Case Title: Terry D. Van Lare v. Vogt, Inc.

Citation: 2004 WI 110

Docket Number: 2001AP003051

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2004-07-09T00:00:00Z

Document:
2004 WI 110 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
01-3051 
COMPLETE TITLE: 
 
 
Terry D. Van Lare and Norman J. Wachtl,  
          Plaintiffs-Appellants, 
 
     v. 
 
Vogt, Inc.,  
          Defendant-Respondent. 
 
 
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
OPINION FILED: 
July 9, 2004   
SUBMITTED ON BRIEFS: 
   
ORAL ARGUMENT: 
March 10, 2004   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Waukesha   
 
JUDGE: 
Patrick L. Snyder   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
BRADLEY, J., concurs (opinion filed). 
CROOKS, J., concurs (opinion filed). 
WILCOX, J., joins concurrence.   
 
DISSENTED: 
        
 
NOT PARTICIPATING: SYKES, J., did not participate.   
 
 
 
ATTORNEYS: 
 
For the plaintiffs-appellants there were briefs by James W. 
Hammes and Cramer, Multhauf & Hammes, LLP, Waukesha, and oral 
argument by James W. Hammes. 
 
For the defendant-respondent there was a brief by Terence 
P. Cahill and Brewer & Cahill, LLP, Oconomowoc, and oral 
argument by Terence P. Cahill. 
 
 
2004 WI 110 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  01-3051   
(L.C. No. 
99 CV 2388) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Terry D. Van Lare and Norman J. Wachtl,  
 
          Plaintiffs-Appellants, 
 
     v. 
 
Vogt, Inc.,  
 
          Defendant-Respondent. 
 
FILED 
 
JUL 9, 2004 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
APPEAL from a judgment and an order of the Circuit Court 
for Waukesha County, Patrick L. Snyder, Judge.  Affirmed.   
 
¶1 
DAVID T. PROSSER, J.   This case is before the court 
on certification by the court of appeals.  The issue certified 
is whether the economic loss doctrine bars a claim for strict 
responsibility misrepresentation in a real estate transaction 
where the alleged misrepresentations are contained in a contract 
between the parties and the claimed damages are solely for 
pecuniary loss. 
¶2 
Consistent 
with 
our 
precedent 
and 
the 
policies 
underlying the economic loss doctrine, we narrow the certified 
question to cover commercial real estate transactions.  We 
No. 01-3051  
 
2 
 
conclude that application of the economic loss doctrine bars Van 
Lare's claim of strict responsibility misrepresentation in a 
commercial real estate contract.  Van Lare did not ask the jury 
to 
decide 
whether 
Vogt 
was 
guilty 
of 
intentional 
misrepresentation; 
he 
asked 
for 
a 
verdict 
on 
strict 
responsibility 
misrepresentation. 
 
Thus, 
Van 
Lare 
sought 
liability under a theory in which Vogt could have been one of 
two innocent parties to a transaction that went awry.  The fact 
that 
the 
contract 
involved 
real 
estate 
instead 
of 
a 
manufacturer's "product" does not alter the outcome in this 
commercial case.  
¶3 
We decline Van Lare's request to order a new trial "in 
the interest of justice."  Van Lare could have sought a remedy 
under alternative legal theories, but he failed to file a timely 
breach of contract claim and withdrew every misrepresentation 
claim 
except 
his 
claim 
for 
strict 
responsibility 
misrepresentation.  Consequently, we affirm the decision of the 
circuit court. 
FACTUAL BACKGROUND 
¶4 
On June 22, 1993, Terry D. Van Lare and Norman J. 
Wachtl (Van Lare)1 entered into a written contract with Vogt, 
Inc. (Vogt) to purchase a 55-acre parcel of real property in 
Waukesha County.  The property in question was the site of a 
gravel pit owned and operated by Vogt.  The Option to Purchase 
                                                 
1 For ease of reference, we will refer to "Van Lare" in the 
singular.  We recognize that Norman Wachtl, Van Lare's co-
appellant, joins in this appeal. 
No. 01-3051  
 
3 
 
contained a clause in which Vogt warranted and represented to 
Van Lare that Vogt had no notice or knowledge of any: 
Underground 
storage 
tanks 
or 
any 
structural, 
mechanical, 
or 
other 
defect(s) 
of 
material 
significance affecting the property, including but not 
limited to inadequacy for normal use of mechanical 
systems, waste disposal systems and well/unsafe well 
water according to State standards, or the presence of 
any 
dangerous 
or 
toxic 
materials 
or 
conditions 
affecting the property.  Excepting one Ready-Mix drum 
(filled with concrete) which may be buried on north-
west corner of property to be conveyed herein. 
¶5 
The Option to Purchase also contained an "as is" 
provision which stated: "Upon closing, Buyer accepts this 
property in 'as is' condition and represents to Seller that 
their purchase of the property is made on the basis of their own 
investigation and testing."  Both parties to the contract were 
represented by counsel. 
¶6 
In September 1993 the parties amended the Option to 
Purchase when the parties became aware that "a certain parcel of 
said property . . . had previously been conveyed by Seller to 
another party."  This discovery required a $20,000 reduction in 
the purchase price. 
¶7 
By November 1993 Van Lare purchased the property in 
accordance with the Option.  The purchase price at closing was 
$213,000.  Prior to purchasing the property, Van Lare was aware 
that illegal dumping of refuse had occurred on a regular basis 
near the entrance of the gravel pit.  Despite this knowledge, 
the only tests Van Lare conducted prior to the closing were 
No. 01-3051  
 
4 
 
tests to determine if there was mineable bank-run material in 
the gravel pit. 
¶8 
From 1993 to 1999 Van Lare operated a landscaping 
business on the site and continued to excavate gravel from the 
pit in accordance with a conditional use permit issued by 
Waukesha County.  In time, Van Lare submitted an application for 
residential development of the property.  During public hearings 
to consider the proposed residential development, Van Lare 
learned that construction debris, including concrete, asphalt, 
fencing materials, PVC piping, pails, ropes, barrels, wood, and 
other types of materials had been buried on the site. 
¶9 
On April 19, 1999, before the 6-year period of 
limitation had run on a potential breach of contract claim, Van 
Lare's attorney notified Vogt of the claimed contractual breach.  
See Wis. Stat. § 893.43.2  The letter stated in part: 
It has now come to my clients' attention that numerous 
building materials and other items, including possibly 
oil and paints, were dumped at the site during the 
years of ownership by Vogt, Inc. . . .   
Photographs, which were taken on or about April 
30, 1990 and which are contained in the files of the 
Waukesha County Park and Planning Commission office, 
reflect 
the 
nature 
and 
extent 
of 
the 
building 
materials and other items which were dumped on the 
property. 
 
In 
addition, 
interviews 
with 
former 
employees indicate conclusively that the company was 
aware of these activities even though they were not 
disclosed at the time the Offer to Purchase was 
executed. 
                                                 
2 All references to the Wisconsin Statutes are to the 2001-
02 edition unless otherwise indicated. 
No. 01-3051  
 
5 
 
¶10 The letter further stated that it was putting Vogt on 
notice that Vogt was liable for any costs and expenses that 
might be incurred in cleaning up the property and invited Vogt 
to undertake excavation or be present to observe excavation 
activities.  Thereafter, on November 29, 1999, Van Lare 
commenced this action, seeking to recover costs involved in 
removing the buried building materials and debris from the site. 
¶11 The Van Lare complaint asserted three causes of 
action: 
intentional 
misrepresentation, 
negligent 
misrepresentation, and strict liability misrepresentation.  The 
strict liability (or strict responsibility) claim incorporated a 
statutory claim for fraudulent misrepresentation under Wis. 
Stat. § 100.18.  Van Lare's complaint did not allege breach of 
contract, presumably because such a claim was now barred by 
Wis. Stat. § 893.43, a six-year period of limitation. 
¶12 Prior to trial, Vogt filed a motion in limine 
requesting the court to allow Van Lare to submit evidence on 
only the intentional misrepresentation claim because, Vogt 
asserted, the economic loss doctrine barred recovery under the 
other claims.  The court denied the motion but, in Van Lare's 
view, the court intimated that it would not submit both the 
intentional misrepresentation and strict liability claims to the 
jury. 
¶13 At the conclusion of the trial testimony, Vogt again 
moved for dismissal of the strict liability claim, asserting 
that the economic loss doctrine barred recovery under that 
claim.  The court denied the motion.  Following that ruling, Van 
No. 01-3051  
 
6 
 
Lare withdrew the intentional misrepresentation claim, the 
negligent misrepresentation claim, and, to the extent it was a 
separate claim, the Wis. Stat. § 100.18 claim.  Instead, Van 
Lare opted to submit only the strict liability claim.  Acting on 
that theory, the jury returned a verdict in favor of Van Lare 
and awarded $375,000 in damages. 
¶14 Following 
the 
verdict, 
Vogt 
moved 
for 
judgment 
notwithstanding the verdict on the ground that the economic loss 
doctrine barred Van Lare from recovering purely economic damages 
under a strict liability misrepresentation claim.  Although the 
court concluded that the evidence presented was sufficient to 
sustain the jury's verdict, the court nonetheless granted Vogt's 
motion because it concluded, contrary to its earlier rulings, 
that Van Lare's strict liability misrepresentation claim was 
barred by the economic loss doctrine. 
¶15 Van Lare appealed, and the court of appeals certified 
the case to this court pursuant to Wis. Stat. § (Rule) 809.61. 
ANALYSIS 
A. 
Applicability of the Economic Loss Doctrine to Commercial 
Real Estate Contracts 
¶16 The threshold issue in this case is whether the 
economic loss doctrine applies to commercial real estate 
contracts such as the Option to Purchase and resulting purchase 
agreement in this case. 
¶17 The economic loss doctrine, first adopted by this 
court in Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, 
Inc., 148 Wis. 2d 910, 437 N.W.2d 213 (1989), is a judicially 
No. 01-3051  
 
7 
 
created doctrine that seeks "(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 situated to assess 
the risk [of] economic loss, the commercial purchaser, to 
assume, allocate, or insure against that risk."  Daanen & 
Janssen, Inc. v. Cedarapids, Inc., 216 Wis. 2d 395, 403, 573 
N.W.2d 842 (1998). 
¶18 The doctrine holds that a commercial purchaser of a 
product 
cannot 
recover 
solely 
economic 
losses 
from 
the 
manufacturer under negligence or strict liability theories, 
particularly where the warranty given by the manufacturer 
specifically 
precludes 
the 
recovery 
of 
such 
damages.  
Sunnyslope, 148 Wis. 2d at 921.  We have repeated this principle 
on numerous occasions.  Digicorp, Inc. v. Ameritech Corp., 2003 
WI 54, ¶33, 262 Wis. 2d 32, 662 N.W.2d 652; Wausau Tile, Inc. v. 
County Concrete Corp., 226 Wis. 2d 235, 245-46, 593 N.W.2d 445 
(1999); State Farm Mut. Auto. Ins. Co. v. Ford Motor Co., 225 
Wis. 2d 305, 315, 592 N.W.2d 201 (1999); Daanen, 216 Wis. 2d at 
402. 
¶19 Wisconsin courts have gradually enlarged the economic 
loss doctrine from its root in Sunnyslope.  Although we defined 
the 
economic 
loss 
doctrine 
narrowly 
in 
Sunnyslope, 
the 
narrowness of the definition corresponded to the facts in that 
case——application of the economic loss doctrine to a product.  
Daanen, 216 Wis. 2d at 403.  Earlier this term, we referred to 
the economic loss doctrine more broadly as "a judicially-created 
No. 01-3051  
 
8 
 
remedies 
principle 
that 
operates 
generally 
to 
preclude 
contracting parties from pursuing tort recovery for purely 
economic or commercial losses associated with the contract 
relationship."  Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, 
¶23, 270 Wis. 2d 146, 677 N.W.2d 233.   
¶20 Although this court has not previously addressed the 
specific issue of whether the economic loss doctrine applies to 
commercial real estate contracts, other courts addressing the 
issue under Wisconsin law have concluded that it does.  For 
instance, 
in 
Kailin v. 
Armstrong, 
2002 WI 
App 70, 252 
Wis. 2d 676, 643 N.W.2d 132, the court of appeals concluded that 
"[a]lthough the economic loss doctrine was developed in the 
context of defective product claims, it applies when real estate 
is the subject of the contract."  Id., ¶27; see also Mose v. 
Tedco Equities—Potter Rd. Ltd. P'ship, 228 Wis. 2d 848, 859, 598 
N.W.2d 594 (Ct. App. 1999) (holding that there is no reason to 
forgo application of the economic loss doctrine because real 
estate is the "product" in question); Metal Processing Co. v. 
Amoco Oil Co., 926 F. Supp. 828, 832 (E.D. Wis. 1996) (finding 
case indistinguishable from others applying the economic loss 
doctrine "merely because the 'product' in this case is land as 
opposed to a piece of equipment or a building"); Raytheon Co. v. 
McGraw-Edison Co., 979 F. Supp. 858, 870 (E.D. Wis. 1997) 
(reasoning that economic loss doctrine applies because when "two 
sophisticated commercial entities enter into an arms-length 
transaction for the sale of industrial property, there is equal 
No. 01-3051  
 
9 
 
bargaining strength on both sides of the table and equal 
opportunity to inspect the property"). 
¶21 While we do not decide today whether the broader 
conceptualization of the economic loss doctrine in Tietsworth 
covers all real estate transactions, we conclude that the 
economic loss doctrine may not be discarded simply because a 
transaction involves real estate.  In this case, we have a 
written, bargained-for contract for the sale of commercial-use 
land between two sophisticated parties represented by counsel 
during the negotiation process.  This is the kind of situation 
that is tailor made for the application of traditional contract 
law. 
¶22 Van 
Lare 
is 
forced 
to 
base 
his 
claim 
on 
a 
misrepresentation theory rather than a breach of contract theory 
because the period of limitation on the contract claim had run.  
Wis. Stat. § 893.43.3  He asserts that it should be of no 
consequence whether the theory of liability is based in tort or 
contract, provided that the misrepresentation is contained in 
the contractual commitment of the parties.  Essentially, Van 
                                                 
3 Wisconsin Statute § 893.43 provides as follows: 
An action upon any contract, obligation or liability, 
express or implied, including an action to recover 
fees for professional services, except those mentioned 
in s. 893.40, shall be commenced within 6 years after 
the cause of action accrues or be barred. 
The option to purchase was signed on June 22, 1993, meaning the 
period of limitation would have run on June 22, 1999.  This 
action commenced on November 29, 1999. 
No. 01-3051  
 
10 
 
Lare argues that the economic loss doctrine bars claims arising 
from breach of tort duties but should not be extended to bar 
claims arising from breach of contractual duties.4  He also 
asserts that the economic loss doctrine's intent was to limit 
damage claims to those damages contemplated by the parties when 
entering into a contract, not to prevent recovery of those 
damages altogether. 
¶23 In truth, Van Lare asks us to forgo application of the 
economic loss doctrine to his strict liability misrepresentation 
claim because the normal application of the doctrine leaves him 
without a remedy.  However, the economic loss doctrine did not 
necessarily preclude other claims, e.g., (1) breach of contract; 
(2) 
violation 
of 
Wis. Stat. § 100.18 
(fraudulent 
representation); and (3) intentional misrepresentation in some 
form.  Unfortunately, in the first two of these potential 
claims, the period of limitation for bringing an action expired.  
The intentional misrepresentation claim, which offers a narrow, 
still imprecise exception to the economic loss doctrine, was 
dropped.  We cannot overrule our precedent to allow Van Lare's 
tort claim simply because his own action or inaction has barred 
other claims. 
                                                 
4 In tort, a duty is put upon an individual member of the 
community simply because he is such a member, but, in contract, 
the duty comes into existence only when the duty-bearer has 
voluntarily undertaken to assume it.  Daanen & Janssen, Inc. v. 
Cedarapids, Inc., 216 Wis. 2d 395, 404 n.4, 573 N.W.2d 842 
(1998). 
No. 01-3051  
 
11 
 
¶24 Contrary to Van Lare's position, applying the economic 
loss doctrine in this case furthers the policies that justify 
the doctrine's existence. 
¶25 One general premise underlying the economic loss 
doctrine is that contract law is better suited to deal with 
purely economic loss in the commercial arena than tort law.  
Daanen, 216 Wis. 2d at 404 (citing E. River S.S. Corp. v. 
Transamerica Delaval, Inc., 476 U.S. 858, [872] (1986)).  
Contract law "is designed to effectuate exchanges and to protect 
the expectancy interests of parties to private bargained-for 
agreements" and "seeks to hold commercial parties to their 
promises."  Id.  In contrast, tort law focuses on "protecting 
society as a whole from physical harm to person or property."  
Id. at 405. 
¶26 The economic loss doctrine exists to preserve the 
distinction between contract and tort law.  Digicorp, 262 
Wis. 2d 32, ¶34.  To allow tort recovery for a misrepresentation 
claim grounded in a bargained-for contract would blur the 
distinction we seek to preserve.  Tort recovery in a contract 
case can only be justified in circumstances such as intentional 
misrepresentation that undermine the foundation of the economic 
loss doctrine.   
¶27 Van Lare had ample opportunity to force Vogt to 
allocate the risk in their contract.  Van Lare not only had 
counsel during the negotiations of the Option to Purchase, but 
also had the time and opportunity to investigate and test the 
subject property prior to closing.  The economic loss doctrine 
No. 01-3051  
 
12 
 
encourages parties to allocate economic risks in this manner.  
It forces purchasers in a position to assess the risks of 
economic loss to insure against those risks.  Daanen, 216 
Wis. 2d at 403.  If we were to allow recovery for strict 
liability misrepresentation in this case, we would seriously 
undermine a purchaser's incentive to insure against risks by 
bargaining for remedies.  At the same time, we would impair 
contracting parties' freedom to allocate the economic risks of 
the transaction by subjecting them to potential tort damages 
even when they agree to forgo such damages. 
¶28 Accordingly, we discern no reason to except Van Lare's 
strict liability misrepresentation claim from application of the 
economic loss doctrine under the facts of this case.  When the 
economic loss doctrine applies, as it does here, it bars 
misrepresentation 
claims 
in 
the 
absence 
of 
a 
recognized 
exception.  As a result, the circuit court correctly concluded 
that Van Lare's strict liability misrepresentation claim is 
barred by the doctrine.  Under existing law, there is no 
exception to the economic loss doctrine for strict liability 
misrepresentation in a purely commercial setting. 
B. 
Exceptions to the Economic Loss Doctrine 
¶29 Van Lare alternatively requests that we create an 
exception to the economic loss doctrine for strict liability 
misrepresentation claims when the sale of real estate is 
involved.  In support of this request, he notes the "fraud in 
the inducement" exception in our case law.  Van Lare adds that 
claims of intentional misrepresentation and strict liability 
No. 01-3051  
 
13 
 
misrepresentation carry a similar burden of proof, Kain v. 
Bluemound East Indus. Park, Inc., 2001 WI App 230, ¶42, 248 
Wis. 2d 172, 635 N.W.2d 640, as well as the same measure of 
damages. 
¶30 We recognized a "fraud in the inducement" exception to 
the economic loss doctrine in Digicorp, 262 Wis. 2d 32, ¶3, but 
we were not able to reach a majority decision on the scope of 
that exception.  The Digicorp court addressed tort claims 
grounded in the theory of intentional misrepresentation, or 
"fraud in the inducement," saying "'fraud in the inducement' 
presents a special situation where parties to a contract appear 
to negotiate freely——which normally would constitute grounds for 
invoking the economic loss doctrine——but where in fact the 
ability of one party to negotiate fair terms and make an 
informed decision is undermined by the other party's fraudulent 
behavior."  Id., ¶48 (quoting Huron Tool & Eng'g Co. v. 
Precision Consulting Servs., Inc., 532 N.W.2d 541, 545 (Mich. 
Ct. App. 1995)).  We noted that Wisconsin has a long-standing 
principle that parties need a background of truth and fair 
dealing in commercial relationships and that a party to a 
business transaction is under a duty to disclose facts basic to 
the transaction if he knows the other is about to enter into the 
transaction with a mistaken or incomplete understanding of those 
facts, and the other party could reasonably expect a disclosure 
of those facts.  Id., ¶¶36-37. 
¶31 We believe that there are substantial, qualitative 
differences 
between 
the 
doctrines 
of 
intentional 
No. 01-3051  
 
14 
 
misrepresentation and strict liability misrepresentation.  These 
differences preclude us from granting a corresponding exception 
from 
the 
economic 
loss 
doctrine 
for 
strict 
liability 
misrepresentation.   
¶32 The tort of strict liability misrepresentation arose 
from the judiciary's determination that in some situations, the 
accuracy of representations is so important that "intent to 
deceive and good-faith belief in the truth of the representation 
are immaterial."  Ollerman v. O'Rourke Co., 94 Wis. 2d 17, 25, 
288 N.W.2d 95 (1980) (quoting Whipp v. Iverson, 43 Wis. 2d 166, 
169-70, 
168 
N.W.2d 201 
(1969)). 
 
Strict 
liability 
misrepresentation places the loss flowing from certain types of 
unintentional misrepresentations on the "innocent" defendant 
rather than the "innocent" plaintiff.  Merrill Lynch, Pierce, 
Fenner & Smith, Inc. v. Boeck, 127 Wis. 2d 127, 139, 377 
N.W.2d 605 (1985) (quoting Gauerke v. Rozga, 112 Wis. 2d 271, 
280, 
332 
N.W.2d 804 
(1983)); 
Stevenson 
v. 
Barwineck, 
8 
Wis. 2d 557, 562, 99 N.W.2d 690 (1959) (citing cases).  A 
plaintiff 
asserting 
a 
claim 
of 
strict 
liability 
misrepresentation is only required to show that the defendant: 
(1) 
made 
the 
representation 
on 
the 
defendant's 
personal 
knowledge or under circumstances in which he necessarily ought 
to have known the truth or untruth of the statement; and (2) had 
an economic interest in the transaction from which he expects to 
gain some economic benefit.  Boeck, 127 Wis. 2d at 138-39.  The 
certification memorandum observes that strict responsibility 
misrepresentation may well apply in situations where the parties 
No. 01-3051  
 
15 
 
are not in equal bargaining positions or the purchaser may not 
be in the best position to assess the risk of economic loss——two 
assumptions upon which the economic loss doctrine rests. 
¶33 A plaintiff alleging intentional misrepresentation, on 
the other hand, faces a more substantial burden of proof.  Such 
a plaintiff must prove that the defendant: (1) either knew the 
representation was untrue or made the representation recklessly 
without caring whether it was true or false; and (2) made the 
representation with intent to deceive and induce the plaintiff 
to act upon it to the plaintiff's pecuniary damage.  Ollerman, 
94 Wis. 2d at 25. 
¶34 The 
misrepresentation 
in 
strict 
liability 
misrepresentation often does not rise to the level of the 
deceitful behavior exhibited in intentional misrepresentation 
cases.  Perhaps for that reason, the United States Court of 
Appeals for the Seventh Circuit correctly predicted that we 
"would 
not 
allow 
a 
negligence 
or 
strict 
liability 
misrepresentation claim seeking to recover economic damages."  
Cooper Power Sys., Inc. v. Union Carbide Chems. & Plastics Co., 
123 F.3d 675, 682 (7th Cir. 1997).  If Van Lare believed that 
the facts of his case constituted "fraud in the inducement," he 
was 
free 
to 
pursue 
a 
claim 
alleging 
intentional 
misrepresentation.  At trial, he withdrew that claim. 
C. 
New Trial in the Interest of Justice 
¶35 Van Lare argues that his choice to dismiss certain 
claims was based upon the circuit court's original conclusion 
that the economic loss doctrine did not bar his strict liability 
No. 01-3051  
 
16 
 
claim.  Accordingly, he suggests that, in the interest of 
justice, he should be awarded a new trial to pursue an 
intentional misrepresentation claim or a claim under Wis. Stat. 
§ 100.18, or both. 
¶36 Wisconsin Stat. § 751.06 provides us with discretion 
to prevent miscarriages of justice.  It provides in pertinent 
part: 
[I]f it appears from the record that the real 
controversy has not been fully tried, or that it is 
probable that justice has for any reason miscarried, 
the court may reverse the judgment or order appealed 
from, regardless of whether the proper motion or 
objection appears in the record, and may direct the 
entry of the proper judgment or remit the case to the 
trial court for the entry of the proper judgment or 
for a new trial, and direct the making of such 
amendments in the pleadings and the adoption of such 
procedure 
in 
that 
court, 
not 
inconsistent 
with 
statutes or rules, as are necessary to accomplish the 
ends of justice. 
This court's interpretation of the statute dictates that a new 
trial may be ordered in two situations: (1) if the real 
controversy has not been fully tried; or (2) if it is probable 
that justice has for any reason miscarried.  Morden v. Cont'l 
AG, 2000 WI 51, ¶88, 235 Wis. 2d 325, 611 N.W.2d 659.  We are 
normally quite reluctant to exercise our discretion to grant a 
new trial under § 751.06, and we will do so only when the 
circumstances are "exceptional."  Id., ¶100. 
¶37 In this case, the "real controversy" was Van Lare's 
contract claim.  That claim was not tried because the period of 
limitation ran out.  Van Lare then had a choice whether to move 
forward with an intentional misrepresentation claim or a strict 
No. 01-3051  
 
17 
 
liability claim, or perhaps both.  He chose strict liability and 
that controversy was fully tried, with Van Lare receiving a 
successful jury verdict.  The verdict was ultimately vacated by 
the circuit court.  Had the circuit court not changed its 
position, the strict liability jury verdict would have been 
overturned on appeal.  It is a bit late now for Van Lare to 
argue 
that 
"the 
real 
controversy" 
was 
intentional 
misrepresentation and that intentional misrepresentation was not 
fully tried.  After all, Vogt repeatedly argued that the only 
claim that should be presented to the jury was intentional 
misrepresentation.  The circuit court, in the pre-trial motions 
hearing, stated: "Well, certainly the case will go forward with 
the intentional misrepresentation.  That's conceded by the 
defense."  Yet, Van Lare sent strict liability to the jury 
instead.  We do not think Van Lare can prevail on grounds that 
the real controversy was not tried.   
¶38 Van Lare then turns to the second prong of the statute 
and asserts a miscarriage of justice.  Initially, Van Lare could 
have brought a claim for breach of contract.  The period of 
limitation did not bar such a claim until June 22, 1999, six 
years after the signing of the Option to Purchase.  Van Lare 
knew about the potential contract breach prior to that date, as 
evidenced by his attorney's letter to Vogt.  Van Lare instead 
chose to pursue tort remedies.  Subsequently, Van Lare withdrew 
his 
intentional 
misrepresentation 
and 
Wis. Stat. § 100.18 
claims.   
No. 01-3051  
 
18 
 
¶39 It is true that on July 9, 2001, before trial, the 
circuit court stated:  
As a practical matter, I would not submit to the jury 
both intentional and strict.  We would do one or the 
other, so we're probably talking intentional.  So, the 
only 
other 
one 
we 
would 
look 
at 
is 
negligent 
misrepresentation, 
if 
that 
becomes 
applicable 
in 
testimony.  I'll let you renew your argument at the 
time of trial.   
At the close of evidence at trial, Vogt's counsel again objected 
to strict liability but lost.  Van Lare's counsel then chose 
strict liability without making a new argument about submitting 
both theories.  He made an understandable strategic decision to 
go forward on the theory that offered the optimum chance for 
success with the jury but he did not simultaneously preserve an 
objection about going forward with two theories.   
¶40 Looking at the evidence, including the "as is" clause 
in the option, the need to revise the June 22 option twice 
before 
the 
closing, 
and 
the 
unutilized 
opportunity 
for 
investigation of the site, we are not convinced that justice has 
miscarried.  In our opinion, any injustice that may have beset 
Van Lare was largely avoidable and, therefore, does not overcome 
our usual reluctance to grant a new trial. 
CONCLUSION 
¶41 We conclude that the economic loss doctrine precludes 
strict liability misrepresentation claims involving a commercial 
real estate contract negotiated at arm's length between parties 
represented by counsel.  By so holding, we conform to our 
precedent and uphold the policies underlying the economic loss 
No. 01-3051  
 
19 
 
doctrine, maintaining the fundamental distinction between the 
law of contract and the law of tort.   
¶42 We find no justification for creating an exception to 
the 
economic 
loss 
doctrine 
for 
strict 
liability 
misrepresentation claims in a commercial real estate context; 
and, because we feel that any injustice suffered by Van Lare was 
largely avoidable, we find no basis on which to award Van Lare a 
new trial to pursue alternative theories of liability. 
By the Court.—The judgment and order of the circuit court 
are affirmed. 
¶43 DIANE S. SYKES, J., did not participate. 
 
 
No.  01-3051.awb 
 
1 
 
¶44 ANN 
WALSH 
BRADLEY, 
J.   (concurring). 
 
I 
write 
separately to forestall revisionist interpretations of the 
holding in Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, 262 
Wis. 2d 32, 662 N.W.2d 652, by those of us who participated in 
the case.  The holding of the case is explained in a footnote to 
the Digicorp opinion.  262 Wis. 2d 32, ¶5, n. 2.  The footnote 
states: 
A majority of this court, Justices Crooks, Prosser, 
and Sykes, rejects the broad exception that the court 
of appeals adopted 
in 
Douglas-Hanson. 
 
However, 
because Justice Sykes would not adopt any fraud 
exception, there is also a majority of this court, 
Justices Bradley, Bablitch and Sykes, that rejects the 
narrow exception that was adopted by the Huron Tool 
court.  Two Justices, Bradley and Bablitch, dissent 
stating 
that 
the 
Douglas-Hanson 
exception 
should 
apply.   A majority holds that a fraud in the 
inducement exception to the economic loss doctrine 
exists, but there is an even split as to what the 
fraud in the inducement exception entails.  While four 
Justices agree that there should be an exception, only 
two Justices, Crooks and Prosser, agree that the Huron 
Tool exception should be adopted.  Chief Justice 
Abrahamson and Justice Wilcox did not participate in 
this case.   
   
¶45 After 
the 
opinion 
was 
released, 
the 
plaintiff, 
Digicorp, joined Bacher Communications, Inc., a third-party 
defendant, in a motion for reconsideration on the grounds that 
the court did not have a clear majority by which to reverse and 
remand the decision to the court of appeals.  They asked us to 
clarify our reasoning and the import of the holding as set forth 
in 
footnote 
2. 
 
The 
third-party 
defendant's 
motion 
for 
reconsideration stated: 
No.  01-3051.awb 
 
2 
 
Public policy dictates that the courts should strive 
to make good law or, at least, clarify the law.  In 
the absence of the ability to do so, the courts should 
strive to uphold the law as it exists. . . . In 
essence, the Court here provided a decision without an 
opinion.  Ultimately, the Court has determined that 
they will overrule the Court of Appeals, but can offer 
no reasons of precedential value as to why the Court 
of Appeals is wrong, or what rule of law is correct. 
We denied the motion for reconsideration without comment or 
further clarification.5 
¶46 Those of us who participated in Digicorp may offer 
differing interpretations of the intent and consequences of 
footnote 2.  However, when asked for clarification in the motion 
for reconsideration, we denied the motion without comment, 
leaving the interpretation for another day.  That day will come 
when a full court can rule on the issue in a case that properly 
presents it.  This is not such a case. 
 
                                                 
5 The motion was denied on September 30, 2003.  Only four 
justices considered the motion, because Justice Bablitch retired 
from the court prior to its consideration. 
No.  01-3051.npc 
 
1 
 
¶47 N. PATRICK CROOKS, J.   (concurring).  While I agree 
with the majority's holding in this case, I write, today, to 
emphasize the action taken in our decision in Digicorp, Inc. v. 
Ameritech 
Corporation, 
2003 
WI 
54, 
262 
Wis. 2d 32, 
662 
N.W.2d 652, regarding the fraud in the inducement exception to 
the economic loss doctrine.  Even though the majority only 
briefly 
discusses 
Digicorp, 
majority 
op., 
¶30, 
I 
write 
separately to stress that the Digicorp majority clearly rejected 
a broad fraud in the inducement exception to the economic loss 
doctrine.  Digicorp, 262 Wis. 2d 32, ¶3. 
¶48 The Digicorp decision extensively discussed Huron Tool 
and Engineering Company v. Precision Consulting Services, Inc., 
209 Mich. App. 365, 532 N.W.2d 541 (1995), and Douglas-Hanson 
Company, Inc. v. BF Goodrich Company, 229 Wis. 2d 132, 598 
N.W.2d 262 (Ct. App. 1999), two cases dealing with fraud in the 
inducement exceptions to the economic loss doctrine. 
¶49 The Huron Tool decision adopted a narrow fraud in the 
inducement exception, concluding that a "plaintiff may only 
pursue a claim for fraud in the inducement extraneous to the 
alleged breach of contract."  Huron Tool, 209 Mich. App. at 374.  
This narrow exception to the economic loss doctrine does not 
apply when the fraud in the inducement is interwoven with the 
contract.  Digicorp, 262 Wis. 2d 32, ¶3.  Thus, in applying this 
narrow exception, a court must "determine whether the fraud 
involved matters for which risks and responsibilities were 
extraneous to, or interwoven into, the contract."  Id., ¶53. 
No.  01-3051.npc 
 
2 
 
¶50 In contrast, the Douglas-Hanson decision proposed a 
broad fraud in the inducement exception to the economic loss 
doctrine, holding "that the economic loss doctrine does not bar 
claims 
for 
intentional 
misrepresentation 
when 
the 
misrepresentation fraudulently induces a party to enter into a 
contract."  Douglas-Hanson, 229 Wis. 2d at 149-50.  In other 
words, this exception would appear to permit a tort action 
whenever it is claimed that a contract was induced by fraud.  
Digicorp, 262 Wis. 2d 32, ¶39. 
¶51 Even though a majority in Digicorp did not adopt Huron 
Tool's narrow fraud in the inducement exception, a majority of 
the justices participating in Digicorp clearly rejected Douglas-
Hanson's broad fraud in the inducement exception to the economic 
loss doctrine.  Id., ¶3.  Five members of the court participated 
in the Digicorp decision.  While four justices recognized a 
fraud in the inducement exception to the economic loss doctrine, 
only two of these four justices would have adopted a narrow 
exception similar to Huron Tool, and two other justices would 
have adopted the broader exception set forth in Douglas-Hanson.  
Digicorp, 262 Wis. 2d 32, ¶5 n.2.  See also Tietsworth v. 
Harley-Davidson, Inc., 2004 WI 32, ¶¶32-34, 270 Wis. 2d 146, 677 
N.W.2d 233.  The fifth justice rejected the Douglas-Hanson 
exception, and would not recognize any fraud in the inducement 
exception.6  Thus, while we did not reach a decision in Digicorp 
                                                 
6 Our decision in Digicorp, Inc. v. Ameritech Corp., 2003 WI 
54, ¶5 n.2, 262 Wis. 2d 32, 662 N.W.2d 652, explained the 
division of the court on the fraud in the inducement exception 
as follows: 
No.  01-3051.npc 
 
3 
 
as to the extent of the fraud in the inducement exception to the 
economic loss doctrine, a majority recognized that there is such 
an exception, and rejected the broad Douglas-Hanson exception.  
Digicorp, 262 Wis. 2d 32, ¶5 n.2. 
¶52 For the foregoing reasons, I respectfully concur. 
                                                                                                                                                             
A majority of this court, Justices Crooks, 
Prosser and Sykes, rejects the broad exception 
that the court of appeals adopted in Douglas-
Hanson.  However, because Justice Sykes would not 
adopt any fraud exception, there is also a 
majority 
of 
this 
court, 
Justices 
Bradley, 
Bablitch and Sykes, that rejects the narrow 
exception that was adopted by the Huron Tool 
court.  Two Justices, Bradley and Bablitch, 
dissent stating that the Douglas-Hanson exception 
should apply.  A majority holds that a fraud in 
the inducement exception to the economic loss 
doctrine exists, but there is an even split as to 
what 
the 
fraud 
in 
the 
inducement 
exception 
entails.  While four Justices agree that there 
should be an exception, only two Justices, Crooks 
and Prosser, agree that the Huron Tool exception 
should be adopted.  Chief Justice Abrahamson and 
Justice Wilcox did not participate in this case. 
No.  01-3051.npc 
 
4 
 
¶53 I am authorized to state that Justice JON P. WILCOX 
joins this concurrence. 
 
 
 
No.  01-3051.npc 
 
 
 
1