as fol- lows: purposes Sec. Restatement, 21. For persons this harm to

property by includes economic loss if caused harm to: (a) plaintiffs person;

(b) person of another when harm to the other interferes with legally protected plaintiff protected interest law; or (c) plaintiffs property other than the defective itself. 7 "The economic loss rule has become a confusing morass." Indem. Ins. Co. Aviation, Inc., Am. v. Am. 532, 891 So. 2d of N. (Fla. 2004) (Cantero, J., concurring). 8Fireman's Fund McGee Marine Underwriters Av. & B Inc., (W.D. Welding Mfg., & 2005 WL at *3 Wis. Mar. 2005). damage propo- property."9 is to "other This claimed loss unanimously controversial; not the court sition is County adopted concept. Tile, Inc. v. this Wausau "[d]amage by Corp.10we said that a defective Concrete system system component integrated to either the an system components dаmage not or other as whole application property' precludes 'other which loss economic doctrine."11 'integrated system' "[t]he Second, 62. because

concept does well to all situations involv- not translate ing property doc- to which the economic loss logically majority applies,"12the has to fabricate trine theory broadening definition of "other another joins present majority property" case. fit the foreseeability,"13 adopting other courts "reasonable damages, adapt- principle of fundamental contract ing "disappointed expectations" define rule to it as property" in economic loss cases.14 "other (1) policies I 63. dissent for three reasons: motivating doctrine the creation the economic loss by dismissing action not furthered the Grams' tort are (the against milk re- Milk manufacturer of Products calves), injured placer whom that killed and their with (2) relationship; no the Grams have contractual 9 op., Majority 28. 10 Tile, County Corp., Inc. v. 2d Wausau Concrete 226 Wis. (1999). 249, 235, 593 445 N.W.2d

11 Tile, S.S. E. River (citing Wausau 226 Wis. at 249 Delaval, Inc., Corp. v. Transamerica 476 U.S. 867-68 cases). (1986) and other

12 Majority op., ¶ Baxendale, v. Eng. Rep. Hadley See Ex.

(1854).

14Majority op., ¶

majority opinion's "disappointed expecta- use of the concept property" tions" to define "other is so broad that the liability products economic loss doctrine threatens the strict (3) majority

doctrine; and even under the opinion's property," summary judg- standard for "other inappropriate ment was in the instant case.

HH majority ¶ opinion 64. The bars the Grams from suing Milk Products in either contract or in Milk tort. replacer Cargill, Products sold the milk to which sold the to the Grams. The Grams and Milk Prod- relationship, ucts have no contractual and the Grams object did not to the dismissal of the contract action. bring against Therefore, if the Grams cannot a tort suit they Milk Products, cannot sue Milk Products at all. Allowing the Grams to Milk sue Products is not an "end run" contract, around the but rather would allow them legal wrong to assert an against action for a distinct the tortfeasor, Milk Products.

¶ against 65. The Grams' tort action Milk Prod- my opinion, analogous is, ucts to the tort action in the against Linden v. Cascade Stone Co. case the expanded Linden, subcontractor.15 In the court the economic suing loss doctrine to bar a homeowner from though subcontractor for work, defective even the homeowner had no contract with the subcontractor.

¶ Bradley explained 66. As Justice in her dissent in Linden, judicially the economic loss doctrine is a premised created doctrine upon whose existence is oft-repeated justifications: "(1) three to the maintаin fundamental distinction between tort law and contract (2) protect parties' law; commercial freedom to Co., Linden v. Cascade Stone 113, 2005 WI 283 Wis. 2d 606, 699 N.W.2d 189. (3) contract; by encourage allocate economic risk of economic best situated to assess risk party loss, assume, allocate, the commercial purchaser, against insure risk."16 Linden, case, the instant

¶ are by doctrine's not furthered policies application the economic loss doctrine to an innocent deny pur- of action defendant- against chaser cause manufacturer who knew or should have known the injured would be purchaser's property defendant-manufacturer's tortious conduct.17

