COURT OF APPEALS DECISION DATED AND FILED July 14, 2010 A.
John Voelker Acting Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL
from a judgment of the circuit court for
Before Brown, C.J., Neubauer, P.J., and
¶1 ANDERSON, J. Korry Ardell purchased property for $3000 less
than its appraised value of $153,000. He
alleges that he was led to believe that the property consisted of four
buildable lots with 192 feet of lake frontage.
It did not. He sued the sellers, Drew
E. Garczynski and Erin R. Garczynski, their real estate agent, Angella Clarke,
and her real estate agency, Diamond Realty. Ardell asserted claims of misrepresentation
(intentional, strict responsibility and negligent), false advertising contrary
to Wis. Stat. § 100.18 (2007-08),[1]
theft by fraud, rescission of the real estate contract, and unjust
enrichment. The Garczynskis prevailed on
summary judgment, and Ardell appealed. Ardell
v. Clarke, No. 2007AP1692, unpublished slip op. at 2 (
¶2 These are the undisputed facts in more detail. In June 2004, Drew and Erin Garczynski
entered into a listing contract with Angella Clarke, a broker for Diamond
Realty, to sell their vacant land on Little Elkhart Lake in the town of
¶3 Ardell’s offer used the standard form approved by the
Wisconsin Department of Regulation and Licensing, WB-13 Vacant Land Offer to
Purchase, which contained language stating that the offer was contingent upon
the seller providing a map of the property prepared by a registered land
surveyor, within fifteen days of acceptance of the offer. After the sellers accepted Ardell’s offer, a
survey was done, and a map based on that survey was prepared and provided by
the seller to Ardell. The survey showed
that the property was bounded in the north by
¶4 As part of Ardell’s efforts to obtain financing, his mortgage lender retained an appraiser who stated that the property had a fair market value of $153,000, $3000 higher than the purchase price. The sale closed in November 2004 with the Garczynskis receiving the agreed-upon purchase price of $150,000 and Ardell receiving a warranty deed vesting him with all right, title and interest in the property. Ardell testified that it was after purchasing the property that he discovered it did not have any lake frontage and that there was only one buildable lot.
¶5 In October 2006, Ardell sued the Garczynskis, their real estate agent, Clarke, and her real estate agency, Diamond Realty. Ardell alleged that Clarke represented to him verbally, through advertisements and a site plan that the Garczynskis’ property consisted of four buildable lots with 192 feet of lake frontage. Ardell alleged that he only later discovered that the property had no lake frontage. The property was separated from the lake by a road, and Ardell opined that he did not have any riparian rights. Ardell also claimed that the property had only one buildable lot, which he claimed the Garczynskis and Clarke knew or should have known and which caused Ardell to purchase the property at an overstated price. Ardell asserted claims of misrepresentation (intentional, strict responsibility and negligent), false advertising contrary to Wis. Stat. § 100.18, theft by fraud, rescission of the real estate contract, and unjust enrichment.
¶6 As already noted, the Garczynskis prevailed on summary judgment, and Ardell appealed. We summarily affirmed. Thereafter, the case was returned to the circuit court; Clarke and Diamond Realty filed a motion for summary judgment. In opposition to the motion, Ardell filed, among other proofs, a new appraisal valuing the property at $91,000 at the time of purchase. The circuit court granted summary judgment emphasizing that because the law of the case sets the value of the property at $153,000, Ardell cannot introduce a new appraisal. Thus, Ardell cannot show harm. Ardell appeals.
¶7 Under the doctrine of issue preclusion, “[w]hen an issue of
fact or law is actually litigated and determined by a valid judgment, and the
determination is essential to the judgment, the determination is conclusive in
a subsequent action between the parties, whether on the same or a different
claim.” Precision Erecting, Inc. v. M
& I Marshall & Ilsley Bank, 224
¶8 We review a grant of summary judgment de novo, applying the
same standards as the circuit court. See Thomas
ex rel. Gramling v. Mallett, 2005 WI 129, ¶26, 285
¶9 Ardell proffers the following arguments on appeal, which we will address as necessary:
I. The circuit court erred in granting summary judgment in favor of Angella Clarke and Diamond Realty because a genuine issue of material fact existed as to whether Clarke and Diamond Realty were acting outside the scope of their agency when they represented that the property had lake frontage and four buildable lots….
II. The circuit court erred in applying the doctrine of claim preclusion in this case when determining that the new appraisal could not be used to show pecuniary loss because the claim against Angella Clarke and Diamond Realty is separate from the claim against the Garczynskis and does not undo the dismissal of the Garczynskis….
III. The circuit court erred in finding that the economic loss doctrine applied because Clarke and Diamond Realty were not parties to the contract….
