Title: Pagoudis v. Keidl

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2023 WI 27 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2020AP225 
 
 
 
COMPLETE TITLE: 
Louis Pagoudis, Hanna Pagoudis, Sead Properties, 
LLC and Kearns Management, LLC, 
          Plaintiffs-Appellants, 
     v. 
Marcus Keidl and Russell K. Berg d/b/a Intervest  
Inspections, 
          Defendants, 
Amy Keidl a/k/a Amy Jo Weyker, 
          Defendant-Respondent-Petitioner. 
 
 
 
 
 
REVIEW OF DECISION OF THE COURT OF APPEALS 
Reported at 399 Wis. 2d. 75, 963 N.W.2d 803 
PDC No:2021 WI App 56 - Published  
 
 
OPINION FILED: 
April 4, 2023    
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
September 9, 2022    
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Washington   
 
JUDGE: 
Todd K. Mertens   
 
 
 
JUSTICES: 
KAROFSKY, J., delivered the majority opinion of the Court, in 
which ZIEGLER, C.J., ANN WALSH BRADLEY, DALLET, and HAGEDORN, 
JJ., joined. ZIEGLER, C.J., filed a concurring opinion, in which 
HAGEDORN, 
J., 
joined. 
ROGGENSACK, 
J., 
filed 
an 
opinion 
concurring in part and dissenting in part. REBECCA GRASSL 
BRADLEY, J., filed an opinion concurring in part and dissenting 
in part. 
 
NOT PARTICIPATING: 
        
ATTORNEYS: 
 
 
For the defendant-respondent-petitioner, there were briefs 
filed by Laura Elaine O’Gorman and Schloemer Law Firm, S.C., 
West Bend. There was an oral argument by Laura Elaine O’Gorman. 
 
 
 
2 
For the plaintiffs-appellants, there was a brief filed by 
Thomas L. Frenn, James R. Shaw, and Frenn Law Offices, 
Wauwatosa, and James Shaw Law, Brookfield. There was an oral 
argument by Shawn M. Govern.  
 
An amicus curiae brief was filed by Cori Moore Lamont and 
Wisconsin Realtors Association, Madison, for Wisconsin Realtors 
Association.  
 
 
 
 
 
2023 WI 27 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2020AP225 
(L.C. No. 
2019CV492) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Louis Pagoudis, Hanna Pagoudis, Sead 
Properties, LLC and Kearns Management, LLC, 
 
          Plaintiffs-Appellants, 
 
     v. 
 
Marcus Keidl and Russell K. Berg d/b/a 
Intervest Inspections, 
 
          Defendants, 
 
Amy Keidl a/k/a Amy Jo Weyker, 
 
          Defendant-Respondent-Petitioner. 
 
FILED 
 
APR 4, 2023 
 
Sheila T. Reiff 
Clerk of Supreme Court 
 
 
 
 
KAROFSKY, J., delivered the majority opinion of the Court, in 
which ZIEGLER, C.J., ANN WALSH BRADLEY, DALLET, and HAGEDORN, 
JJ., joined. ZIEGLER, C.J., filed a concurring opinion, in which 
HAGEDORN, 
J., 
joined. 
ROGGENSACK, 
J., 
filed 
an 
opinion 
concurring in part and dissenting in part. REBECCA GRASSL 
BRADLEY, J., filed an opinion concurring in part and dissenting 
in part. 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed in 
part, reversed in part, and cause remanded.   
 
¶1 
JILL 
J. 
KAROFSKY, 
J.   This 
case 
involves 
a 
residential real estate transaction and a claim that the seller 
No. 
2020AP225   
 
2 
 
misrepresented the condition of the subject property, which has 
given rise to confusion because three legally distinct entities—
—Elias "Louis" Pagoudis, Sead Properties, LLC (Sead LLC), and 
Kearns Management, LLC (Kearns LLC)——conflated their interests 
when filing their complaint.  This court now endeavors to 
disentangle those interests and holds that only Sead LLC has 
sufficiently stated a claim upon which relief can be granted.  
Pagoudis's and Kearns LLC's claims against Amy Keidl must be 
dismissed.1 
I.  BACKGROUND 
¶2 
We begin by introducing the participants in this real 
estate dispute.  Pagoudis owns and is the sole member of two 
LLCs: Sead LLC and Kearns LLC.2  Together, Pagoudis, Sead LLC, 
and Kearns LLC are the plaintiffs in this action and Amy and 
Marcus Keidl, the sellers of a piece of residential real estate 
(the Property), are the defendants.3   
                                                 
1 The Honorable Todd K. Martens of the Washington County 
Circuit Court dismissed the plaintiffs' claims with prejudice.  
We leave it to the circuit court's discretion on remand whether 
to dismiss Pagoudis's and Kearns LLC's claims with or without 
prejudice in light of the analysis herein. 
2 The complaint also lists Hanna Pagoudis, Louis Pagoudis's 
wife, as a plaintiff with an interest in both LLCs.  The 
complaint treats all of Hanna Pagoudis's claims and rights as 
derivative of her husband's claims through marriage, so this 
opinion focuses only on Louis Pagoudis. 
3 The plaintiffs also brought a negligence claim against the 
home inspector, Russell Berg, but that claim was not part of Amy 
Keidl's motion to dismiss and is therefore not before this court 
on appeal. 
No. 
2020AP225   
 
3 
 
¶3 
We next take a moment to establish which documents we 
are reviewing.  The plaintiffs filed a first amended complaint 
after Amy Keidl filed a motion to dismiss, but before the 
circuit court ruled on the motion.  With the first amended 
complaint in play, the circuit court granted Amy Keidl's motion 
to dismiss in full.  The plaintiffs filed a motion for 
reconsideration while simultaneously filing a second amended 
complaint.4  The circuit court subsequently entered the final 
order granting Amy Keidl's original motion, necessarily denying 
the motion for reconsideration.  The plaintiffs appealed this 
final order.  As such we treat the first amended complaint, the 
complaint in place when the court initially granted the motion 
to dismiss, as the operative complaint. 
¶4 
Various other documents were submitted to this court 
either in the record attached to motions or in the appendix to 
appellate briefing.  When reviewing a motion to dismiss, we 
generally limit the review to the four corners of the complaint.  
See Andruss v. Divine Savior Healthcare Inc., 2022 WI 27, ¶15, 
401 Wis. 2d 368, 973 N.W.2d 435.  The circuit court considered 
two warranty deeds attached to Keidl's motion to dismiss under 
the limited "incorporated-by-reference doctrine."  The court of 
appeals upheld the consideration of the warranty deeds, and the 
plaintiffs did not appeal that decision.  Thus, we also consider 
                                                 
4 Amy Keidl filed another motion to dismiss relating to the 
plaintiffs' second amended complaint. 
No. 
2020AP225   
 
4 
 
these two warranty deeds.  We do not consider or rely on any 
other extraneous documents.5 
¶5 
Now we set out the facts of the purchase and transfer 
of the Property, as alleged in the first amended complaint and 
established by the warranty deeds.  Pagoudis negotiated the 
terms of the Property's purchase from the Keidls.  During the 
negotiations, he received a real estate condition report (RECR) 
signed by Amy Keidl.  Pagoudis then signed the offer to 
purchase, which states that the contract is between the Keidls 
and Pagoudis "or assigns." 
¶6 
Sead LLC then executed the negotiated contract for the 
Property and took title to it.  Less than six months later, Sead 
LLC assigned the Property to Kearns LLC.  At the time the 
complaint was filed, Kearns LLC held title to the Property. 
¶7 
After 
purchasing 
the 
Property, 
the 
plaintiffs 
discovered defects that Amy Keidl failed to disclose in the 
RECR.  The alleged defects range from water and mildew in the 
basement, to insect infestations, to an unwanted piano.6  The 
plaintiffs brought this action against the Keidls for breach of 
contract, 
common 
law 
misrepresentation, 
and 
statutory 
misrepresentation. 
                                                 
5 We do, however, read some of the complaint's confusing or 
contradictory language in light of helpful concessions made in 
the plaintiffs' briefing and oral argument. 
6 We need not go further into the specifics of the alleged 
defects.  At this stage of the proceeding, we accept as true the 
factual allegation that there were material defects in the 
Property that were not disclosed in the RECR. 
No. 
2020AP225   
 