I—I I—I The economic doctrine of recent ori- loss ¶ "[B]e- of the doctrine is still gin. scope evolving. 16Linden, 606, J., (Bradley, dissenting) Wis. Elec., 139, 38, (quoting Ins. Co. Am. v. Cease 2004 WI of N. 462). Inc., 361, Vogt, Wis. 2d 688 N.W.2d See also Van Lore v. 631, 2004 WI 274 Wis. 2d 683 N.W.2d 46. 17Damages against Cargill available under contract law are necessarily damages against not the same as recoverable Milk (Second) Products under law. Restatement of Contract (1979). Damages warranty § 351 cmt a. at 136 for breach of 402.714, against Cargill by relating § are to covered Wis. Stat. 402.715(2)(b), § accepted goods, relating consequential to damages any "[i]njury person property available for to or warranty." proximately resulting any from breaсh of scope damages Cargill We do not know the of the for which may Cargill party be liable because is not a and the contract may action is not before us. There also be contractual limitations majority right against Cargill. on the Grams' to recover As the notes, to give parties opportunity an limit "Contracts 14 scope liability." Majority op., and amount of n.3. The know, n.12, majority majority op., pro- cannot see 55 before ceedings against Cargill completed are whether the Grams will fully allegedly compensated be contract for the defective product.

543 scope about the cause there has been much confusion important legal doctrine, it to review its under- this is pinnings."18 parties priv- For commercial contractual disallowing

ity, tort dam- the economic loss doctrine's injury ages purely (except person to or economic loss property) protects integrity of the contract. other privity permitted a tort action in of contract We have situations, however, for certain frauds.19 privity,

¶ 70. For those not in contractual strict products liability purchaser a allows a to sue manufac- injury property physical person or turer for to product. products result of the defective strict govern liability designed problem doctrine was to injuries by physical person property caused defec- to or products. The tive economic loss doctrine was devel- namely, oped purpose, protect for a different to manu- liability loss," is, facturers from for "economic injury non-physical person property caused product beyond damages compensated defective those through purpose the law of warranties. The product liability loss doctrine in the arena economic protect liability the manufacturer from for losses to subsequent purchasers resulting from the failure of its perform according warranty.20 to the War- ranty liability prevents law thus of unknown un- scope.21 limited 18 Aviation, Inc., Indemnity Ins. Co. Am. 891 Am. v. So. of N. (Fla. 2004). 532, Co., Kellogg Kaloti Enters. v. See Sales WI

Wis. 2d 699 N.W.2d 205. (Cal. 1965). Co., 145, Seely v. White Motor 403 P.2d 150 21Seely, 403 P.2d at 150.

544 71. What constitutes economic loss is not self- " evident, '[e]conomic because loss' is not a self-defining term, and it does not mean all literally monetary v. Northridge Co. W.R. Grace & Co.23 our losses."22

court the distinction explained between economic loss (to action) recovered in a be contract and physical harm (to action) he recovered in a property as follows:

The plaintiffs' products liability strict claim is not barred, however, simply plaintiffs because the seek dam- costs, ages repair costs, value, replacement decreased profits and lost in the sale of the centers. While economic costs, by repair replacement costs, loss is measured loss profits, value, of or diminution of the measure of dam- ages does not determine complaint whether the is for physical property] City [to harm or economic loss. Co., Gypsum 646, Manchester v. National Supp. 637 F (D.R.I. 1986). words, 651 In other the fact that plaintiffs' damages measure of the is economic does not injury transform the nature of its property] [to into a solely economic Town loss. Hooksett School Dt. v. W.R. (D.N.H. 1984).24 Co., 126, Supp. Grace & 617 F. 131 "Economic loss" has been described as that loss from "resulting the failure of the product per- form to the level by buyer expected commonly has been measured the cost of by repairing or replacing and the loss of consequent profits, product because diminution value it does not 22Fireman's Fund McGee Marine A B Underwriters v. & (W.D. Inc., Welding 568055, & Mfg., 2005 WL at *3 March Wis. 2005). 8, 23 Co., Northridge Co. v. & W.R. Grace Wis. 2d (1991). N.W.2d 179 ‍​‌​​​​‌‌​​‌‌‌‌‌‌‌‌​​​​​‌‌‌‌​​‌​​‌​‌‌​​​‌​‌​​​​​​‍Co., Northridge Co. v. W.R. Grace & 2dWis. (1991). 931-32, 471 N.W.2d 179 general purposes which it was manu- for the

work and sold."25 factured alleged product, that the Here the Grams replacer, it did not contain the defective that

milk was expected expected. The the non- Grams nutritional value replacer provide nutrition for the milk medicated they was claim were told there The Grams calves. replacers significant milk the two difference between no up to The feed did not live than medication. other expectations. resulted in the calves The defective feed large gaining weight in a number of not sufficient dying. the lack of medication was We know that calves the calves ceased not the cause of the deaths because real, non-medicated the Grams substituted die when replacer. milk milk for the non-medicated damages in the instant The the Grams seek money, they not in terms of but are case are measured replacer repairing replacing the milk or the costs Certainly, product. in the value of the the diminution implied claim for breach of war- contract Grams' ranty premised on notion that the non-medicated expectations. replacer disappointed However, their milk (strict liability, negligence, inten- the tort claims allege replacer misrepresentation) milk that the tional injury property. "[C]laims tangible physical caused allege non- economic loss combination with which [economic loss] are not economic loss barred doctrine."26 F. Leasing Guggisberg, Supp. v. 907-08 Agristor 1985) added) (D. Minneapolis Soc'y (emphasis (quoting Minn. Architects, v. Parker-Klein Assocs. N.W.2d

Fine Arts (Minn. 1984) (overruled Farms, 458 by Hapka Paquin v. 820-21 (Minn. 1990))). N.W.2d 683 Tile, 226 2d at 247. Wausau Wis. question majority opinion presents 75. The "disappointed expectations" is whether dead calves are property" damagеd. or are "other that has been majority opinion mutually treats the two exclusive, "disappointed expec- concludes that the dead calves are majority's tations," and holds for the defendant. The interpretation property" exception of the "other is so nothing narrow that it is unworkable; almost will qualify exception. applied literally, for the If the majority's property" exception articulation of the "other might completely exception eliminate the to the eco- nomic loss doctrine. my "disappointed expectations" mind, 76. To property" mutually prin-

and "other are not exclusive ciples. example, Take, for a car dealer's defective car spontaneously though that lurches backwards even the properly motor has been turned off. The defective car driving destroys garage in reverse the door. Since the expectation operate only is that the car will when engaged, self-operating will not be in reverse, and will spontaneously destroy anything not it, behind the ma- jority opinion's disappointed expectations would, rule if applied literally, recovery bar in tort for to the garage door. example, developer buys Or, a real estate developer keeps house from a builder for resale. The period. garage

the house for a The house as built has a equipped garage opener. that is with an automatic door day garage prompting, One the closes, door without developer's jeep, destroying onto the front of the the jeep. occupants jeep injured. Apply- of the are not ing literally "disappointed expectations" the standard by majority opinion announced the in the case, instant developer garage the would not be able to sue door opener garage opener manufacturer because the door According expected.

merely perform to the failed to as majority performance' opinion:" be 'Level should now regardless performance,"27 to include failed understood property." of the harm done "other expec- Despite purchaser's "disappointed ¶ 78. garage goes in car that reverse and the tations" with majority shut, I am confident that the door that slams jeep are "other the trailer and would hold that property" strict manufacturer is liable under and the liability.28 products expecta- assuming "disappointed

¶ 79. Even disap- might mahiourishment, tions" pointed expectations entail calves' cannot include the death any triple it is at the normal rate more than calves simply "disappointed еxpectations" pet dog when a dies eating dog not or that is as nutritious as result of food disap- say advertised. To dead animals are as fat-free as pointed expectations suggests no harm to that there is disap- qualify person property not that would Anytime pointed expectations. product fails a defective injures something, and then obviously disappointed someone or its owner product's performance. that

with disappointed expectations ¶ 80. and "other Both property" examples in in coexist these the instant governing prin- of the two be the case. Which should ciple? it, As I a is liable he or she see defendant when product places in an a that creates commerce defective injury property the risk of other than unreasonable product injury purchaser and that occurs. The sold injury. should this risk of Grams should not bear 27Majority op., 28 akin to damage property] [to "Such other is considered so injury that the are treated E. River S.S. personal two alike." (1986). Inc., Delaval, v. U.S. Corp. Transamerica 867 have an milk opportunity prove that the replacer was a defective that product created an unreasonable risk of injury to the calves and injury that occurred. 81. The California Supreme Court explained

the principle governing to other property follows:

The distinction that the law has drawn between tort recovery physical injuries for and warranty recovery for economic arbitrary loss is not and does not rest on the plaintiff "luck" of one in having causing an accident rests, rather, physical injury. The distinction on an un- derstanding the nature responsibility the a manu- of of distributing must undertake in products. his He facturer appropriately can physical injuries be held liable for by caused requiring goods his to match a defects safety standard in terms that conditions of defined of create unreasonable risks harm. He cannot be held for the performance level of products his in the agrees consumer's business unless he that product the designed to meet the consumer's demands. A con- was sumer should charged not be at the will of manufac- bearing turer with physical injury risk when he buys product can, however, a on the market. He fairly be charged with the risk that will not match his expectations economic agrees unless manufacturer it will. in negligence, Even actions for liability manufacturer's damages physi- is limited to injuries recovery cal and there is no for economic loss alone.29 82. The U.S. Supreme recently Court most ad

dressed issue of "other Sa property" ratoga Fishing Co. v. J.M. Martinac & Co.30 Sa ratoga Fishing, J.M. Martinac & Co. manufactured added). Seely, 403 P.2d at 151 (emphasis Co., Saratoga Fishing Co. v. J.M. Martinac & 520 U.S. (1997). Madruga.31 Madruga,

ship Joseph in and sold it new netting, equipment skiff, a and turn, added such as parts ship for that the could be used to fish other so Madruga ship years A sold the few later tuna.32 fishing Saratoga Fishing. years later, Thirteen tuna designed ship defectively caught a fire as result of the hydraulic system originally ship part that was by Saratoga Martinac. sued J.M. Martinac built J.M. damage by equipment parts for to the added tort Madruga. reversing ¶ 83. the Ninth Circuit Court of Supreme Appeals, Court held that the United States ship "product all items the itself' the was by Madruga property." ship were "other added Saratoga's Supreme Accordingly, Court, ruled U.S. proceed against original manufac- tort suit could turer, J.M. Martinac. Saratoga Fishing presents striking

¶ 84. con- majority opinion in the case. In trast rebuking to the instant "creating] a tort the Ninth Circuit immunity any prece- beyond that set relevant tort approvingly ," ... the Court cited three cases in dent objects which determined the harmed were courts property"33 remedy "other and that therefore could be had tort. cited, In one case A.J. Decoster Co. v. West Maryland

inghouse Corp.,34 high Electric court 140,000 killed when found that chickens a ventilation system for the chicken house malfunctioned were

31Id. at 877.

32Id.

33Id. at 880-81. 34A.J. Co. v. Westinghouse Corp., Decoster Elec. A.2d (Md. 1994). property." "other The second case the Court cited was Lines, Illinois, United Air Inc. v. CEI Industries of "[a] Inc.,35 in which warehouse owner recovered for damage building to a caused a defective roof."36 Finally, Saratoga the Court cited a case similar to Fishing damage equipment in which to added seismic ship resulting engine on a from an fire was in actionable tort.37 "[o]ne emphasized impor-

¶ 86. The Court that purpose defective-product tant tort law is to encour- age products."38 the manufacture of safer The manufac- liability turer should not be immunized from for physical damage.39 ship's foreseeable To allow the liability escape Saratoga Fishing, manufacturer ordinary governing asserted, Court defied "the rules liability."40 the manufacturer's tort ¶ 87. The did Court note that the intermediate warranty, "[n]o seller could have included but court thought possibility has that mere of such a contract precluded recovery [a term purchaser's] tort property."41

other Supreme reject ¶ 88. The U.S. Court went on to argument law, that contract if warranties were supplant available, should tort law. Court wrote why "respondents explained ordinary that have not 35 Lines, Ill., Inc., United Air Inc. v. CEI Indus. 499 (Ill. 1986). N.E.2d App. 558 Ct. 36 Saratoga Fishing, at 520 U.S. 880. Supply Ships Corp., Nicor Assocs. v. Gen. Motors F.2d (5th 1989). Cir. 38 Saratoga Fishing, U.S. at 39Id.

