Bob Thompson & Sons, Inc. v. Gorden, No. 2008AP2428 (Wis. App. 11/3/2009)

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Bob Thompson & Sons, Inc., d/b/a Thompson's Sand and Gravel, Plaintiff, v. Shuyler H. Van Gorden, Defendant-Third-Party Plaintiff-Appellant, v. Pinewood Realty, Inc., ABC Insurance Company and Walter R. Tibbitts, Third-Party Defendants-Respondents.

No. 2008AP2428.

Court of Appeals of Wisconsin, District III.

Opinion Filed: November 3, 2009.

APPEAL from a judgment of the circuit court for Sawyer County: NORMAN L. YACKEL, Judge. Affirmed.

Before Hoover, P.J., Peterson and Brunner, JJ.

¶ 1 PER CURIAM.

Shuyler Van Gorden appeals a summary judgment dismissing various misrepresentation claims against Pinewood Realty, Inc., and Walter Tibbitts. The circuit court concluded Van Gorden suffered purely economic loss when the Department of Natural Resources frustrated his development plan by designating his recently purchased property an island. We affirm.

BACKGROUND¹

¶ 2 This case involves the sale of property on the Chippewa Flowage in Sawyer County. In 1999, the owner, Walter Tibbitts, entered into a listing contract with licensed real estate broker Stephen Bodenschatz. The contract obligated Bodenschatz and his company, Pinewood, to market the western portion of Tibbitts' parcel to prospective purchasers. Tibbitts would retain ownership of the eastern portion of his property, and Bodenschatz would receive a commission based on the sale price of the western parcel.

¶ 3 A narrow strip of land connected the eastern portion of Tibbitts' property with the portion he desired to sell. During high water periods the ground softened and at times became submerged, which made crossing difficult. Shortly after he purchased the property in 1993, Tibbitts reinforced the crossing with large concrete slabs to improve access. The four- to ten-inch-thick slabs were placed below the high water mark, and water would occasionally fill the channel despite their placement.

¶ 4 On September 19, 2000, Shuyler Van Gorden, an experienced real estate investor, purchased the western portion of Tibbitts' parcel. Bodenschatz, acting on Tibbitts' behalf, prepared the offer to purchase, which detailed Van Gorden's development plans for the property. Van Gorden intended to subdivide the land and create several residential parcels, selling all but a single parcel he would retain. To hasten the sale of the subdivided parcels, Van Gorden entered into a listing agreement with Bodenschatz. Bodenschatz and Pinewood promised to use reasonable efforts to procure purchasers for the subdivided parcels, and in return would be paid a commission based upon the sale price. Bodenschatz obtained offers to purchase four of Van Gorden's subdivided parcels, but only the sale of two parcels to Jim Schilling was completed.

¶ 5 The sale to Schilling required Van Gorden to improve the concrete roadway, which provided the only road access to the property. Van Gorden, through Bodenschatz, hired Bob Thompson & Sons, Inc., to grade and widen the road. Soon after the improvements began, the Department of Natural Resources (DNR) halted the project because Van Gorden failed to obtain necessary permits. During its investigation, the DNR determined the Van Gorden property was an island and notified Van Gorden that the concrete slab "bridge" was an illegal fill of the lake bed.

¶ 6 Had Sawyer County taken a similar stance, the DNR's designation of the property as an island could have complicated Van Gorden's effort to subdivide and sell his property. A Sawyer County ordinance requires that a developer of island lots own at least one mainland access lot on the Flowage for every two developed island lots. SAWYER COUNTY, WI, ORDINANCE § 4.413. To successfully complete his development plans while complying with the ordinance, Van Gorden would have had to purchase three mainland lots along the Flowage to provide access to the parcels he wished to sell. It does not appear the county ever designated the property an island, nor does it appear Van Gorden requested that the county make such a determination. Instead, he had the land appraised and sold to the Public Land Trust for $650,000, which was half of the appraised value.

¶ 7 Bob Thompson & Sons, Inc., brought suit against Van Gorden on February 10, 2006, seeking satisfaction of a lien claim for the roadwork done prior to the DNR's intervention.² Van Gorden's answer included third-party complaints against Tibbitts and Pinewood for negligent, strict, and intentional misrepresentation. He sought damages for "loss of profit, loss of value of property, benefit of the bargain losses, out of pocket losses, interest and other consequential damages." At a hearing on cross-motions for summary judgment, Tibbitts and Pinewood asserted that summary judgment was appropriate based on our supreme court's then-recent decision in Below v. Norton, 2008 WI 77, 310 Wis. 2d 713, 751 N.W.2d 351, in which the court held the economic loss doctrine applicable to residential real estate contracts. The circuit court agreed and granted summary judgment for Tibbitts and Pinewood, stating, "And whether that new case covers this, I guess the [c]ourt would find that it does." Van Gorden appeals.

ANALYSIS

¶ 8 As an initial matter, Van Gorden argues we must remand the action to the circuit court for findings of fact and conclusions of law. There is no need to do so. First, "[c]ircuit courts do not make `findings' of fact in ruling on a summary judgment motion." Camacho v. Trimble Irrev. Trust, 2008 WI App 112, ¶11, 313 Wis. 2d 272, 756 N.W.2d 596. A court's need to make factual findings would necessarily preclude summary judgment because summary judgment is appropriate only when no genuine issues of material fact exist. See WIS. STAT. § 802.08(2). Second, Van Gorden incorrectly claims the circuit court "made absolutely no conclusions of law." This is not a case in which remand is appropriate because the basis for the court's dismissal is unclear. See Below, 310 Wis. 2d 713, ¶7. The circuit court unambiguously concluded the economic loss doctrine barred Van Gorden's claims, which is a conclusion of law.

¶ 9 We review the circuit court's decision to grant summary judgment de novo. Snyder v. Badgerland Mobile Homes, Inc., 2003 WI App 49, ¶7, 260 Wis. 2d 770, 659 N.W.2d 887. We will affirm that decision if the record demonstrates no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. WIS. STAT. § 802.08(2). On review, we use the same methodology as the trial court. Union Pac. R.R. Co. v. Motive Equip., Inc., 2006 WI App 58, ¶7, 291 Wis. 2d 236, 714 N.W.2d 232; see also Snyder, 260 Wis. 2d 770, ¶8 (discussing methodology). "We do value any analysis that the trial court has placed in the record." Motive Equip., 291 Wis. 2d 236, ¶7.

¶ 10 The economic loss doctrine is a judicial rule that prevents contracting parties from recovering in tort for purely economic or commercial losses associated with the contractual relationship. Van Lare v. Vogt, Inc., 2004 WI 110, ¶19, 274 Wis. 2d 631, 683 N.W.2d 46 (quoting Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶23, 270 Wis. 2d 146, 677 N.W.2d 233). The economic loss doctrine has expanded since its relatively modest origin in Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 148 Wis. 2d 910, 437 N.W.2d 213 (1989), in which the court applied the doctrine to bar negligence and strict liability claims of a commercial purchaser against a manufacturer, to possess "one of the broadest coverages in the United States." Ralph C. Anzivino, The Fraud in the Inducement Exception to the Economic Loss Doctrine, 90 MARQ. L. REV. 921, 930 (2007). The doctrine's primary policy justifications are "(1) to maintain the fundamental distinction between tort law and contract law; (2) to protect commercial parties' freedom to allocate economic risk by contract; and (3) to encourage the party best suited to assess the risk [of] economic loss, the commercial purchaser, to assume, allocate, or insure against that risk." Kaloti Enters., Inc. v. Kellogg Sales Co., 2005 WI 111, ¶28, 283 Wis. 2d 555, 699 N.W.2d 205 (quotations omitted) (alteration in original). As a practical matter, the rule prevents a party from "eschewing the more limited contract remedies and seeking [the broader array of] tort remedies." Insurance Co. of N. Am. v. Cease Elec., Inc., 2004 WI 139, ¶24, 276 Wis. 2d 361, 688 N.W.2d 462.

¶ 11 Determining the type of loss alleged is critical when analyzing whether the economic loss doctrine applies. See Prent Corp. v. Martek Holdings, Inc., 2000 WI App 194, ¶19, 238 Wis. 2d 777, 618 N.W.2d 201. Our supreme court has defined economic loss as "damages resulting from inadequate value because the product is inferior and does not work for the general purposes for which it was ... sold." Kaloti Enters., 283 Wis. 2d 555, ¶29 (quotation omitted). Recovery for economic loss refers to recovery as a result of a product failing in its intended use or failing to live up to a contracting party's expectations. Id.

¶ 12 Van Gorden concedes his alleged damages amount to purely economic loss; at least, Van Gorden does not dispute Pinewood's characterization of his losses, and we deem the matter conceded. See Schlieper v. DNR, 188 Wis. 2d 318, 322, 525 N.W.2d 99 (Ct. App. 1994) (unrefuted arguments are deemed conceded). But we note the damages alleged—including the difference between the purchase price of the property as a peninsula and the sale price of the property as an island—are classic economic losses. See INorthridge Co. v. W.R. Grace & Co., 162 Wis. 2d 918, 926, 471 N.W.2d 179 (1991) (direct economic loss includes the difference between the value of what is received and its value as represented).

¶ 13 We must also consider the risk that caused the economic loss in determining whether to apply the doctrine. Prent Corp., 238 Wis. 2d 777, ¶19. In Prent Corp., we concluded the economic loss doctrine barred negligent misrepresentation claims brought by the commercial purchaser of a...