5 
 
¶8 
Amy Keidl filed a motion to dismiss for failure to 
state a claim upon which relief can be granted pursuant to Wis. 
Stat. § 802.06(2)(a)6 (2019-20)7.  The circuit court dismissed 
the case in full, deciding that each of the parties lacked 
standing to pursue their stated claims.  The court reasoned that 
Pagoudis and Kearns LLC have no standing because they were not 
parties to the original transaction, and Sead LLC has no 
standing because it transferred the Property before filing the 
action and thus no longer has an interest in the Property.  The 
court of appeals reversed, holding that at least one of the 
parties has standing and remanded to the circuit court for 
further factual development to determine which party or parties 
have standing under which claims.  We now conclude that 
Pagoudis's and Kearns LLC's claims against Amy Keidl are 
dismissed without further factual development because both 
parties failed to state a claim upon which relief may be 
granted.  Sead LLC's claims, however, survive the motion to 
dismiss, and as a result we remand the case to the circuit court 
for further proceedings.  
II.  STANDARD OF REVIEW 
¶9 
A motion to dismiss is reviewed de novo taking all 
well-pleaded factual allegations in the complaint as true and 
drawing reasonable inferences from those facts.  Colectivo 
Coffee Roasters, Inc. v. Soc'y Ins., 2022 WI 36, ¶7, 401 Wis. 2d 
                                                 
7 All subsequent references to the Wisconsin Statutes are to 
the 2019-20 version unless otherwise indicated. 
No. 
2020AP225   
 
6 
 
660, 974 N.W.2d 442.  We do not defer to a complaint's legal 
conclusions.  Id.  In determining whether this complaint 
survives a motion to dismiss, we look to various statutes, which 
we also interpret de novo.  State v. Forrett, 2022 WI 37, ¶5, 
401 Wis. 2d 678, 974 N.W.2d 422. 
III.  ANALYSIS 
¶10 While the circuit court, the court of appeals, and the 
parties view the issue in this case as one of standing, we 
conclude 
that 
the 
question 
here 
is 
really 
whether 
each 
plaintiff, based on the plaintiff's unique interest in the 
Property, has sufficiently pled any claim upon which relief can 
be granted pursuant to Wis. Stat. § 802.06(2)(a)6.  This case 
does not raise a question of judicial policy but of the 
complaint's legal sufficiency.  See McConkey v. Van Hollen, 2010 
WI 57, ¶15, 326 Wis. 2d 1, 783 N.W.2d 855 ("standing in 
Wisconsin is not a matter of jurisdiction, but of sound judicial 
policy").  Although there are many reasons that a claim may not 
survive a motion to dismiss, we limit our review to the narrow 
issue raised and developed on appeal (though stripped of the 
guise of standing).  As such, we interpret the issue as whether 
each plaintiff, based on their individual interests in the 
Property, states a claim upon which relief can be granted. 
¶11 We determine that, according to the allegations in the 
complaint, only Sead LLC has properly stated a claim upon which 
relief can be granted.  We begin by laying out the plaintiffs' 
collective claims.  We then summarize some basic principles of 
LLC law in order to establish that each plaintiff's claims must 
No. 
2020AP225   
 
7 
 
be analyzed independently.  Finally, we address each plaintiff's 
claims independently and determine that only Sead LLC's claims 
survive the motion to dismiss. 
A.  The Claims 
¶12 The plaintiffs' five claims fall into two categories: 
breach of contract and misrepresentation.  The plaintiffs' first 
cause of action alleges breach of contract (warranty).  The 
elements of any breach of contract claim are (1) the existence 
of a contract between the plaintiff and the defendant; (2) 
breach of that contract; and (3) damages.  Brew City Redev. 
Grp., LLC v. The Ferchill Grp., 2006 WI App 39, ¶11, 289 Wis. 2d 
795, 714 N.W.2d 582.  To prove the existence of a warranty, the 
elements are: (1) an affirmation of fact; (2) inducement to the 
buyer; and (3) reliance by the buyer.  See Selzer v. Brunsell 
Bros., Ltd., 2002 WI App 232, ¶13, 257 Wis. 2d 809, 652 N.W.2d 
806.  When a warranty is found to be part of a contract, false 
representations made as part of the warranty are a breach of the 
contract. 
¶13 The plaintiffs' second cause of action is for common 
law intentional misrepresentation.  To establish intentional 
misrepresentation, the plaintiffs must show: (1) that the 
defendant made a representation of fact to the plaintiff; (2) 
the representation was false; (3) the plaintiff believed and 
relied on the misrepresentation to the plaintiff's detriment; 
(4) the defendant made the misrepresentation knowingly or 
recklessly, and (5) the defendant did so intending to deceive 
No. 
2020AP225   
 
8 
 
and induce the plaintiff.  Tietsworth v. Harley Davidson, Inc., 
2004 WI 32, ¶13, 270 Wis. 2d 146, 677 N.W.2d 233. 
¶14 The plaintiffs' third cause of action is for common 
law strict liability misrepresentation.  To establish strict 
liability misrepresentation, the plaintiffs must show: (1) the 
defendant made a representation of fact to the plaintiff; (2) 
the representation was false; (3) the plaintiff believed and 
relied on the misrepresentation to the plaintiff's detriment; 
(4) the defendant knew or ought to have known that the statement 
was false; and (5) the defendant had an economic interest in the 
transaction.  Ollerman v. O'Rourke Co. Inc., 94 Wis. 2d 17, 25, 
288 N.W.2d 95 (1980). 
¶15 The 
plaintiffs' 
fourth 
cause 
of 
action 
is 
misrepresentation under Wis. Stat. §§ 943.20(1)(d) and 895.446.8  
The elements of this claim are: (1) that the defendant made a 
false representation to the plaintiff; (2) the defendant knew 
the representation was false; (3) the defendant intended to 
deceive and defraud the plaintiff; (4) the plaintiff was 
deceived; (5) the plaintiff was defrauded; and (6) the defendant 
obtained money through the sale of property to the plaintiff.  
Ferris v. Location 3 Corp., 2011 WI App 134, ¶8, 337 Wis. 2d 
155, 804 N.W.2d 822 (citing Wis. JI-Civil 2419). 
                                                 
8 Wis. Stat. § 943.20(1)(d) makes it a crime to "obtain[] 
title to property of another person by intentionally deceiving 
the person with a false representation which is known to be 
false, made with intent to defraud, and which does defraud the 
person to whom it is made."  Section 895.446(1) establishes that 
anyone "who suffers damage or loss by reason of intentional 
conduct" prohibited by § 943.20 has a civil cause of action. 
No. 
2020AP225   
 
9 
 
¶16 The plaintiffs' fifth and final cause of action is 
misrepresentation under Wis. Stat. § 100.18, often referred to 
as "false advertising."9  The elements of this claim are: (1) the 
defendant made a representation to the public with intent to 
induce an obligation; (2) the representation was untrue, 
deceptive or misleading; and (3) the representation caused the 
plaintiff a pecuniary loss.  K & S Tool & Die Corp. v. 
Perfection Machinery Sales, Inc., 2007 WI 70, ¶19, 301 Wis. 2d 
109, 732 N.W.2d 792.   
¶17 In their complaint, the plaintiffs allege their claims 
collectively without distinguishing between Pagoudis, Sead LLC, 
and Kearns LLC's differing interests and involvement in the 
transaction.  Importantly, however, the plaintiffs' legal 
interests are not collective as each plaintiff is a separate 
legal entity according to the principles of LLC law.  We explain 
some of those LLC principles here to make this conclusion clear. 
                                                 
9 The relevant portion of § 100.18(1) reads that "[n]o 
person . . . with intent to induce the public in any manner to 
enter 
into 
any 
contract 
or 
obligation 
relating 
to 
the 
purchase . . . of any real estate . . . shall make, publish, 
disseminate, circulate, or place before the public . . . an 
advertisement, announcement, statement or representation of any 
kind to the public relating to such purchase . . . [which] 
contains any assertion, representation or statement of fact 
which 
is 
untrue, 
deceptive 
or 
misleading." 
 
Section 
100.18(11)(b) establishes that "any person suffering pecuniary 
loss because of a violation of this section" has a civil cause 
of action. 
No. 
2020AP225   
 
10 
 
B.  LLCs 
¶18 Limited Liability Companies are business entities 
created by statute——in Wisconsin, by Wis. Stat. ch. 183.10  
Although an LLC is an association of members, Chapter 183 treats 
LLCs as distinct legal entities separate from their members.  
Joseph W. Boucher et al., LLCs and LLPs: A Wisconsin Handbook 
§ 4.4.  This legal distinction between the interests of LLCs and 
their members is evident in how the chapter governs LLC and 
member property interests (subchapter VII) and the relationships 
between LLCs and their members (subchapter III). 
¶19 First, chapter 183 clearly distinguishes the property 
interests of LLC members from the property interests of the LLC.  
See 
Wis. 
Stat. 
§ 183.0701(1) 
("All 
property 
originally 
transferred to or subsequently acquired by or on account of a 
limited liability company is property of the limited liability 
company and not of the members individually."); Wis. Stat. 
§ 183.0701(3) ("Any interest in real property may be acquired in 
the name of a limited liability company and title to any 
interest so acquired shall vest in the limited liability company 
rather than in the members individually.").  LLC members have a 
personal property interest in the LLC itself, but do not have an 
                                                 
10 We note that since the appeal of this action, Wis. Stat. 
ch. 183 has been completely repealed and recreated in 2021 WI 
Act 258.  Wisconsin Stat. § 183.0110(d)(1)(2021-22) states that 
the 2019 version of chapter 183 shall remain applicable "with 
respect to obligations incurred by the limited liability company 
prior to"  the date of applicability of the new chapter, January 
1, 2023.  As the obligations in this case were incurred prior to 
January 1, 2023, the 2019 version of chapter 183 applies.   
No. 
2020AP225   
 
11 
 
interest in any specific property owned by the LLC.  Wis. Stat. 
§ 183.0703; Wis. Stat. § 183.0701(1).  This is true even if a 
member contributed that specific property to the LLC.  Wis. 
Stat. § 183.0701(1). 
¶20 Second, Chapter 183 defines the relationship between 
an LLC and its members such that a member may act as an agent of 
the LLC, but a member does not share the LLC's liabilities 
solely by virtue of membership.  Section 183.0301(1) provides 
that each member of a member-managed LLC11 is an agent of the LLC 
and the acts of members made in the ordinary course of LLC 
business bind the LLC.  Additionally, the "debts, obligations, 
and liabilities" of an LLC "shall be solely the debts, 
obligations and liabilities of the [LLC]," and an LLC's member 
"is not personally liable for any debt, obligation or liability" 
of the LLC (subject to a few exceptions that are inapplicable in 
this case).  Wis. Stat. § 183.0304(1).  This is the "limited 
liability" referenced in the LLC designation. 
¶21 Taken together, these statutes establish that LLCs are 
individual entities that are legally separate from their members 
and from other LLCs, regardless of common ownership.  Neither 
                                                 
11 LLCs may be either member-managed or manager-managed and 
different statutory rules apply to each designation.  The 
default rule is that LLCs are member-managed.  Wis. Stat. 
§ 183.0401(1).  Since Pagoudis has not alleged otherwise, and 
because he has at times claimed to be acting on behalf of Sead 
LLC, we assume that the default rule applies and Sead LLC is a 
member-managed LLC. 
No. 
2020AP225   
 
12 
 
assets nor liability flow freely between the LLC and its members 
simply by virtue of LLC membership. 
¶22 Based on these principles, and absent any allegations 
that would otherwise tie their interests together, we must treat 
Pagoudis as distinct under the law from his LLCs.  We also must 
treat Sead LLC's interests as distinct from Kearns LLC's 
interests.  Pagoudis may have taken some actions on behalf of 
his LLCs as an agent, but that does not mean he can combine his 
interests as an individual with his interests as an agent of an 
LLC.  We now turn to the claims at issue with these distinctions 
in mind. 
C.  The Plaintiffs 
¶23 We first explain that, under the allegations in the 
complaint, each of Pagoudis's claims must be dismissed because 
he was not a party to the final contract and did not purchase 
the Property.  Then we demonstrate that Sead LLC survives the 
motion to dismiss because, as alleged, it was a party to the 
contract, 
received 
representations 
from 
the 
Keidls, 
and 
purchased the Property.  Finally, we establish that Kearns LLC's 
claims must be dismissed because, as alleged, Kearns was not a 
party to the contract and the Keidls made no representations to 
Kearns LLC. 
1.  Pagoudis 
¶24 Although 
the 
complaint 
alleges 
that 
Pagoudis 
negotiated and signed the offer to purchase, it does not allege 
that he took title to the Property, and we know from the 
warranty deed and concessions at oral argument that Sead LLC 
No. 
2020AP225   
 
13 
 
purchased and took title from the Keidls.  The complaint does 
not specify how this transpired, but it could have happened in 
one of two ways, neither of which would allow Pagoudis to 
establish a claim in his individual capacity.  Either: (1) 
Pagoudis negotiated and signed the offer to purchase as an agent 
of Sead LLC; or (2) Pagoudis assigned his rights as an 
individual in the contract to Sead LLC before the purchase was 
completed.   
¶25 Under the first scenario, if Pagoudis acted as Sead 
LLC's agent, then his actions were on behalf of Sead LLC alone 
and he was never a party to the transaction in his individual 
capacity.12 
¶26 Under the second scenario, if Pagoudis were acting in 
his individual capacity when he negotiated the contract, then he 
necessarily must have assigned his relevant contract rights to 
Sead LLC before the contract was executed because Sead LLC 
purchased and took title to the Property.  If Pagoudis assigned 
his rights in this way, then Pagoudis's rights as an individual 
were extinguished.  When one assigns particular rights in a 
contract to another party, their own claims under those assigned 
rights are generally extinguished.  Tullgren v. Sch. Dist. No. 1 
of Vill. of Whitefish Bay, 16 Wis. 2d 135, 142, 113 N.W.2d 540 
(1962) (quoting 6 C.J.S. Assignments § 82).  Otherwise, any 
                                                 
12 The plaintiffs presented this scenario during oral 
arguments, claiming that Pagoudis was acting as an agent of Sead 
LLC when signing the offer to purchase and that no assignment 
was made. 
No. 
2020AP225   
 
14 
 
assignment of contract rights would expand and duplicate 
liability.  Thus, whether Pagoudis acted as an agent or assigned 
his contract rights to Sead LLC, Pagoudis did not purchase the 
Property. 
¶27 As such, under either scenario, Pagoudis failed to 
state a claim for breach of contract.  Pagoudis cannot satisfy 
the first element of a breach of contract claim——the existence 
of a contract between the Keidls and Pagoudis. 
¶28 Also, Pagoudis cannot satisfy the third element of a 
breach of contract claim or any of his misrepresentation claims 
because he did not purchase the property——the complaint's only 
alleged source of damages.  As to his common law intentional and 
strict liability misrepresentation claims, Pagoudis cannot show 
that he believed and relied upon the misrepresentation to his 
own detriment, and thus he cannot satisfy the third element of 
either claim.  Even if Pagoudis alleged reliance, it was to Sead 
LLC's 
detriment, 
not 
Pagoudis's. 
 
Pagoudis's 
statutory 
misrepresentation claim must likewise fail under its sixth 
element——that the defendant obtained money through the sale of 
property to the plaintiff——because the Keidls sold the property 
to Sead LLC and not to Pagoudis.  Finally, Pagoudis's statutory 
false advertising claim fails under its third element——that the 
representation caused the plaintiff a pecuniary loss.  Again, 
the only source of damages or pecuniary loss alleged in the 
complaint stems from the purchase of the property, and Pagoudis 
did not purchase the property. 
No. 
2020AP225   
 
15 
 
¶29 Pagoudis argues that because he used personal funds in 
the purchase of the Property, he was in fact the purchaser under 
the contract despite not taking title to the Property.  This 
argument is rebutted by Wis. Stat. § 183.0701 which establishes 
that the property acquired by an LLC, including title to real 
property, belongs solely to the LLC and not to the LLC's 
members.  The source of the funds is immaterial.  In sum, 
Pagoudis has not stated any claim for breach of contract or any 
form of misrepresentation and thus his claims must be dismissed. 
2.  Sead LLC 
¶30 In contrast, 
Sead LLC's allegations satisfy the 
elements 
of 
its 
breach 
of 
contract 
claim 
and 
its 
misrepresentation claims. Sead LLC satisfies the elements of its 
breach of contract claim by alleging: (1) the Keidls entered 
into a contract with Sead LLC which included a warranty or 
representation related to the RECR;13 (2) the Keidls breached 
that contract because those affirmations were false; and (3) 
Sead LLC suffered damages as a result.   
                                                 
13 The complaint alleges that as part of the contract for 
the purchase of the Property, the Keidls "warranted and 
represented that they had no notice or knowledge of conditions 
affecting the Property other than those identified in the 
[RECR]."  Although the required language of an RECR as set out 
in Wis. Stat. § 709.03 clearly states that it "is not a warranty 
of any kind," the complaint alleges plausibly that the Keidls 
separately offered a warranty as part of the purchase contract, 
which document is not before this court.  Furthermore, Amy Keidl 
did not develop any argument that the plaintiffs failed to 
sufficiently allege the existence of a warranty.  As such, we do 
not decide whether the disclaimer of a warranty in § 709.03 
could eventually defeat Sead LLC's breach of contract (warranty) 
claim.  
No. 
2020AP225   
 
16 
 
¶31 Sead LLC's allegations satisfy all of the elements of 
the four misrepresentation claims.  Under the intentional 
misrepresentation claim, Sead LLC has alleged: (1) that Amy 
Keidl made a representation of fact to Sead LLC (either through 
its agent, Pagoudis, or through the assigned contract rights) 
that the Keidls did not know of any material property defects 
beyond those disclosed; (2) that such representation was false 
because the Keidls knew of additional material defects; (3) that 
Sead LLC believed and relied on the representations in the RECR; 
(4) that the Keidls knowingly made the false representation; and 
(5) that the Keidls did so intending to deceive and induce Sead 
LLC into purchasing the Property.  For the purposes of the 
complaint, the strict liability misrepresentation claim's first 
four elements are the same as the intentional misrepresentation 
claim.  In addition to properly alleging those elements, the 
complaint sufficiently alleges that the Keidls had an economic 
interest in the sale of the Property. 
¶32 Under 
the 
statutory 
misrepresentation 
claim, 
the 
complaint sufficiently alleges that: (1) the Keidls made a false 
representation to Sead LLC that all known material defects were 
reported in the RECR; (2) the Keidls knew the representation was 
false; (3) the Keidls intended to deceive and defraud Sead LLC; 
(4) Sead LLC was deceived; (5) Sead LLC was defrauded; and (6) 
the Keidls obtained money through the sale of property to Sead 
LLC. 
¶33 Finally, under the false advertising claim, the 
complaint sufficiently alleges that: (1) the Keidls made a 
No. 
2020AP225   
 
17 
 
representation to "the public" by making representations in the 
RECR to a potential buyer, Sead LLC; (2) the representations 
were untrue; and (3) the representation caused Sead LLC a 
pecuniary loss because it purchased property with more material 
defects than disclosed that will cost money to repair.  
¶34 The circuit court in this case erroneously dismissed 
Sead LLC as lacking standing because Sead LLC no longer held 
title to the Property.  Current or continuing possession of 
property is not an element of any of the alleged claims and is 
not a requirement under general standing principles.  The 
question 
is 
whether 
Sead 
LLC 
suffered 
damages 
before 
transferring the Property.  Sead LLC has alleged that it 
suffered damages because it paid more for the Property than the 
Property was actually worth.  It incurred these alleged damages 
at the point of sale, prior to transferring the Property.  
Furthermore, Sead LLC alleges plausibly that it incurred costs 
in preparing to repair the Property prior to transferring the 
property to Kearns LLC. 
¶35 In light of the LLC principles set out above, it is 
important to note that Sead LLC's damages are limited to only 
the damages Sead LLC itself suffered.  The court of appeals 
discussed, without deciding, that Kearns LLC and Sead LLC's 
damages might flow between them as a "related party."  See 
Pagoudis v. Keidl, 2021 WI App 56, ¶33, 399 Wis. 2d 75, 963 
N.W.2d 803.  However, LLCs do not become "related" parties 
merely 
due 
to 
common 
membership 
or 
ownership. 
LLCs 
are 
individual entities whose benefits and protections stem from 
No. 
2020AP225   
 
18 
 
their legally separate nature.  These lines of separation cannot 
be crossed at the whim of the LLC's members only when beneficial 
to them.  Sead LLC is its own entity, separate from Kearns LLC 
and separate from its member, Pagoudis.  Sead LLC must establish 
its own damages. 
3.  Kearns LLC 
¶36 Finally, we turn to Kearns LLC, the current owner of 
the Property.  Kearns LLC's breach of contract (warranty) claim 
must be dismissed.  It was not a party to the contract with the 
Keidls.  The complaint does not allege that Kearns LLC signed 
the offer to purchase the Property or that Kearns LLC was 
assigned any rights under that offer to purchase, nor does it 
allege any other facts that would put Kearns LLC in privity of 
contract with the Keidls.14  As such, it cannot satisfy the first 
element of a breach of contract claim: that a contract existed 
between the Keidls and Kearns LLC. 
¶37 Similarly, Kearns LLC's misrepresentation claims must 
be dismissed because the complaint does not allege that the 
Keidls made any representations to Kearns LLC.  Therefore, 
Kearns LLC does not meet the first element of its first three 
misrepresentation 
claims——that 
the 
defendant 
made 
a 
representation of fact to the plaintiff.  Furthermore, the 
complaint does not allege that the Keidls made a representation 
                                                 
14 Privity of contract is defined as the "relationship 
between the parties to a contract, allowing them to sue each 
other but preventing a third party from doing so."  Privity, 
Black's Law Dictionary 1453 (11th ed. 2019). 
No. 
2020AP225   
 
19 
 
of fact to Kearns LLC as a member of "the public" under the 
first element of a false advertising claim.15 
¶38 Stated another way, under the facts alleged in the 
complaint, Sead LLC——not the Keidls——is the only party that 
could have made representations regarding the current status of 
the Property to Kearns LLC before Kearns LLC took title to the 
property.  Therefore, any claim for misrepresentation Kearns LLC 
may hold would have to be brought against Sead LLC. 
¶39 The plaintiffs argue that Kearns LLC can nevertheless 
satisfy the elements of their misrepresentation claims under a 
theory of third-person misrepresentation as set out in the 
Restatement (Second) of Torts § 533.  The Restatement (Second) 
of Torts § 533 states: 
The maker of a fraudulent misrepresentation is subject 
to liability for pecuniary loss to another who acts in 
justifiable reliance upon it if the misrepresentation, 
although not made directly to the other, is made to a 
third person and the maker intends or has reason to 
expect that its terms will be repeated or its 
substance communicated to the other, and that it will 
influence his conduct in the transaction or type of 
transaction involved. 
This section cannot apply under the facts of this case because 
the Keidls did not have a reason to expect that their 
                                                 
15 Although representations to a potential real estate 
purchaser have been considered representations to "the public" 
in Below v. Norton, under these facts, only the purchaser 
received those representations from the Keidls.  See Below v. 
Norton, 2008 WI 77, ¶¶5-6, 310 Wis. 2d 713, 751 N.W.2d 351. 
No. 
2020AP225   
 
20 
 
representations in the RECR would be repeated and relied upon by 
Kearns LLC.16    
¶40 A decision that the Keidls had reason to expect the 
representations in the RECR would reach and be relied on by a 
subsequent 
buyer 
would 
run 
contrary 
to 
Wisconsin's 
RECR 
statutes.  Wisconsin Stat. § 709.02(1) requires that sellers of 
residential real estate furnish a completed RECR under Wis. 
Stat. § 709.03 to "the prospective buyer."  The statutorily 
provided form states that "[t]he owner discloses the following 
information with the knowledge that, even though this is not a 
warranty, prospective buyers may rely on this information in 
deciding whether and on what terms to purchase the property."  
Wis. Stat. § 709.03 A6.  These statutes clearly set out the 
reasonable expectation regarding who may rely on an RECR.   
¶41 Only a "prospective buyer" may be expected to rely on 
the RECR.  Sections 709.02 and 709.03 are closely related 
statutes with direct cross references between them and thus a 
plain reading of the statutes assigns a consistent meaning to 
the term "prospective buyer" in both sections.  See United Am., 
LLC v. Wis. Dep't of Transp., 2021 WI 44, ¶6, 397 Wis. 2d 42, 
959 N.W.2d 317 ("Common meaning is derived in part from the 
statutory context in which the terms are used.  That includes 
the terms' usage in relation to the language of closely related 
statutes[.]" (internal citations omitted)).  In Wis. Stat. 
                                                 
16 We do not decide whether Restatement § 533 may be adopted 
by a future court under different factual allegations. 
No. 
2020AP225   
 
21 
 
§ 709.02(1), "prospective buyer" refers specifically to a buyer 
already in contract with the seller.  Wis. Stat. § 709.02(1) 
("[T]he owner of the property shall furnish, not later than 10 
days after acceptance of a contract of sale or option contract, 
to the prospective buyer of the property a completed copy of the 
report under s. 709.03 . . . .").  Thus, although the term 
"prospective" could indicate simply any "future" buyer,17 the 
term "prospective buyer" in the context of the statute must be 
limited to a future buyer within the specific transaction at 
issue.  To extend liability to any future buyer in a different 
transaction with a different seller would be contrary to the 
plain language of the statute and would create endless potential 
liability for home sellers.  It is evident that the statutes 
establish that a seller must reasonably expect reliance by only 
the prospective buyer in the current transaction. 
¶42 As there can be no reasonable expectation of third-
party reliance stemming from an RECR, and the Keidls made no 
direct representations to Kearns LLC, Kearns LLC cannot maintain 
any of its misrepresentation claims.  In sum, all claims by 
Kearns LLC must be dismissed.  
IV.  CONCLUSION 
¶43 Sead 
LLC's 
claims 
survive 
this 
Wis. 
Stat. 
§ 802.06(2)(a)6. motion to dismiss, which we interpret as 
challenging the sufficiency of the complaint based on the 
                                                 
17 Prospective is defined as "effective or operative in the 
future."  Prospective, Black's Law Dictionary 1477 (11th ed. 
2019). 
No. 
2020AP225   
 
22 
 
identity of the plaintiff.  Amy Keidl's motion to dismiss must 
be granted as to Pagoudis and Kearns LLC as they have not stated 
any claim upon which relief can be granted. 
By the Court.—The decision of the court of appeals is 
affirmed in part, reversed in part, and the cause is remanded to 
the circuit court for further proceedings consistent with this 
opinion.
No.  2020AP225.akz 
 
1 
 
¶44 ANNETTE KINGSLAND ZIEGLER, C.J.   (concurring).  I 
agree that both Pagoudis and Kearns must be dismissed, and I 
reiterate both that I would not adopt the Restatement (Second) 
of Torts § 533 and that an LLC is indeed a separate and distinct 
entity from its members.  Furthermore, based upon the Amended 
Complaint, concessions at oral argument by Pagoudis's counsel, 
and warranty deeds undisputedly incorporated into the Amended 
Complaint, dismissal of Pagoudis is appropriate.  I write 
separately to emphasize the limited scope of our review at the 
motion to dismiss stage with regard to Pagoudis's claims brought 
in his personal capacity and the unique facts of this case that 
bear upon that question. 
¶45 "When 
we 
review 
a 
motion 
to 
dismiss, 
factual 
allegations in the complaint are accepted as true for purposes 
of our review."  Data Key Partners v. Permira Advisers LLC, 2014 
WI 86, ¶18, 356 Wis. 2d 665, 849 N.W.2d 693.  We "derive all 
reasonable inferences from those facts" and "construe those 
facts and inferences in the light most favorable to the 
plaintiff."  Preston v. Meriter Hosp., Inc., 2005 WI 122, ¶13, 
284 Wis. 2d 264, 700 N.W.2d 158.  Though "a court cannot add 
facts in the process of construing a complaint," Data Key 
Partners, 356 Wis. 2d 665, ¶19, a court may, in limited 
circumstances, consider facts outside the four corners of the 
complaint under the "incorporation-by-reference" doctrine.  "The 
incorporation-by-reference doctrine 'prevents a plaintiff from 
"evad[ing] dismissal . . . simply by failing to attach to his 
complaint a document that prove[s] his claim has no merit."'"  
No.  2020AP225.akz 
 
2 
 
Soderlund v. Zibolski, 2016 WI App 6, ¶38, 366 Wis. 2d 579, 874 
N.W.2d 561 (quoting Brownmark Films, LLC v. Comedy Partners, 682 
F.3d 687, 690 (7th Cir. 2012)) (alterations in original).   
¶46 The 
plaintiffs' 
Amended 
Complaint 
alleges, 
"SEAD 
PROPERTIES, 
LLC . . . purchased 
the 
Property 
from 
the 
DEFENDANTS."1  The Amended Complaint also alleges the "[P]roperty 
was purchased with mar[it]al funds" and that "Pagoudis entered 
into a contract with [the Keidls] for the purchase of the 
Property, which was intended to be their permanent residence 
with their children."  As the court of appeals put it, these 
pleadings are "hardly a model of clarity."  Pagoudis v. Keidl, 
2021 WI App 56, ¶36, 399 Wis. 2d 75, 963 N.W.2d 803.  Without 
more, one might read the Amended Complaint as not clearly 
establishing whether it was Pagoudis, in his personal capacity, 
or Sead that received representations about the property causing 
the purchase.   
¶47 Ordinarily, in a motion to dismiss, we would construe 
the pleading in a light most favorable to the nonmoving party 
without resort to any extrinsic sources.  One might be able to 
conclude that Pagoudis cannot yet be dismissed because the 
pleadings sufficiently allege that Pagoudis individually was the 
initial purchaser to whom misrepresentations were made and that 
those misrepresentations caused him to decide to purchase 
property 
and 
assign 
it 
before 
closing. 
 
However, 
that 
interpretation was directly repudiated by his counsel at oral 
                                                 
1 The plaintiffs also filed a second amended complaint.  We 
review only the first amended complaint because the plaintiffs 
appealed from the order dismissing that complaint.   
No.  2020AP225.akz 
 
3 
 
argument.  Perhaps this is because Sead is reflected as the 
owner on the warranty deed.  
¶48 Typically we would not consider anything other than 
the complaint in our analysis.  However, Keidl actually attached 
two warranty deeds to the motion to dismiss.  The circuit court 
considered both of these documents.  The court of appeals upheld 
that 
consideration 
as 
proper 
under 
the 
incorporation-by-
reference 
doctrine, 
and 
neither 
party 
appealed 
this 
determination or argues that this was improper.  The first 
document was the deed from the initial purchase transfer from 
the Keidls to Sead, and the second was the deed transferring the 
Property from Sead to Kearns.  Relevant to our determination, 
however, is the first warranty deed, as it concerns the initial 
purchase of the Property.  The deed from the initial transfer 
states, "This Deed[ is] made between Marcus J. Keidl and Amy J. 
Keidl . . . and Sead Properties LLC."  It conveyed the Property 
directly from the Keidls to Sead, "[t]ogether with all and 
singular 
the 
hereditaments 
and 
appurtenances 
thereunto 
belonging."   
¶49 Pagoudis's counsel conceded at oral argument that 
Pagoudis was not acting as an individual but instead acted only 
as an agent for his LLC in the transaction and that any 
misrepresentations were made to those LLCs through Pagoudis.2  
                                                 
2 We may accept such concessions for purposes of resolving a 
motion to dismiss.  See Wis. Mfrs. & Com. v. Evers, 2022 WI 38, 
¶17 n.10, __ Wis. 2d __, 977 N.W.2d 374 (accepting a concession 
at the motion to dismiss stage); DeBruin v. St. Patrick 
Congregation, 2012 WI 94, ¶4 n.5, 343 Wis. 2d 83, 816 N.W.2d 878 
(same); Penterman v. Wis. Elec. Power Co., 211 Wis. 2d 458, 480-
81, 565 N.W.2d 521 (1997) (same).  
No.  2020AP225.akz 
 
4 
 
Responding to questions about whether the complaint states a 
claim for Pagoudis individually or Pagoudis as a member of Sead, 
counsel stated,    
The fact of the matter is Louis Pagoudis was on the 
contract.  Louis Pagoudis is the managing sole member 
of both of the LLCs.  He's an agent by definition 
under [§] 183 because the LLC acts through its members 
and its managing members are authorized.  And so, at 
the end of the day, I believe these LLCs are the 
recipients of the misrepresentation.[3] 
¶50 Counsel 
was 
next 
questioned 
about 
how 
Pagoudis 
"personally could suffer damages simply because [he is a] member 
of an organization that purchased a property."  Counsel 
responded, "[T]here are losses that are related to diminution of 
value . . . . The sole members, their value in the LLC is tied 
to the profits and losses in the values of the assets."  Counsel 
admitted that the only damage Pagoudis suffered was through his 
interest in the LLC.  There is no allegation that Pagoudis 
personally suffered damages unrelated to his LLC interest.4  
                                                 
3 Counsel also later conceded that Pagoudis "took title 
through an LLC." 
4 Although LLC members may be monetarily affected by the 
successes and failures of the distinct legal entity, the LLC, 
the treatment of the LLC remains the same regardless of the 
composition of its members.  To say otherwise would blur the 
line between an LLC and its members.  The protections afforded 
do not fluctuate depending on advantages given a particular 
situation.  Cf. Notz v. Everett Smith Grp., Ltd., 2009 WI 30, 
¶20, 316 Wis. 2d 640, 764 N.W.2d 904 (footnote omitted) 
(citation omitted) ("[A] right of action that belongs to the 
corporation cannot be pursued as a direct claim by an individual 
stockholder. . . . [E]ven where the injury to the corporation 
results in harm to a shareholder, it won't transform an action 
from a derivative to a direct one . . . ."); 54 C.J.S. Limited 
Liability Companies § 64 (2023) ("The principles of derivative 
lawsuits applicable to corporations likewise apply to limited 
liability companies.").  
No.  2020AP225.akz 
 
5 
 
Counsel's admissions demonstrate that Pagoudis only ever acted 
through his LLC, never in his personal capacity. 
¶51 Based on counsel's admissions at oral argument and the 
warranty deed, Sead was the initial purchaser and took title 
directly from the Keidls.  Pagoudis, in his personal capacity, 
never individually purchased or owned the Property and therefore 
had no claims to assign.  For these reasons, the claims brought 
in Pagoudis's personal capacity are properly dismissed.  
¶52 For the foregoing reasons, I respectfully concur.   
¶53 I am authorized to state that Justice BRIAN HAGEDORN 
joins this concurrence. 
 
No.  2020AP225.pdr 
 
1 
 
 
¶54 PATIENCE DRAKE ROGGENSACK, J.   (concurring in part, 
dissenting in part).  Louis Pagoudis, Sead, LLC (Sead) and 
Kearns Management, LLC (Kearns) assert claims against Marcus and 
Amy Keidl (the Keidls) based on their sale of "the Property."  
The majority improperly dismisses Pagoudis's and Kearns's claims 
based on its conclusion that in regard to those two plaintiffs, 
the Amended Complaint fails to state a claim upon which relief 
can be granted.1   
¶55 Because the Amended Complaint alleges facts that, if 
proved 
true, 
state 
tort 
claims 
for 
intentional 
misrepresentation, 
strict 
liability 
for 
misrepresentation, 
violations of Wis. Stat. §§ 895.446 and 943.20 and false 
advertising pursuant to Wis. Stat. § 100.18, by the Keidls, 
Pagoudis and Kearns should be permitted to proceed further in 
developing facts relevant to those tort claims.2   
¶56 Furthermore, as I explain below, such claims generally 
are assignable.  However, the Amended Complaint does not allege 
that they were assigned to either Sead or Kearns and therefore, 
they likely remain with Pagoudis.  And finally, if Sead or 
Kearns are worth less than the dollar amount that Pagoudis 
placed into them due to actions of the Keidls, the value of his 
personal property interests in those entities may have been 
injured.  We simply can't determine where the ultimate injury 
                                                 
1 Majority op., ¶8.   
2 Essentially, 
Pagoudis's claim is for fraud in the 
inducement based on those alleged torts.   
No.  2020AP225.pdr 
 
2 
 
may lie based solely on the Amended Complaint.  Accordingly, 
because the possibilities in regard to injury and valuation are 
myriad, I would affirm the court of appeals, and I respectfully 
dissent from the majority opinion's dismissal of claims made by 
Pagoudis and Kearns.  
I.  BACKGROUND 
¶57 The Amended Complaint alleges that Pagoudis contracted 
with the Keidls to purchase the Property.3  Although Pagoudis, 
Sead and Kearns are listed as "Plaintiffs" in the Amended 
Complaint, with few exceptions, the paragraphs of the Amended 
Complaint refer to "plaintiff" in the singular form, allege 
facts occurring before the closing on the sale of the Property 
when Pagoudis was the only actor and allege financial outlays 
that Pagoudis made subsequent to closing.  In sum, the 
allegations in the Amended Complaint are written as though from 
Pagoudis's perspective.4 
¶58 In making his decision to purchase, Pagoudis relied on 
the "Real Estate Condition Report" (RECR) that was prepared by 
Amy Keidl and dated February 1, 2017.5  The RECR shows that 
Pagoudis acknowledged its receipt on March 11 or 17, 2017.6  
Although the accepted offer to purchase is not part of the 
record before us, the parties seem to agree that Pagoudis signed 
                                                 
3 Amended Complaint, ¶5.   
4 E.g., id., ¶¶5, 6, 8, 10-12, 18, 31-36, 40.  
5 Id., ¶1, referencing the attached RECR, ¶6.   
6 Id., RECR attached to the Amended Complaint has an unclear 
date of receipt by Pagoudis.  
No.  2020AP225.pdr 
 
3 
 
it with some indication on the document that he could assign the 
interest he was obtaining.7 
¶59 Prior to closing, the Keidls represented that they had 
no knowledge of defects, including, but not limited to basement 
water leaks or mold or fungus being present in the Property.8  
Pagoudis found those and other defects subsequent to closing, 
and he contacted experts who informed him that those defects 
existed while the Keidls owned the property.9  Therefore, 
Pagoudis contends that the Keidls knew of the defects.10   
¶60 Pagoudis asserts that the Keidls failed to disclose 
material facts with the intent to deceive and to induce him to 
act in reliance on their deception.11  He asserts the Keidls made 
representations about the condition of the Property that were 
untrue, with the intent to sell the Property.12  Because of the 
Keidls' failure to disclose defects in the Property, Plaintiffs 
suffered economic damage.13   
¶61 Sead Properties, LLC is a Wisconsin limited liability 
company.14  As Pagoudis's likely assign, Sead took title to the 
                                                 
7 The accepted offer to purchase was not submitted at the 
circuit court.  It was improperly attached to Plaintiffs' 
appendix at the court of appeals.   
8 Amended Complaint, ¶9.   
9 Id., ¶11. 
10 Id., ¶13.   
11 Id., ¶22.  
12 Id., ¶38.   
13 Id., ¶29.   
14 Id., ¶2.   
No.  2020AP225.pdr 
 
4 
 
Property from the Keidls.15  Pagoudis is the sole member of 
Sead.16  Kearns is a Wisconsin limited liability company that is 
solely owned by Pagoudis.17  Sead assigned its interest in the 
Property to Kearns.18  The Amended Complaint says nothing about 
Pagoudis assigning his tort claims to Sead or Kearns.  
¶62 The circuit court dismissed the Amended Complaint as 
to all parties.  It concluded that the Amended Complaint did not 
state a claim for Pagoudis, Sead, or Kearns.  The court of 
appeals reversed and reinstated the Amended Complaint in regard 
to Pagoudis, Sead, and Kearns.19  It concluded that the Amended 
Complaint could not be dismissed without further factual 
development.20   
                                                 
15 Id., ¶2.  It is agreed that Sead took title to the 
Property, even though that fact is not alleged in the Amended 
Complaint. 
16 Id., ¶2.   
17 Id., ¶3.   
18 Id., ¶3.   
19 Pagoudis v. Keidl, 2021 WI App. 56, ¶2, 399 Wis. 2d 75, 
963 N.W.2d 803.   
20 Id.   
No.  2020AP225.pdr 
 
5 
 
II.  DISCUSSION 
A.  Standard of Review 
¶63 Upon review of this motion to dismiss, we begin by 
accepting all well-pleaded facts and their reasonable inferences 
in the Amended Complaint.  Data Key Partners v. Permira Advisers 
LLC, 2014 WI 86, ¶19, 356 Wis. 2d 665, 849 N.W.2d 693.  "[L]egal 
conclusions asserted in a complaint are not accepted, and legal 
conclusions are insufficient to withstand a motion to dismiss."  
Id., ¶18.  Furthermore, "a court cannot add facts in the process 
of construing a complaint."  Id., ¶19.  Whether the alleged 
facts state a claim for relief is a question of law that is 
subject to our independent review.  Id., ¶17.   
¶64 The pending dispute requires us to interpret and apply 
statutes, 
which 
also 
present 
questions 
of 
law 
that 
we 
independently decide.  Townsend v. ChartSwap, LLC, 2021 WI 86, 
¶11, 399 Wis. 2d 599, 967 N.W.2d 21.    
B.  Claim Ownership 
¶65 In order to answer the questions presented by the 
motion to dismiss, it is helpful to understand the relationships 
between Pagoudis and the two limited liability companies, Sead 
and Kearns.  See Marx v. Morris, 2019 WI 34, 386 Wis. 2d 122, 
925 N.W.2d 112.   
1.  General LLC Principles 
¶66 Wisconsin limited liability companies are entities 
that were created by Wis. Stat. ch. 183.21  They commonly are 
                                                 
21 Wisconsin Stat. ch. 183 recently was repealed and 
recreated, with revisions effective January 1, 2023 unless the 
obligation at issue occurred prior to that date.  Wis. Stat. 
No.  2020AP225.pdr 
 
6 
 
used in Wisconsin because of their flexibility and the personal 
liability shield they provide for members who conduct business 
by the use of an LLC.  
¶67 LLCs are formed by filing articles of organization 
with the Department of Financial Institutions to give notice of 
their existence.  Wis. Stat. § 183.0201; Joseph W. Boucher et 
al, LLCs and LLPs:  A Wisconsin Handbook, § 1.6 (6th ed. 2018).  
Generally, members create a contract, the operating agreement, 
which sets out an LLC's mode of operation.  Id., §§ 1.6, 3.60.   
¶68 Due to the desire for flexibility of operation, many 
provisions in Wis. Stat. ch. 183 furnish default rather than 
mandatory rules for an LLC.  "However, all the default rules 
apply 
unless 
an 
operating 
agreement 
unambiguously 
states 
otherwise."  Marx, 386 Wis. 2d 122, ¶27.   
¶69 Members make contributions to the capital of the LLC 
in exchange for their ownership interest in it.  LLCs and 
LLPs:  A Wisconsin Handbook, supra, at § 4.8.  Contributions 
traditionally consist of property or cash or services, and the 
operating 
agreement 
states 
the 
value 
of 
each 
member's 
contribution.  Wis. Stat. § 183.0501.   
¶70 A member's ownership interest in an LLC is personal 
property.  Wis. Stat. § 183.0703.  Therefore, even if a member 
obtains his or her interest in the LLC by contributing real 
estate to the LLC, once contributed, that individual's interest 
in the real estate ends.  Wis. Stat. § 183.0701(1); LLCs and 
LLPs:  A Wisconsin Handbook, supra, at § 4.4.  In exchange, the 
                                                                                                                                                             
§ 183.0110(d)(1) (2021-22).   
No.  2020AP225.pdr 
 
7 
 
member obtains a personal property interest in the LLC.  
§ 183.0703; LLCs and LLPs:  A Wisconsin Handbook, supra, § 4.4.  
2.  Pagoudis, Sead, and Kearns 
¶71 The operating agreement for neither Sead nor Kearns is 
in the record.  Therefore, at this point in the litigation, we 
proceed based solely on the factual allegations contained in the 
Amended Complaint, which we accept as true for purposes of Amy 
Keidl's motion to dismiss.  Data Key Partners, 356 Wis. 2d 665, 
¶19.  
¶72 The assignment of the contractual right to take title 
to the Property, which apparently was executed in favor of Sead, 
also is not in the record.22  Therefore, we cannot tell whether 
Pagoudis assigned simply the right to take title to the Property 
or also assigned his tort claims.  However, the Amended 
Complaint does not allege tort claim assignment. 
¶73 We addressed a similar concern in Chimekas v. Marvin, 
25 Wis. 2d 630, 131 N.W.2d 297 (1964), which was relied on in 
part by the court of appeals.23  There, Chimekas contracted with 
                                                 
22 The parties seem to agree that Pagoudis contracted to 
purchase the property for himself "or assigns."  However, the 
accepted offer to purchase was not submitted while this matter 
was before the circuit court and no document actually making an 
assignment from Pagoudis to Sead is in the record.  However, 
paragraph 2 of the Amended Complaint says, Sead "purchased the 
property from the DEFENDANTS."  This may be a conclusion of law 
to which we owe no deference if Pagoudis paid for the property 
to which Sead took title.  See Davis v. Buchanan Cnty., Mo., 
5 F.4th 907, 911 (8th Cir. 2021).  At this point in the 
litigation, we simply don't have complete factual development.    
23 Pagoudis, 399 Wis. 2d 75, ¶36.   
No.  2020AP225.pdr 
 
8 
 
Marvin to purchase residential property.  As "an inducement for 
the Chimekas entering into the contract the defendants knowingly 
falsely represented and warranted that the basement was dry and 
waterproof; in fact it was not dry or waterproof."  Id. at 631.  
Chimekas assigned all of their contractual rights to Chaloupkas 
by gift and both sued Marvin for damages for fraud.  Id.   
¶74 The trial court dismissed the action, concluding that 
once Chimekas transferred their interest to Chaloupkas they had 
no damages, and Chaloupkas had no damages because a cause of 
action for fraud is not assignable.  Id. at 631-32.  We 
explained, as we reversed the trial court, that Chimekas' 
assignment to Chaloupkas of the contractual right to purchase 
the property "is not an allegation that the former assigned 
their tort cause of action for fraud to the latter."  Id. at 
632.  In concluding that Chaloupkas was not an assignee of the 
fraud claim, we further explained that the "accepted test of 
assignability of a cause of action is whether it survives the 
death of a party."  Id. at 632-33 (citing P.C. Monday Tea Co. v. 
Milwaukee Cnty. Expressway Comm'n, 24 Wis. 2d 107, 111, 128 
N.W.2d 631 (1964) (further citations omitted)).  Furthermore, "a 
cause of action for deceit in inducing a conveyance of real 
estate survives the defrauded party's death.  Such a cause of 
action, therefore, is assignable."  Chimekas, 25 Wis. 2d at 633.  
However, Chimekas making a gift of their right to own the 
property does not affect the issue of whether Chimekas sustained 
                                                                                                                                                             
The majority opinion never mentions Chimekas v. Marvin, 25 
Wis. 2d 630, 131 N.W.2d 297 (1964), even though the court of 
appeals and I have used it in our opinions.   
No.  2020AP225.pdr 
 
9 
 
damages because of defendants' alleged false representations.  
Id.  Therefore, we concluded that the complaint stated facts 
that were sufficient to constitute a tort cause of action in 
fraud for Chimekas.  Id.  
¶75 Here, as in Chimekas, Pagoudis's tort claims against 
the Keidls could have been assigned to Sead because they 
generally are assignable claims.  Id. at 633.  However, there is 
no allegation in the Amended Complaint that Pagoudis did assign 
them.  Therefore, at this point in the litigation, Pagoudis may 
well hold those claims.  
¶76 The majority analysis is confused because it does not 
recognize that Pagoudis's claims are tort claims against the 
Keidls.  Although breach of contract is alleged, cut to the 
quick, the Amended Complaint alleges fraud in the inducement to 
purchase real estate.  The majority opinion also does not 
recognize that the Amended Complaint controls our analysis.   
¶77 Pagoudis did not allege in the Amended Complaint that 
he assigned his tort claims to anyone.  The majority opinion 
says that if Pagoudis negotiated the purchase of the Property as 
an individual and assigned his contract rights to Sead, 
"Pagoudis's rights as an individual were extinguished."24  The 
majority goes on to opine that "When one assigns particular 
rights in a contract to another party, their own claims under 
those assigned rights are generally extinguished."25  It cites 
                                                 
24 Majority op., ¶26. 
25 Id.   
No.  2020AP225.pdr 
 
10 
 
Tullgren v. Sch. Dist. No. 1 of Vill. of Whitefish Bay, 16 
Wis. 2d 135, 142, 113 N.W.2d 540 (1962), for that assertion.   
¶78 Tullgren 
says 
it 
is 
based 
on 
an 
"unqualified" 
assignment of contract rights.  Id. at 141-42.  Here, an 
"assignment" from Pagoudis is not in the record so we do not 
know if there is a document that sets the terms of the 
assignment.  Perhaps it was unqualified; perhaps not.  The 
record is silent.   
¶79 Also, Tullgren is based on a contract claim.  And, 
although the Plaintiffs made a breach of contract claim, the 
central dispute in regard to Pagoudis is based on fraud in the 
inducement, which is a tort claim.  Tullgren provides no support 
for 
the 
conclusion 
that 
Pagoudis's 
tort 
claims 
are 
extinguished.26   
¶80 Chimekas is on all fours with the dispute before us.  
It is grounded in the principle that transferring ownership in a 
property does not transfer tort claims unless the owner of the 
tort claim so alleges.  Chimekas, 25 Wis. 2d at 633.  In the 
dispute before us, the Amended Complaint does not allege that 
Pagoudis assigned his tort claims against the Keidls.    
¶81 Kearns now has title to the property.27  However, there 
is nothing in the Amended Complaint that alleges that Pagoudis 
assigned his tort claims to Sead, who then assigned them to 
                                                 
26 Without the assignment from Pagoudis to Sead, it is also 
not possible to determine whether it was "unqualified" in regard 
to contract rights.   
27 Amended Complaint, ¶3.   
No.  2020AP225.pdr 
 
11 
 
Kearns when Sead assigned its ownership rights in the Property.  
It simply alleges Kearns is a Wisconsin LLC to which Sead 
assigned the Property.28  
¶82 Under Wisconsin law, LLCs operate under the entity 
theory such that each LLC is an individual entity.  Gottsacker 
v. Monnier, 2005 WI 69, ¶14, 281 Wis. 2d 361, 697 N.W.2d 436.  
Therefore, their interests may not be conflated into one entity 
even though Pagoudis solely owns both Sead and Kearns.   
¶83 As we also do not have the operating agreements for 
Sead or Kearns, we do not know exactly what Pagoudis contributed 
to either one.  Therefore, we cannot ascertain with certainty 
whether either suffered injury due to the Keidls' interactions 
with Pagoudis.  And finally, if Pagoudis transferred only his 
contractual interest in the Property to Sead based on the sale 
contract's stated value and if that value, while held by Sead, 
diminished, Pagoudis's personal property interest in Sead also 
may have diminished.29  LLCs and LLPs:  A Wisconsin Handbook, 
§ 4.8.  None of these questions can be answered based solely on 
the Amended Complaint.  However, our process when faced with a 
motion to dismiss for failure to state a claim begins and ends 
with the Amended Complaint.   
III.  CONCLUSION 
                                                 
28 Id.   
29 The type of injury alleged would not produce duplicative 
damages, because only one set of damages for the Keidls' 
interaction with Pagoudis is possible.  See Jones v. Secura Ins. 
Co., 2002 WI 11, ¶3, 249 Wis. 2d 623, 638 N.W.2d 575.  However, 
at this point in the litigation, I cannot determine where the 
ultimate injury occurred.   
No.  2020AP225.pdr 
 
12 
 
¶84 Because the Amended Complaint alleges facts that, if 
proved true, state claims for intentional misrepresentation, 
strict liability for misrepresentation, violations of Wis. Stat. 
§§ 895.446 and 943.20 and false advertising pursuant to Wis. 
Stat. § 100.18 by the Keidls, Pagoudis should be permitted to 
proceed further in developing facts relevant to those claims.   
¶85 Furthermore, 
as 
I 
explained 
above, 
such 
claims 
generally are assignable, but the Amended Complaint does not 
allege that they were assigned to either Sead or Kearns and 
therefore, they likely remain with Pagoudis.  And finally, if 
Sead or Kearns are worth less than the dollar amount that 
Pagoudis placed into them due to actions of the Keidls, the 
value of his personal property interests in those entities may 
have been injured.  Accordingly, because the possibilities in 
regard to injury and valuation are myriad, I would affirm the 
court of appeals, and I respectfully dissent from the majority 
opinion's dismissal of claims made by Pagoudis and Kearns. 
 
 
No.  2020AP225.rgb 
 
1 
 
 
¶86 REBECCA GRASSL BRADLEY, J.   (concurring in part, 
dissenting in part).  In the mid-1500s, the Pope commissioned 
Michelangelo to paint a depiction of The Last Judgment in the 
Sistine Chapel.  As was customary at the time, Michelangelo 
included nudity in his work.  Because the sensibilities of a 
prominent cardinal were offended, the Pope ordered Michelangelo 
to cover the nudity of religious figures.  He did, marking the 
beginning of the infamous "Fig Leaf Campaign."  The Council of 
Trent scoured Rome in search of nude sculptures, ordering metal 
fig leaves placed over many depictions of genitalia.  Recently, 
efforts have been made to restore some of the art to its 
original form. 
¶87 On occasion, this court has taken a chisel to statutes 
that have offended some justices' sensibilities.  While we may 
employ "tools" of construction, a chisel is not a legitimate 
tool for judges.  The legislature writes law and the judiciary 
interprets and applies it.  A statute, like a statue, is 
supposed to be viewed in its original form. 
¶88 One statute subjected to judicial reshaping is Wis. 
Stat. § 100.18(1) (2019–20).  It states, in relevant part: 
No person . . . with intent to sell . . . or in any 
wise 
dispose 
of 
any 
real 
estate . . . to 
the 
public . . . or with intent to induce the public in 
any manner to enter into any contract or obligation 
relating 
to 
the 
purchase . . . of 
any 
real 
estate, . . . 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, 
No.  2020AP225.rgb 
 
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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 . . . of such 
real estate . . . 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. 
§ 100.18(1) (emphasis added).  In a series of cases, this court 
has castrated the plain meaning of this statute by taking a 
chisel to the phrase "the public."  See generally Hinrichs v. 
DOW Chem. Co., 2020 WI 2, 389 Wis. 2d 669, 937 N.W.2d 37.  This 
court has previously held, "a statement that was made to only 
one individual could qualify for the protections afforded by 
§ 100.18," equating a statement directed to "the public" with a 
statement directed solely to a single person who is, as people 
tend to be, a member of "the public[.]"  See Below v. Norton, 
2008 WI 77, ¶6, 310 Wis. 2d 713, 751 N.W.2d 351 (citation 
omitted).  As I have previously explained in a more thorough 
analysis, a "particularized statement[]" to a single person 
"within the context of . . . [an] ongoing business relationship" 
is not a statement made to "the public."  Hinrichs, 389 
Wis. 2d 669, 
¶94 
(Rebecca 
Grassl 
Bradley, 
J., 
concurring/dissenting). 
 
This 
court's 
objectively 
wrong 
precedent should be overturned.  See Manitowoc Co. v. Lanning, 
2018 WI 6, ¶81 n.5, 379 Wis. 2d 189, 906 N.W.2d 130 (Rebecca 
Grassl Bradley, J., concurring) ("Reflexively cloaking every 
judicial opinion with the adornment of stare decisis threatens 
No.  2020AP225.rgb 
 
3 
 
the rule of law, particularly when applied to interpretations 
wholly unsupported by the statute's text."). 
¶89 The majority opinion accords with the law except for 
its 
conclusion 
that 
Sead 
LLC's 
claim 
under 
Wis. 
Stat. 
§ 100.18(1) survives.  See majority op., ¶33.  The majority errs 
in holding "the Keidls made a representation to 'the public' by 
making representations in the . . . [Real Estate Conditions 
Report] to a potential buyer, Sead[.]"  Id.  The plain statutory 
language does not extend to representations made solely to the 
buyer during a private real estate transaction.1  Accordingly, I 
respectfully concur in part and dissent in part.  
                                                 
1 The economic loss doctrine may bar recovery for certain 
misrepresentation claims in this case, but the issue has not 
been argued to this court.  See generally Wis. Civil——JI 2400, 
at 4 (2023) (explaining the doctrine "requires transacting 
parties in Wisconsin to pursue only their contractual remedies 
when asserting an economic loss claim"). 
No.  2020AP225.rgb 
 
 
 
1