40 Id. at 882-83.

41 Id. at 882. liability governing should the manufacturer's

rules seller] [intermediate merely supplanted because the be liability theory overlapping may in con- incur an tract."42 rejected argu- Finally, also the Court would be and distributors

ment that manufacturers besieged explained liability. The Court with tort principles, such as of other tort there are "a host foreseeability, proximate cause, and the 'economic loss' liability.43 already substantially limit tort doctrine" that Saratoga Fishing, ¶ under 90. In contrast with majority opinion's case, standard the instant the cited cases would be barred in all three of the suits property" if "other were loss doctrine the economic "disap- everything resulting being from redefined as pointed expectations." in all three cases The "disappointed expec- easily purchasers' the was within tations."

¶ rule set forth in I would follow the 91. Because Saratoga Fishing therein, and case, the cases cited the join majority opinion. Tile, I do not Wausau

¶ HH h-i r— ¶ of this case lead me to conclude 92. The facts majority's summary judgment rule, under the new that majority opinion improperly granted here. was determining acknowledges of whether a case is one that easy.44 performance expectations disappointed is not reaches us because the circuit 93. This case summary granted judgment Milk in favor of court 42 Id. at 882-83.

43 Id. at 884.

44Majority op., Summary judgment properly granted Products.45 only ques- fact, when there are no issues of material upon moving party tions law which the is entitled to judgment.46 majority opinion candidly

¶ 94. The admits that application newly adopted of its "within-the- contemplation-of-the-parties" standard, is, the dis- appointed performance expectations standard, is fact- "[Application necessarily rule] intensive: require of the will interpretation purpose [the] trans- expected product."47 [the] action and the short, uses of parties' expectations the court must what the know apply correctly. were in order to the doctrine If the majority really says, summary judgment means what it inappropriate was in this case. Taking light the facts most favorable Grams, must,

to the as we from we know the record expected get replacer that the a milk Grams quality they same nutritional as the one had success- fully years, three used for but non-medicated. We know representative from Mr. Grams' affidavit that from Cargill him told that Half-Time non-medicated milk replacer had the same nutritional value as the milk replacer bought Cargill years. the Grams had from expect mortality The Grams did not rate of their triple. They expect calves to did not their calves to replacer become undernourished on a milk tively represented affirma- being of the same nutritional quality they as a with which were familiar and had used with success.48

45Majority op., 1. ¶ WI 128, Badger ‍​‌​​​​‌‌​​‌‌‌‌‌‌‌‌​​​​​‌‌‌‌​​‌​​‌​‌‌​​​‌​‌​​​​​​‍Taylor, State Bank v. 276 Wis. ¶ 688 N.W.2d 439. 47Majority op., 54. ¶ 48 majority See 50-51. op., ¶¶ majority opinion Paragraph de-

¶ 53 of the 96. Every ¶ special 53 not sentence attention. serves only sentence) (except also but a citation last lacks directly support fact, In record in the record. lacks paragraph. linchpin Ac- of the whole contradicts cording majority opinion: "A farmer reasonable to the switching milk to an unmedicated know that would replacer mortality."49 in calf increase could cause some mortality equal one-third of the increase" in Does "some testimony, know, without How does this court calves? expect under these farmer would what reasonable from the record that at least know circumstances? We expert would not removal of antibiotics one stated that mortality can infer from the rate. We affect the calves' was not the cause of the lack of medication record that calves ceased to die when Grams the deaths because milk for the non- real, non-medicated substituted according replacer. short, to the milk medicated (and any probably reasonable record, farmer) the Grams contemplated the lack of not have would triple the normal kill their calves at medication would rate.

¶ does not indicate The record this case 97. contemplated by an outcome that dead calves were making by any party farmer, thus reasonable either summary judgment inappropriate here. foregoing reasons, I dissent. For the 98. that Justice LOUIS I am authorized to state joins opinion. BUTLER, JR. this B.

49Majority op.,

Case Details

Case Name: Grams v. Milk Products, Inc.

Court Name: Wisconsin Supreme Court

Date Published: Jul 8, 2005

Citation: 699 N.W.2d 167

Docket Number: 2003AP801

Court Abbreviation: Wis.