IV. The circuit court erred in granting summary judgment because a reasonable jury could have found that Mr. Ardell reasonably relied on Angella Clarke’s misrepresentation, thereby creating an issue of fact for the jury….
V. The circuit court erred in determining that the principle of unjust enrichment is not applicable because there was no contract between Angella Clarke and Diamond Realty and Ardell because Clarke and Diamond Realty were acting outside the scope of agency when she misrepresented the property.
¶10 We first note that we agree with Ardell that the economic loss
doctrine does apply. In the recent case
of Shister
v. Patel, 2009 WI App 163, ¶¶1, 24, 322 Wis. 2d 222, 776 N.W.2d 632, we
clarified that the economic loss doctrine does not bar tort claims by buyers
against the seller’s real estate broker or his or her employer. Because there is no contractual relationship
between the buyer and the seller’s broker, an independent duty arises.
Under well-established Wisconsin law, “an agent who
does an act that would be a tort if he [or she] were not then acting as an
agent for another is not relieved from liability to an injured third party,
simply because he [or she] was acting as an agent when he [or she] caused the
injury.” Ramsden v. Farm Credit Servs.,
223
Shister, 322
¶11 However, although Ardell’s tort claims are not precluded by the economic loss doctrine, he cannot prevail on this theory. Ardell runs into the same problem he faced in his claims against the Garczynskis: he cannot prove damages based on the undisputed facts. The most instructive case is Precision Erecting. In order to understand why Precision Erecting defeats Ardell’s position, we describe the pertinent parts of that decision.
¶12 In Precision Erecting, a
¶13 Precision Erecting and the other third-party subcontractors and
suppliers alleged that AFW owed them a total of $365,000.
¶14 On appeal, Nambe effectively asked that it be allowed to
litigate the contractual relationship between AFW and Antonic because of Nambe’s
own interest in holding AFW liable for the balance due to Nambe.
¶15 We determined that issue preclusion barred any further
litigation regarding the relationship between AFW and Antonic.
We observe it to be self-evident that a summary judgment motion by its very nature alleges certain facts to be undisputed. If a litigant who is not the subject of the motion for summary judgment nonetheless has reason to dispute the facts supporting the motion, it is that litigant’s duty to appear and object to the motion. If not, and summary judgment is granted, the facts underlying that judgment are binding on all other parties to the suit as a matter of issue preclusion.
¶16 Like Nambe in Precision Erecting, Ardell passed up his chance to litigate an issue critical to his success. We made clear in Precision Erecting that a litigant in a multiparty suit who does not want to lose the opportunity to litigate a critical issue should “closely examine any exposure it might have whenever one of the other parties files a motion for summary judgment against another party [and] not against the litigant.” See id. at 292. This rationale readily applies in the case at bar. In fact, here, if possible, Ardell passing up his chance is even more inexcusable than Nambe passing up its chance. Unlike, Nambe who was a third party, Ardell was the named litigant and his duty to “closely examine any exposure” was unmistakable.
¶17 The very fact that a summary judgment motion was made against Ardell put him on notice that unless he disputed the facts as presented in the motion, they would remain undisputed facts. If he did not agree with the $153,000 appraisal, he should have come forward at that time with a second appraisal. He did not. He is therefore held to the undisputed facts in the previous adjudication. And, as in the previous adjudication, assuming misrepresentations were made to Ardell, he cannot show harm. Likewise, assuming a Wis. Stat. § 100.18 violation, he cannot show pecuniary loss.
¶18 In short, under Precision Erecting, because summary
judgment was granted to the Garczynskis, the facts underlying that judgment are
binding on all other parties to the suit as a matter of issue preclusion. See Precision
Erecting, 224
By the Court.—Judgment affirmed.
Not recommended for publication in the official reports.
[1]
Fraudulent representations. (1) No person, firm, corporation or association, or agent or employee thereof, with intent to sell, distribute, increase the consumption of or in any wise dispose of any real estate, merchandise, securities, employment, service, or anything offered by such person, firm, corporation or association, or agent or employee thereof, directly or indirectly, to the public for sale, hire, use or other distribution, or with intent to induce the public in any manner to enter into any contract or obligation relating to the purchase, sale, hire, use or lease of any real estate, merchandise, securities, employment or service, shall make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in this state, in a newspaper, magazine or other publication, or in the form of a book, notice, handbill, poster, bill, circular, pamphlet, letter, sign, placard, card, label, or over any radio or television station, or in any other way similar or dissimilar to the foregoing, an advertisement, announcement, statement or representation of any kind to the public relating to such purchase, sale, hire, use or lease of such real estate, merchandise, securities, service or employment or to the terms or conditions thereof, which advertisement, announcement, statement or representation contains any assertion, representation or statement of fact which is untrue, deceptive or misleading.
All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted.