Title: Hoida, Inc. v. M&I Midstate Bank
Citation: 2006 WI 69
Docket Number: 2003AP002108
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: June 13, 2006

2006 WI 69 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2003AP2108 
 
 
COMPLETE TITLE: 
 
 
Hoida, Inc., 
          Plaintiff-Appellant-Petitioner, 
     v. 
M&I Midstate Bank and McDonald Title Company, 
Inc., 
          Defendants-Respondents, 
William C. Herbert, 
          Defendant-(In T.ct.). 
 
 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2004 WI App 191 
Reported at: 276 Wis. 2d 705, 688 N.W.2d 691 
(Ct. App. 2004–Published) 
 
 
OPINION FILED: 
June 13, 2006   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
November 8, 2005   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Portage   
 
JUDGE: 
Lewis Murach 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
BRADLEY, J., dissents (opinion filed). 
BUTLER, JR., J., joins the dissent.   
 
NOT PARTICIPATING: ABRAHAMSON, C.J., did not participate.   
 
 
 
ATTORNEYS: 
 
For the plaintiff-appellant-petitioner there were briefs by 
Scott R. Halloin and Mallery & Zimmerman, S.C., Milwaukee, and 
oral argument by Scott R. Halloin. 
 
For the defendant-respondent M&I Midstate Bank, there was a 
brief by Russell T. Golla and Anderson, O’Brien, Bertz, Skrenes & 
Golla, Stevens Point, and oral argument by Russell T. Golla. 
 
For the defendant-respondent McDonald Title Company, Inc., 
there was a brief by William J. Ewald and Denissen, Kranzush, 
Mahoney & Ewald, S.C., Green Bay, and oral argument by William J. 
Ewald. 
 
 
 
2
An amicus curiae brief was filed by John E. Knight, James E. 
Bartzen, Kirsten E. Spira, and Boardman, Suhr, Curry & Field LLP, 
Madison, on behalf of the Wisconsin Bankers Association. 
 
 
2006 WI 69
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2003AP2108  
(L.C. No. 
2001CV153) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Hoida, Inc., 
 
          Plaintiff-Appellant-Petitioner, 
 
     v. 
 
M&I Midstate Bank and McDonald Title Company, 
Inc., 
 
          Defendants-Respondents, 
 
William C. Herbert, 
 
          Defendant-(In T.ct.). 
 
FILED 
 
JUN 13, 2006 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
PATIENCE DRAKE ROGGENSACK, J.   We review a court of 
appeals decision that affirmed the circuit court's grant of 
summary judgment dismissing the claims of Hoida, Inc. (Hoida) 
against defendants M&I Midstate Bank (M&I) and McDonald Title 
Company, Inc. (McDonald Title).  Hoida is a subcontractor that 
incurred losses on a building project gone awry when the general 
contractor 
and 
the 
owner 
of 
the 
property 
fraudulently 
misappropriated 
approximately 
$650,000 
of 
the 
project's 
No. 
2003AP2108   
 
2 
 
construction loan proceeds.  M&I and McDonald Title were the 
lending bank and the disbursing agent, respectively, on the 
project.  Hoida claimed that it was a third-party beneficiary of 
the owner's loan agreement with M&I.  Hoida also claimed that 
the defendants were negligent because they did not identify the 
subcontractors and materialmen who worked on the project, did 
not verify that the progress on the work was sufficient to 
justify the release of loan funds, and did not secure lien 
waivers from Hoida, which Hoida alleges would have prevented its 
losses.  The defendants deny Hoida's claims.  They also make a 
prima facie showing that they did not breach the duty of 
ordinary care under the circumstances by not undertaking the 
tasks Hoida identified and that the lack of lien waivers was not 
a cause-in-fact of Hoida's damage.  The defendants also contend 
that public policy precludes Hoida's claim.   
¶2 
We conclude that Hoida has not stated a third-party 
beneficiary claim, and that it has not provided facts to 
controvert M&I's prima facie showing that it did not breach the 
duty of ordinary care under the circumstances.  We also conclude 
that the claim Hoida seeks to establish against M&I is barred by 
the legislative determination of priority as between a lender 
and a subcontractor set out in Wis. Stat. § 779.01(4) (2003-04)1 
and Wis. Stat. § 706.11.  And finally, while we do not conclude 
that Hoida has overcome McDonald Title's prima facie showing 
                                                 
1 All subsequent references to the Wisconsin Statutes are to 
the 2003-04 version unless otherwise noted. 
No. 
2003AP2108   
 
3 
 
that it did not breach the duty of ordinary care under the 
circumstances, if we were to do so, Hoida's negligence claim 
would be precluded by judicial public policy.  Accordingly, we 
affirm the court of appeals. 
I.  BACKGROUND 
¶3 
In October 1996, The Villager at Nashotah, L.L.C. 
(Villager) entered into a construction loan agreement with M&I 
to borrow money to build four eight-unit apartment buildings in 
Plover, Wisconsin.  The agreement between M&I and Villager was 
written and called for M&I to lend a total of $1,320,000 to 
Villager.  The loan agreement set out the limits of M&I's 
responsibilities and it was secured by four separate real estate 
mortgages.  Villager presented four initial draw requests for 
loan funds at the closing, and M&I disbursed those funds for 
project start-up.  M&I made arrangements with McDonald Title to 
make the remaining disbursements of the loan.  There was no 
written agreement between M&I and McDonald Title to establish 
the terms of the disbursement arrangement; their agreement was 
oral, arranged between the M&I loan officer for the project, 
Thomas Domaszek (Domaszek), and Robert McDonald (McDonald) of 
McDonald Title.  
¶4 
The loan agreement between M&I and Villager stated 
that M&I "shall not be responsible for any aspect of the 
Construction . . . or the procurement of lien waivers," and that 
M&I would have "no obligation or liability to contractors, 
No. 
2003AP2108   
 
4 
 
subcontractors, laborers [or] materialmen."2  It also gave M&I 
the 
right 
to 
inspect 
the 
property 
at 
any 
time 
during 
construction, but explicitly stated that M&I "is in no way 
obligated to do so."3  Another provision required Villager to 
forward notices to M&I any time that an individual or business 
providing goods or services to the project gave notice or demand 
relating to payment.4  
                                                 
2 The exact language of the relevant contract provisions is 
as follows: 
3. 
DUTIES OF OWNER 
 
a) M&I is acting solely as a mortgage lender and 
shall not be considered a principal with respect to 
the purchase of any goods or materials or Construction 
of any portion of the Property secured by the 
Mortgage.  M&I shall not be responsible for any aspect 
of the Construction . . . or the procurement of lien 
waivers . . . . 
 
b) M&I shall have no obligation or liability to 
contractors, subcontractors, laborers, materialmen, or 
the persons or lien claimants furnishing goods or 
services for payment under any circumstances, it being 
intended and agreed that such persons are not and 
shall not become beneficiaries of this Agreement in 
any respect, unless M&I assumes completion of project 
under paragraph 8 and then only as to those items 
authorized by M&I to be completed or provided at the 
expressed request of M&I.   
3 This language is in the fifth portion of the agreement, 
titled "Survey, Appraisals and Inspections": 
b) M&I is given the right to inspect the Property 
at any time during Construction, but is in no way 
obligated to do so. 
4 This provision of the contract reads as follows: 
4. 
NOTICE AND CONSTRUCTION DOCUMENTS 
No. 
2003AP2108   
 
5 
 
¶5 
Another portion of the contract, "Owner's Deposit and 
Disbursement of Construction Funds," sets forth the respective 
responsibilities of M&I and Villager with regard to disbursement 
of construction funds.  Among other provisions within that 
section, provision (d), was a requirement that construction 
funds be disbursed only upon the owner's order and satisfaction 
of the requirements within the lending contract.5  The contract 
also gave M&I the right, at its option, to complete construction 
if any breach of the contract occurred.6 
¶6 
M&I and McDonald Title agreed that McDonald Title 
would act as M&I's agent for disbursing the loan proceeds.  Upon 
receipt of requests for payment from the general contractor, 
                                                                                                                                                             
a) 
Upon 
receipt 
of 
any 
notice 
or 
demand 
whatsoever 
from 
any 
contractor, 
subcontractor, 
laborer, materialman, or other person furnishing goods 
or services (including without limitation any lien 
notice or claim notice of intent to file lien claim), 
the Owner shall immediately forward such notice to 
M&I.   
5 The relevant portion of this provision is as follows: 
 
d) Except as otherwise hereafter provided, all 
funds for Construction (including Owner's Deposit and 
Loan Proceeds) shall be disbursed only upon the 
Owner's 
order 
(except 
under 
paragraph 
8) 
and 
satisfaction of the requirements of this Agreement and 
M&I.  M&I shall have the right to determine the time 
and other requirements under which disbursements shall 
be made and shall have the right to take any action 
which it deems necessary to complete Construction to 
its satisfaction (including the right to complete 
Construction under paragraph 8).  
6 Provision 
8 
contains 
"M&I's 
Right 
to 
Complete 
Construction." 
No. 
2003AP2108   
 
6 
 
Packard Construction, Inc. (Packard), McDonald Title would 
follow a payment process and disburse funds.  This payment 
process required the completion of a written Application and 
Certification for Payment form that contained Packard's itemized 
application 
for 
payment, 
the 
project 
architect's 
signed 
certificate for payment and Villager's signed certificate, as 
owner/borrower, authorizing payment in the amount of the 
application. 
¶7 
In February 1997, Packard subcontracted with Hoida for 
prefabricated wooden wall sections and roof trusses.  Hoida 
commenced construction, and by February 26, Hoida had invoiced 
Packard for $5,705 of its work.  The invoices required payment 
within 15 days.  On March 5, 1997, as a result of not being 
paid, Hoida wrote to Villager and explained that pursuant to 
Wis. Stat. § 779.02, it possessed lien rights on the project 
property.  However, Hoida did nothing further after sending the 
letter, and it continued to produce and ship materials to the 
construction site until April 23, 1997.  Hoida also continued to 
invoice Packard, sending 51 separate invoices through the end of 
April.7  Hoida was paid only $25,000 over the course of those two 
months.   
¶8 
In late May or early June, after Hoida had delivered 
all of the product it contracted with Packard to produce, 
Kenneth Larsen of Hoida contacted Domaszek to advise him that 
                                                 
7 The last legible date on the invoices in the record is 
April 24, 1997; there are additional and presumably subsequent 
invoices, but the date is either absent or illegible. 
No. 
2003AP2108   
 
7 
 
Hoida had not yet been paid.  McDonald Title and M&I became 
concerned at about the same time because the project did not 
appear to be progressing as planned.  On June 5, 1997, almost 
three months after Hoida's letter to Villager giving notice that 
it claimed lien rights, Hoida served Villager with a Written 
Notice of Intent to File Construction Lien Claims pursuant to 
Wis. Stat. § 779.06.8  On June 6, 1997, McDonald informed Packard 
that no more funds would be provided until McDonald Title and 
M&I received lien waivers for the funds that had been released. 
¶9 
On July 7, 1997, McDonald sent a letter to Villager, 
to the attention of Mike Imperl (Imperl), stating that two 
subcontractors had filed separate notices of Intent to File 
Liens and that "obviously indicates that they haven't been 
paid."  He requested a response and said that he would seek a 
replacement contractor if Villager did not take appropriate 
action.  Throughout the month of July, McDonald attempted to 
reach Imperl to advise him of his concerns about the lack of 
construction progress and administration of the project.   
¶10 Also in July, McDonald made visits to the construction 
site, and in the course of those visits, discovered that two 
buildings that should have been secured and locked were not.  
McDonald became worried that the buildings would not be 
completed by winter.  On July 28, McDonald sent a letter to 
Imperl and three others associated with Villager, expressing 
                                                 
8 According to Wis. Stat. § 779.06(2), Hoida was required to 
give notice more than 30 days before the filing of a claim for 
lien. 
No. 
2003AP2108   
 
8 
 
concern about the project.  He informed them that in spite of 
repeated 
requests, 
Packard 
had 
not 
provided 
construction 
breakdowns; Packard had failed to provide lien waivers; at least 
two subcontractors had not been paid; M&I had to advance money 
to them to keep them on the job; and generally, the project 
appeared to be progressing very slowly.  Also on July 28, Hoida 
filed a Claim for Lien on the project. 
¶11 On August 28, 1997, McDonald wrote to Imperl and John 
Christianson (Christianson), the owner of Packard, to tell them 
that the buildings must be locked and secure before any further 
funding could occur.  It was subsequently discovered that 
Christianson and Imperl had misappropriated $650,000 to $700,000 
of the construction funds.  Imperl was later indicted on 
multiple counts of bank fraud.  The architect for the project, 
William Herbert, also averred that his signature was forged on 
some of the draw requests that M&I paid through McDonald Title. 
¶12 M&I commenced foreclosure on Villager's mortgages in 
order to complete the project and recover its losses.  Hoida 
also 
obtained 
judgments 
against 
Villager, 
Packard 
and 
Christianson, but remained unpaid.  Hoida's unpaid invoices 
total $291,582.81.9 
¶13 In May of 2001, Hoida sued M&I and McDonald Title.  
Hoida, M&I and McDonald Title all filed motions for summary 
judgment.  The circuit court concluded that there was no 
                                                 
9 Hoida estimates that it is owed $548,175.68, including 
interest.  
No. 
2003AP2108   
 
9 
 
existing law upon which the court could conclude that M&I and 
McDonald Title owed a duty to protect Hoida against the losses 
that it incurred.  It concluded Hoida had not met its burden of 
showing that a duty to collect lien waivers existed, and 
therefore, Hoida's claim failed to state a claim for relief.  It 
granted M&I and McDonald Title's motion for summary judgment, 
dismissing all claims against them. 
¶14 Hoida appealed, and the court of appeals held that 
Hoida had alleged each of the elements necessary to establish a 
negligence claim, but affirmed the circuit court's grant of 
summary judgment for the defendants on the ground that public 
policy considerations precluded recovery.  It cited Wisconsin 
Statutes, ch. 779, that places lenders above subcontractors in 
lien prioritization on construction projects, as support for 
holding that Hoida's claim was barred by public policy.  Hoida, 
Inc. v. M&I Midstate Bank, 2004 WI App 191, ¶23, 276 Wis. 2d 
705, 688 N.W.2d 691.10  We review that decision. 
II.  DISCUSSION 
A. 
Standard of Review 
¶15 This case requires us to review summary judgment 
dismissing Hoida's claims against the defendants.  Whether 
summary judgment was properly granted is a question of law.  
Fortier v. Flambeau Plastics Co., 164 Wis. 2d 639, 651-52, 476 
                                                 
10 The court of appeals cited policy as evidenced in the 
statutes for its decision:  "Establishing for Hoida a new claim 
against M&I and McDonald would contravene the public policy 
choices of the legislature."  Hoida, Inc. v. M&I Midstate Bank, 
2004 WI App 191, ¶23, 276 Wis. 2d 705, 688 N.W.2d 691. 
No. 
2003AP2108   
 
10 
 
N.W.2d 593 (Ct. App. 1991).  We independently review a grant or 
denial of summary judgment, applying the same method as the 
circuit court.  Cole v. Hubanks, 2004 WI 74, ¶5, 272 Wis. 2d 
539, 681 N.W.2d. 147 (citing Sawyer v. Midelfort, 227 Wis. 2d 
124, 135, 595 N.W.2d 423 (1999)).  Whether public policy 
precludes a negligence claim is also a question of law, subject 
to our independent review.  Gritzner v. Michael R., 2000 WI 68, 
¶27, 235 Wis. 2d 781, 611 N.W.2d 906.  
B. 
Summary Judgment Principles 
¶16 Every decision on a motion for summary judgment begins 
with a review of the complaint to determine whether, on its 
face, it states a claim for relief.  Westphal v. Farmers Ins. 
Exch., 2003 WI App 170, ¶9, 266 Wis. 2d 569, 669 N.W.2d 166.  If 
it does, we examine the answer to see if issues of fact or law 
have been joined.  Id.  After we have concluded that the 
complaint and answer are sufficient to join issue, we examine 
the 
moving 
party's 
affidavits 
to 
determine 
whether 
they 
establish a prima facie case for summary judgment.  Id.  When 
they do so, we review the opposing party's affidavits to 
determine whether there are any material facts in dispute, or 
inferences from undisputed material facts, that would entitle 
the opposing party to a trial.  Id.  "We will affirm a grant of 
summary judgment when there are no genuine issues of material 
fact and the moving party is entitled to judgment as a matter of 
law."  Baumeister v. Automated Prods., Inc., 2004 WI 148, ¶11, 
277 Wis. 2d 21, 690 N.W.2d 1 (citation omitted).  "[T]he mere 
existence of some alleged factual dispute between the parties 
No. 
2003AP2108   
 
11 
 
will not defeat an otherwise properly supported motion for  
summary judgment," so long as there is no disputed fact that is 
material to the claim or defense made.  Id. (quoting City of 
Elkhorn v. 211 Centralia Corp., 2004 WI App 139, ¶18, 275 
Wis. 2d 584, 685 N.W.2d 874).   
C. 
Hoida's Claims  
¶17 Hoida claims that M&I and McDonald Title are liable 
for the damages it sustained based on the following allegations 
set out in the complaint:  (1) the defendants had a duty of 
"identification 
of 
subcontractors 
and 
materialmen 
at 
the 
project"; (2) the defendants had a duty of "determination that 
the work has reached the proper stage to justify disbursement"; 
(3) the defendants had a duty of "collection of lien waivers 
from 
contractors, 
subcontractors 
and 
suppliers" 
before 
disbursement of loan funds were made; (4) the defendants "owed a 
duty to the subcontractors and material suppliers, including 
Hoida, because [the subcontractors and material suppliers] were 
third-party beneficiaries and also because it was reasonably 
foreseeable that any failure by [the defendants] . . . could 
harm subcontractors and material suppliers, including Hoida"; 
and (5) the defendants breached these duties causing damage to 
Hoida. 
 
M&I 
and 
McDonald 
Title 
denied 
all 
of 
Hoida's 
allegations.   
¶18 The first step of our summary judgment analysis is to 
determine whether the complaint sets forth a claim for relief.  
Trinity Evangelical Lutheran Church & Sch.-Freistadt v. Tower 
Ins. Co., 2003 WI 46, ¶32, 261 Wis. 2d 333, 661 N.W.2d 789.  It 
No. 
2003AP2108   
 
12 
 
appears that Hoida attempted to plead both a claim for breach of 
contract, as a third-party beneficiary, and a claim for 
negligence.11   
1. 
Breach of contract 
¶19 The complaint does not allege whether the duties 
outlined in ¶17 above arise from a loan document, an agreement 
between M&I and McDonald Title or from some other agreement that 
could give rise to a contract theory of recovery.  It also does 
not allege that Hoida was an intended beneficiary of any such 
agreement.  However, in order to state a claim based on third-
party beneficiary status, the complaint must allege facts 
sufficient to show that the agreement that was breached was 
entered into primarily and directly for plaintiff's benefit or 
the complaint must have attached a copy of the agreement that 
demonstrates that purpose.  Schell v. Knickelbein, 77 Wis. 2d 
344, 349, 252 N.W.2d 921 (1977).  Hoida did neither.  Therefore, 
its attempted breach of contract claim fails to state a claim 
for relief.  
2. 
Negligence 
¶20 Hoida alleged that the defendants breached the duty of 
care owed to it, not by doing some act that caused harm, but by 
failing to perform certain tasks that Hoida claims M&I and 
                                                 
11 Hoida's 
briefs 
attempt 
to 
raise 
issues 
of 
misrepresentation.  However, the circuit court declined to 
review that issue, noting that misrepresentation was not pleaded 
and therefore was not before the court.  Our independent review 
of 
the 
complaint 
confirms 
that 
Hoida 
did 
not 
plead 
misrepresentation.  Therefore, we do not address it.  
No. 
2003AP2108   
 
13 
 
McDonald Title had an obligation to perform.  Hoida does not 
assert that this obligation arose from any heightened duty of 
care, such as a fiduciary duty.  Rather, it pleads that the duty 
of ordinary care required M&I and McDonald Title to identify the 
subcontractors and materialmen for the project; to verify that 
sufficient work on the project had been completed to "justify 
disbursement"; and to collect lien waivers from Hoida before 
disbursing funds from Villager's loan.  Hoida characterizes 
these obligations as "basic industry standards" of conduct for 
lenders and their agents, and it claims that if the lender does 
not complete these tasks, it is reasonably foreseeable that 
subcontractors and materialmen will be harmed. 
¶21 Wisconsin's common law of negligence has developed 
primarily through cases of personal injury and property damage.  
The specific question of a lender's liability to a third party 
who suffers losses, where the lender and the third party are not 
in privity of contract and the lender has no fiduciary duty to 
the third party, is a question of first impression in Wisconsin.  
We review established common law negligence principles as our 
starting point.  
¶22 Generally stated, "[t]he test of negligence is whether 
the conduct foreseeably creates an unreasonable risk to others."  
Morgan v. Pa. Gen. Ins. Co., 87 Wis. 2d 723, 732, 275 N.W.2d 660 
(1979) (citing, e.g., Coffey v. Milwaukee, 74 Wis. 2d 526, 537, 
247 N.W.2d 132 (1976); Antoniewicz v. Reszczynski, 70 Wis. 2d 
836, 857, 236 N.W.2d 1 (1975); A.E. Inv. Corp. v. Link Builders, 
Inc., 62 Wis. 2d 479, 484-85, 214 N.W.2d 764 (1974)).  The risk 
No. 
2003AP2108   
 
14 
 
of harm need not be to a particular plaintiff.  Morgan, 87 
Wis. 2d at 732.  The allegedly negligent act must also cause an 
injury.  "A cause of action in negligence requires proof that 
the defendant failed to exercise ordinary care and that the act 
or omission complained of was the cause of the plaintiff's 
injury."  Fischer v. Cleveland Punch & Shear Works Co., 91 
Wis. 2d 85, 92, 280 N.W.2d 280 (1979) (citing Greiten v. La Dow, 
70 Wis. 2d 589, 601, 235 N.W.2d 677 (1975)). 
¶23 For decades, Wisconsin courts have engaged a four-
element analysis to determine whether an actionable claim for 
negligence has been stated.  We require a plaintiff to plead 
facts, which if proved true, would establish the following four 
elements:  "(1) the existence of a duty of care on the part of 
the defendant, (2) a breach of that duty of care, (3) a causal 
connection between the defendant's breach of the duty of care 
and the plaintiff's injury, and (4) actual loss or damage 
resulting from the [breach]."12  Gritzner, 235 Wis. 2d 781, ¶19; 
                                                 
12 The dissent implies that Wisconsin does not employ the 
four-element test for actionable negligence; it relies heavily 
on Palsgraf v. Long Island Railroad Co., 162 N.E. 99 (N.Y. 
1928).  Dissent, ¶¶64-65.  In so doing, the dissent ignores the 
use of the four-element test in current decisions, one of which 
was authored by the author of the dissent herein.  See, e.g., 
Antwaun A. v. Heritage Mut. Ins. Co., 228 Wis. 2d 44, 55, 596 
N.W.2d 456 (1999) (Justice Bradley explaining for the majority, 
"As with any negligence claim, Antwaun A. must show that there 
exists:  (1) A duty of care on the part of the defendant; (2) a 
breach of that duty; (3) a causal connection between the conduct 
and the injury; and (4) an actual loss or damage as a result of 
the injury"); Rockweit v. Senecal, 197 Wis. 2d 409, 418, 541 
N.W.2d 742 (1995) (specifying that the same four elements must 
exist in order to establish a cause of action for negligence in 
Wisconsin).   
No. 
2003AP2108   
 
15 
 
see also Rockweit v. Senecal, 197 Wis. 2d 409, 418, 541 N.W.2d 
742 (1995). 
¶24 Wisconsin courts have also reserved the right to deny 
the existence of a negligence claim based on public policy 
reasons:  "[I]n Wisconsin, even if all the elements for a claim 
of negligence are proved, or liability for negligent conduct is 
assumed by the court, the court nonetheless may preclude 
liability based on public policy factors."  Smaxwell v. Bayard, 
2004 WI 101, ¶39, 274 Wis. 2d 278, 682 N.W.2d 923.  The 
legislature also establishes public policy for the state through 
the statutes it enacts, and we are limited "to applying the 
policy the legislature has chosen to enact, and may not impose 
[our] own policy choices."  Fandrey v. Am. Family Mut. Ins. Co., 
2004 WI 62, ¶16, 272 Wis. 2d 46, 680 N.W.2d 345.13 
                                                                                                                                                             
In addition, juries find facts, but whether a duty exists 
and the scope of such a duty are questions of law for the courts 
to decide.  See, e.g., Ceplina v. So. Milwaukee School Board, 73 
Wis. 2d 338, 341-42, 243 N.W.2d 183 (1976) (concluding that 
whether the school board had a duty to the injured child and the 
scope of any such duty were questions of law for a court to 
decide); Johnson v. Seipel, 152 Wis. 2d 636, 643, 449 N.W.2d 66 
(Ct. App. 1989) (concluding whether Seipel owed a duty to the 
Johnsons in regard to his use of boats on the river in front of 
the Johnsons' property, and what the scope of any such duty was, 
are questions of law).  
13 As we explained in Fandrey v. American Family Mutual 
Insurance Co., 2004 WI 62, 272 Wis. 2d 46, 680 N.W.2d 345, the 
application of public policy as set out in the statutes and the 
application of judicial public policy factors are two very 
different concepts. 
The legislature's determination of "public policy" in 
a broader context relates to what is politically 
appropriate for the state as a whole.  When "public 
policy" is used in this context, it is true that the 
No. 
2003AP2108   
 
16 
 
¶25 The analysis of the four elements necessary to state a 
claim for actionable negligence is the first consideration for a 
court when deciding motions for summary judgment, even if an 
appellate court can directly consider the judicial public policy 
factors to preclude liability when the facts are particularly 
clear.  Alvarado v. Sersch, 2003 WI 55, ¶18, 262 Wis. 2d 74, 662 
N.W.2d 350; see also Gritzner, 235 Wis. 2d 781, ¶24.  This is 
because "negligence 
and 
liability 
are 
distinct 
concepts."  
Alvarado, 262 Wis. 2d 74, ¶17.  
¶26 We have not addressed previously the precise question 
before us, and therefore have given no guidance for the pleading 
requirements for a claim of lender liability due to an alleged 
failure to undertake certain tasks.  Further, undisputed 
material facts that were not pleaded will be helpful to our 
explanation of this new claim that Hoida seeks to develop.  For 
these reasons, we will assume, while not deciding, that the 
complaint states an actionable claim for negligence in regard to 
M&I and McDonald Title.  
¶27 The first element of the four-element analysis for a 
claim of actionable negligence, duty, involves two aspects:  (1) 
                                                                                                                                                             
judiciary is limited to applying the policy the 
legislature has chosen to enact, and may not impose 
its own policy choices.  This stands in stark contrast 
to the judiciary's use of "public policy," formerly 
referred to as "proximate cause," which refers to the 
practice of limiting tort liability as part of the 
legal cause analysis "on a case-by-case basis." 
Id., ¶16 (citations omitted). 
No. 
2003AP2108   
 
17 
 
the existence of a duty of ordinary care; and, (2) an assessment 
of 
what 
ordinary 
care 
requires 
under 
the 
circumstances.  
Hatleberg v. Norwest Bank Wis., 2005 WI 109, ¶¶17-18, 283 
Wis. 2d 234, 700 N.W.2d 15.  We begin with the duty of ordinary 
care. 
¶28 In Klassa v. Milwaukee Gas Light Co., 273 Wis. 176, 77 
N.W.2d 397 (1956), we reviewed the established concept that in 
order to find negligence, a court first must decide whether the 
defendant owed a duty to the plaintiff.  Id. at 181-82.  We 
cited previous case law and secondary sources as foundation for 
our statement that "it is not necessary in order for an act to 
be negligent that the actor should reasonably have foreseen the 
particular injury which did result from such act so long as he 
should have foreseen that harm was likely to be caused to 
someone by reason [of his act]."  Id. at 182 (citing Pfeifer v. 
Standard Gateway Theater, Inc., 262 Wis. 229, 55 N.W.2d 29 
(1952)).  
¶29 Klassa explained that despite this broad, general 
statement of duty, courts could conclude that an act that caused 
harm did not constitute negligence under certain circumstances:  
"Whenever a court holds that a certain act does not constitute 
negligence because there was no duty owed by the actor to the 
injured party, although the act complained of caused the injury, 
such court is making a policy determination."  Klassa, 273 Wis. 
at 183.  In making that assertion, we explained that the 
shifting sands of society's ideas about responsibility drive 
courts' conclusions with regard to what the duty of ordinary 
No. 
2003AP2108   
 
18 
 
care requires under the circumstances presented.14  Id. at 
183-84.  However, we also have explained that the duty of 
ordinary care is not a judicial public policy factor, but 
rather, 
it 
is 
"an 
ingredient 
in 
the 
determination 
of 
negligence."  A.E. Inv., 62 Wis. 2d at 484.   
¶30 To summarize, one has a duty to exercise ordinary care 
under the circumstances.15  Gritzner, 235 Wis. 2d 781, ¶20.  If a 
person, without intending to do harm, acts, or fails to do an 
                                                 
14 In Klassa v. Milwaukee Gas Light Co., 273 Wis. 176, 77 
N.W.2d 397 (1956), we explained: 
For more than two generations it has been 
repeated that there can be no duty toward an unborn 
child; now all of a sudden the cases on prenatal 
injury are going the other way.  It used to be held 
that one who gets himself into danger owes no duty to 
a rescuer injured in saving him; now all at once the 
duty is there.  It was once well-settled law that one 
who negligently made misrepresentations could owe no 
possible duty to a third person into whose hands they 
might come; there is now respectable authority that in 
some situations such a duty can be found.  It was once 
the law that a landlord leasing a small shop for the 
admission of the public owed no duty to those who 
entered; all of the recent cases agree that the duty 
is clear. 
Id. at 183-84 (quoting William L. Prosser, Palsgraf Revisited, 
52 Mich. L. Rev. 1, 14-15, (1953)).  
15 The dissent also mischaracterizes the holding of the 
majority opinion as having concluded that M&I and McDonald Title 
owed no duty to Hoida.  Dissent, ¶58.  However, the majority 
opinion clearly concludes that M&I and McDonald Title have a 
duty to exercise ordinary care under the circumstances.  See 
infra, ¶¶30-32.  What the majority opinion turns on is whether 
the circumstances of this case require M&I and McDonald Title to 
undertake all the affirmative acts that Hoida requests.  See 
infra, ¶32.  
No. 
2003AP2108   
 
19 
 
act, that a reasonable person would recognize as creating an 
unreasonable risk of injury or damage to a person or property, 
he 
or 
she 
is 
not 
exercising 
ordinary 
care 
under 
the 
circumstances, and is therefore negligent.  Rockweit, 197 
Wis. 2d at 424 (citation omitted).  Ordinary care involves the 
concept 
of 
foreseeability, 
in 
that 
a 
reasonable 
person 
exercising ordinary care would have foreseen injury as a 
consequence of his act.  Greiten, 70 Wis. 2d at 602; Osborne v. 
Montgomery, 203 Wis. 223, 234, 234 N.W. 372 (1931).   
¶31 These concepts, taken together, establish certain 
relationships.  The existence of a duty of ordinary care 
encompasses 
what 
is 
reasonable 
according 
to 
facts 
and 
circumstances present in each individual case.  Whether there 
has been a breach, the next element of a negligence claim, will 
depend in part upon what is reasonable to require a person to 
do, 
or 
to 
refrain 
from 
doing, 
under 
the 
circumstances.  
Hatleberg, 283 Wis. 2d 234, ¶¶18-20. 
¶32 Therefore, what is within the duty of ordinary care 
depends on the circumstances under which the claimed duty 
arises.  For example, what is comprised within ordinary care may 
depend on the relationship between the parties or on whether the 
alleged tortfeasor assumed a special role in regard to the 
injured party.  See id. (concluding that Wells Fargo Bank's duty 
of ordinary care under the circumstances did not include an 
affirmative obligation to review a trust document to ensure that 
it would be effective in reducing estate taxes); see also id., 
¶42 (concluding that because Wells Fargo undertook the role of 
No. 
2003AP2108   
 
20 
 
giving financial advice to its client, its duty of ordinary care 
under the circumstances required it to avoid providing false 
information to her).  When a party is alleged to have a 
fiduciary duty to another individual, we examine what is 
encompassed within ordinary care under a different lens because 
of that claimed fiduciary relationship.16  See Beloit Liquidating 
Trust v. Grade, 2004 WI 39, ¶2, 270 Wis. 2d 356, 677 N.W.2d 298 
(concluding that a corporate officer's or director's duty of 
ordinary care under the circumstances to corporate creditors was 
not that of a fiduciary unless the corporation was insolvent and 
no longer a going concern).  Stated otherwise, the duty of 
ordinary care under the circumstances is determined by what 
would be reasonable given the facts and circumstances of the 
particular claim at hand.  
                                                 
16 Hoida cites First National Bank v. Wernhart, 204 Wis. 2d 
361, 555 N.W.2d 819 (Ct. App. 1996), in support of its argument.  
In Wernhart, the court of appeals concluded that a lender had a 
fiduciary relationship to a borrower because it had consented to 
disburse the loan proceeds and personal funds of the borrower, 
without further participation by the borrower.  Id. at 370.  The 
court held that the bank, therefore, was acting as an agent of 
the borrower.  Id.  The court concluded that the lender owed a 
fiduciary duty to the borrower to assure compliance with the 
construction contract before disbursing funds.  Id.  Because the 
bank made no attempt to perform this duty, the court affirmed 
the circuit court's conclusion that the bank had breached its 
duty.  Id. at 370-71. 
Wernhart is readily distinguishable because the bank's duty 
of care in disbursing those loan proceeds was determined by the 
bank's obligation as a fiduciary of the borrower.  Hoida claims 
no fiduciary relationship between itself and either M&I or 
McDonald Title.  Additionally, M&I had the approval of the 
borrower, in writing, and it relied on that approval, only to 
discover later that the "approval" was part of a bank fraud 
scam. 
No. 
2003AP2108   
 
21 
 
¶33 This limitation on what is required by the duty of 
ordinary care is not a new concept.  It is a well-established 
consideration 
in 
the 
analysis 
of 
claims 
of 
intentional 
misrepresentation based on a failure to disclose.  For example, 
the duty of ordinary care in regard to being required to speak 
is limited by the circumstances surrounding the transaction.  
Kaloti Enters., Inc. v. Kellogg Sales Co., 2005 WI 111, ¶¶16-19, 
283 Wis. 2d 555, 699 N.W.2d 205; Ollerman v. O'Rourke Co., Inc., 
94 Wis. 2d 17, 46, 288 N.W.2d. 95 (1980).  No misrepresentation 
occurs through nondisclosure unless there is a duty to disclose.  
Kaloti, 283 Wis. 2d 555, ¶13; Ollerman, 94 Wis. 2d at 42.   
¶34 Hoida's claims against M&I and McDonald Title present 
no special relationship, such as a fiduciary relationship, nor 
did either defendant assume a special role with regard to Hoida.  
Accordingly, we examine what a reasonable lender and its agent 
in the position of M&I and McDonald Title would be obligated to 
do in similar circumstances.  
¶35 In previous cases, we have examined business contracts 
and agreements to help determine what is included within the 
duty of ordinary care, where the alleged negligence arose out of 
a business relationship.  Kaloti, 283 Wis. 2d 555, ¶¶6-9; 
Baumeister, 277 Wis. 2d 21, ¶¶21-24.  Baumeister provides the 
foundation for our analysis here.   
¶36 Baumeister involved the claims of two workmen who were 
injured during the construction of a church when the trusses 
that would support the church roof were being installed and the 
structure collapsed.  Baumeister, 277 Wis. 2d 21, ¶6.  They sued 
No. 
2003AP2108   
 
22 
 
the architect, among others, claiming that he was negligent in 
providing instructions and in supervising the placing of 
temporary bracing that was to support the trusses during 
installation.  Id., ¶8.  The workmen claimed that their injuries 
were foreseeable, if the temporary bracing was not properly 
placed and therefore the architect breached his duty of ordinary 
care.  Id., ¶13.   
¶37 We concluded that the architect did not breach the 
duty of ordinary care exercised by an architect in similar 
circumstances.  Id., ¶18.  In so concluding, we established that 
an architect's duty of ordinary care required a review of the 
architect's contract with the church.  We did so because the 
terms of the architect's contract assisted us in determining 
what would be reasonable for an architect to foresee under the 
circumstances.  The contract in Baumeister stated that the 
architect 
was 
"relieved 
of 
liability 
with 
regards 
to 
'construction 
means, 
methods, 
techniques, 
sequences 
or 
procedures, or for safety precautions and programs in connection 
with the Work.'"  Id., ¶21 (quoting the architect's contract 
with the church).  We also considered the uncontroverted expert 
testimony of another architect whose opinion was that an 
architect "is not responsible for, nor does he control, the 
methodology 
and 
techniques 
chosen 
by 
the 
contractor" 
to 
construct a building.  Id. (quoting from architect Lee Madden's 
affidavit).   
¶38 Here, 
the 
business 
context 
in 
which 
M&I 
lent 
construction funds was one in which each party had its own 
No. 
2003AP2108   
 
23 
 
respective contractual relationship to another in a construction 
project.  For example, M&I's contract was with Villager, who was 
the owner of the project and the borrower of the funds.  
According to their contract, M&I was not to release any funds 
without the owner's approval.  It complied with that obligation 
by having McDonald Title collect a completed Application and 
Certification 
for 
Payment 
form 
that 
included 
Villager's 
signature for each draw on the loan proceeds.  Although not 
required by its contract with Villager, M&I also had McDonald 
Title obtain the signature of the architect and an itemization 
of 
the 
general 
contractor 
before 
funds 
were 
released.  
Furthermore, M&I's contract with Villager specifically provided 
that M&I had no duty to secure lien waivers or to oversee 
construction.  These contractually assumed obligations and 
agreed upon limitations for M&I shaped its duty of ordinary care 
in disbursing the proceeds of the construction loan because they 
set out what the parties agreed was reasonable under the 
circumstances.  
¶39 McDonald Title's contract was with M&I.  It was 
obligated to perform only those tasks that M&I requested, just 
as if it were an employee of M&I rather than an independent 
agent.  M&I required completed Application and Certification for 
Payment forms for all disbursements, and McDonald Title secured 
those forms.  It acted solely at M&I's direction.  And while it 
is true that an agent can be individually liable if he "does an 
act that would be a tort if he were not then acting as an 
agent," Ramsden v. Farm Credit Services of North Central 
No. 
2003AP2108   
 
24 
 
Wisconsin ACA, 223 Wis. 2d 704, 715, 590 N.W.2d 1 (Ct. App. 
1998), the principles of Ramsden do not enlarge an agent's duty 
of ordinary care beyond the principal's duty of ordinary care 
when the agent is acting solely as M&I, itself, could lawfully 
have acted.  Here, Hoida seeks to ascribe liability to McDonald 
Title for not undertaking the same tasks as it alleges M&I 
should have undertaken.  And, as we have explained, M&I's duty 
of ordinary care under the circumstances did not include the 
obligation to undertake the tasks Hoida seeks to impose on M&I.  
Furthermore, Hoida cites no Wisconsin case that would create the 
obligations for an agent that it ascribes to McDonald Title.17 
¶40 Neither M&I nor McDonald Title reasonably could have 
foreseen that the general contractor and the owner would act 
together to forge the architect's signature on Application and 
Certification for Payment forms and to convert the loan proceeds 
for the project to their own use.  Nor could they reasonably 
have foreseen that Hoida would produce such a mass of materials 
for the project without enforcing its contract with Packard to 
be paid within 15 days of delivery.  To the contrary, two other 
subcontractors who were not timely paid contacted M&I, and 
McDonald Title paid them.   
                                                 
17 We note a tentative draft for a proposed change to 
Restatement (Third) of Agency would provide that "An agent's 
breach of a duty owed to the principal is not an independent 
basis for an agent's tort liability to a third party.  An agent 
is subject to tort liability to a third party harmed by the 
agent's conduct only when the agent's conduct breaches a duty 
that the agent owes to the third party."  Restatement (Third) of 
Agency § 7.02 (Tentative Draft No. 5, 2004). 
No. 
2003AP2108   
 
25 
 
¶41 However, even assuming, arguendo, that McDonald Title 
was negligent in its distribution of the loan proceeds, we 
conclude that Hoida's claim against McDonald Title was precluded 
by judicial public policy.  The application of judicial public 
policy factors to preclude recovery for negligence has a long 
history in Wisconsin.  See Colla v. Mandella, 1 Wis. 2d 594, 
598-99, 85 N.W.2d 345 (1957).  In Colla, we articulated the six 
public policy factors that Wisconsin courts use today to limit 
liability in negligence claims:  (1) "the injury is too remote 
from the negligence"; (2) the recovery is "'wholly out of 
proportion to the culpability of the negligent tort-feasor'"; 
(3) the harm caused is highly extraordinary given the negligent 
act; (4) recovery "would place too unreasonable a burden" on the 
negligent tort-feasor; (5) recovery would be "too likely to open 
the way to fraudulent claims"; and (6) recovery would enter into 
"'a field that has no sensible or just stopping point.'"  Id. 
(citations omitted); see also Fandrey, 272 Wis. 2d 46, ¶¶30-35.  
If any one of the six factors applies, we may preclude 
liability.  Id.   
¶42 While there are occasions when we determine that 
judicial public policy factors should not be applied in advance 
of a full trial, Bowen v. Lumbermens Mut. Cas. Co., 183 Wis. 2d 
627, 654, 517 N.W.2d 432 (1994), when the public policy is well 
presented by the pleadings and the materials accompanying a 
summary judgment motion, we may decide whether any of them 
should be applied, Sawyer, 227 Wis. 2d at 141.   
No. 
2003AP2108   
 
26 
 
¶43 Here, we conclude that permitting recovery would place 
too unreasonable a burden on McDonald Title, who acted solely at 
the direction of M&I.  Fandrey, 272 Wis. 2d 46, ¶15 n.12.  The 
burden that Hoida asks that we place on McDonald Title when it 
is acting as a disbursing agent for a construction loan is to 
require it to:  (1) identify all subcontractors and all 
materialmen who provide either services or goods for the 
construction 
project 
at 
any 
time 
during 
the 
course 
of 
construction; (2) for every disbursement, assess the progress of 
the construction and determine whether enough construction has 
been completed to warrant the amount of money that is being 
requested for that draw on the loan proceeds; and (3) before 
each 
disbursement, 
to 
collect 
lien 
waivers 
from 
all 
subcontractors and materialmen who provided goods or services to 
the construction project.  Subcontractors and materialmen change 
as a construction project progresses.  For example, a concrete 
subcontractor may pour the foundation and have concluded his 
work on the job, while a painter may work only on the inside of 
a building after it is largely completed.  Supplies that become 
incorporated into a building are purchased by both general 
contractors and subcontractors.  Tracking who purchased what and 
when would be a never-ending task, if we were to require 
McDonald Title to perform it.  Additionally, we find nothing in 
the record that would permit us to conclude that McDonald Title 
has any special expertise in evaluating whether the progress in 
the construction of a building is equivalent to the dollar 
amount of any given draw request  Accordingly, we conclude that 
No. 
2003AP2108   
 
27 
 
Hoida's claim against McDonald Title is precluded by the fourth 
judicial public policy factor.18 
¶44 Accordingly, we conclude that M&I and McDonald Title's 
duty of ordinary care under the circumstances with regard to 
Hoida did not require either of them to identify Hoida as a 
subcontractor on the project, to verify that progress on the 
project was sufficient to justify the release of the amount of 
funds that the general contractor and the owner requested, or to 
secure lien waivers from Hoida.  
¶45 We further conclude that M&I exercised ordinary care 
under the circumstances this case presents when it retained 
McDonald Title to act as its disbursing agent and instructed it 
to secure completed Application and Certification for Payment 
forms for all disbursements.  These forms contained the 
signature of Villager, who was the owner/borrower in regard to 
the project, the signature of the architect and the signature of 
the general contractor.   
¶46 Once what is required by the duty of ordinary care 
under the circumstances is established, the second element of 
actionable negligence, whether a breach of that duty has 
occurred, can be ascertained.  Hoida's claim of a breach is 
based entirely on the theory that the defendants' duty of 
ordinary care under the circumstances required them to undertake 
certain tasks that we have concluded ordinary care under the 
                                                 
18 We do not analyze the other five factors, as the 
preclusion by one public factor is sufficient to grant summary 
judgment.  Fandrey, 272 Wis. 2d 46, ¶34. 
No. 
2003AP2108   
 
28 
 
circumstances did not require.  It then follows that no breach 
occurred and therefore the defendants were not negligent, as a 
matter of law.19  In the future, when attempting to plead lender 
liability based on negligently failing to undertake certain 
tasks, a plaintiff must allege why the duty of ordinary care of 
the lender or disbursing agent includes the obligation to 
affirmatively undertake the tasks that plaintiff claims the 
lender or disbursing agent reasonably failed to perform under 
the circumstances. 
¶47 Normally, we would conclude our discussion at this 
point.  However, it may be helpful to those who suffer losses 
arising from similar circumstances in the future to point out 
that the legislature has made a policy choice in regard to the 
relative priority of a subcontractor and a lender when funds are 
                                                 
19 We also note that because of the theft of the loan 
proceeds, there is a significant causation issue here.  We 
reviewed the cause doctrine's evolution in Wisconsin in Fandrey.  
We identified the two aspects of cause, cause-in-fact and legal 
cause.  Fandrey, 272 Wis. 2d 46, ¶14.  Cause-in-fact has been 
described as follows:  "[a] defendant's negligence is 'a cause' 
of a plaintiff's injury or damage if it was a substantial factor 
in producing the injury or damage."  Alvarado v. Sersch, 2003 WI 
55, ¶34 n.2, 262 Wis. 2d 74, 662 N.W.2d 350.  A finding of 
causation must have a reasonable basis in the record; it cannot 
be based on conjecture.  Merco Distrib. Corp. v. Commercial 
Police Alarm Co., 84 Wis. 2d 455, 458-60, 267 N.W.2d 652 (1978).  
Cause-in-fact has also been described as requiring an unbroken 
sequence of events connecting the negligent act and the injury.  
Cefalu v. Cont'l W. Ins. Co., 2005 WI App 187, ¶2, 285 Wis. 2d 
766, 703 N.W.2d 743. 
Here, M&I and McDonald Title contend that Hoida's loss was 
caused by the collusion of the owner and the general contractor 
to steal the project's construction funds, not by any alleged 
negligence on the defendants' part.   
No. 
2003AP2108   
 
29 
 
insufficient to cover both of their losses.  As the court of 
appeals said: 
Under Wis. Stat. ch. 779, the legislature made a 
policy choice to provide protection to subcontractors 
and material suppliers on construction projects.  It 
also 
elected, 
under 
Wis. 
Stat. 
§§ 779.01(4) and 
706.11, to limit that protection in certain situations 
by providing priority status to lenders.  Establishing 
for Hoida a new claim against M&I and McDonald would 
contravene 
the 
public 
policy 
choices 
of 
the 
legislature.  "[T]he judiciary is limited to applying 
the policy the legislature has chosen to enact, and 
may not impose its own policy choices."   
Hoida, 276 Wis. 2d 705, ¶23 (citation omitted). 
¶48 We agree with the court of appeals that if this court 
were to develop a new lender liability claim by imposing 
affirmative obligations on a lender that it has not undertaken 
by contract or voluntarily assumed, the result would be to give 
subcontractors and material suppliers payment priority over 
construction lenders when a third party acts in a way that could 
cause loss for both.  However, the legislature has enacted 
statutes that evince the public policy of Wisconsin to pay 
construction lenders first.  Wis. Stat. § 779.01(4) and Wis. 
Stat. § 706.11.  We cannot establish a common law claim that 
would contravene that legislative choice.  If a new claim is to 
be established for those in Hoida's position, it is for the 
legislature to do so, not this court.  
¶49 As we explained above, Hoida has not shown there are 
any material facts in dispute, or any inferences favorable to it 
from undisputed facts, that would entitle it to a trial.  
Instead, Hoida claims support for its position from Kornitz v. 
No. 
2003AP2108   
 
30 
 
Earling & Hiller, Inc., 49 Wis. 2d 97, 181 N.W.2d 403 (1970), 
which allowed a purchaser of an apartment building a trial to 
resolve its misrepresentation and negligence claims against a 
mortgage lender.  It also cites Klein-Dickert Oshkosh, Inc. v. 
Frontier Mortgage Corp., 93 Wis. 2d 660, 287 N.W.2d 742 (1980), 
which supported a prior court's finding that a construction 
project lender had guaranteed payment to a swimming pool dome 
subcontractor.  Neither case persuades us. 
¶50 Kornitz concluded that more facts were necessary 
before the court could fully consider the issues.  It involved a 
misrepresentation claim, the distinct legal elements of which 
weighed significantly in the court's conclusion that the 
plaintiff had a viable legal claim that warranted a full trial.  
Kornitz, 49 Wis. 2d at 103.  As we explained in footnote 11, 
supra, Hoida did not plead a misrepresentation claim.  In Klein-
Dickert, there was privity of contract between the lender and 
the subcontractor because the subcontractor explained that it 
would not proceed with construction unless the lender guaranteed 
payment of its bid, and the lender agreed to that request.  
Klein-Dickert, 93 Wis. 2d at 669.  The decision in Klein-Dickert 
turned on a contractual obligation.  Here, Hoida had no privity 
of contract or third-party beneficiary status.20  
                                                 
20 Hoida cites no Wisconsin case that imposes an affirmative 
obligation to undertake the tasks it seeks to impose on M&I and 
McDonald Title simply because M&I was the construction lender 
and McDonald Title its disbursing agent.  Instead, it cites the 
following out-of-state cases.  We conclude that none are 
persuasive for the position Hoida asserts.   
No. 
2003AP2108   
 
31 
 
                                                                                                                                                             
In Southern Life Insurance Co. v. Pollard Appliance Co., 
150 So. 2d 416 (Miss. 1963), the court imposed liability on a 
lender who did not shoulder its statutory obligation under 
Mississippi law.  Id. at 418.  In Cook v. Citizens Savings & 
Loan Ass'n, 346 So. 2d 370 (Miss. 1977), a contractor gave 
notice to the lender that construction had been completed and it 
requested payment of the contract price of $8,800.  The lender 
issued payment jointly to Cook and the owner for $5,000.  Id. at 
371.  The lender then issued payment solely to the owner for the 
balance of the loan, without paying Cook what was due on his 
contract.  Id.  Although not specifically citing the Mississippi 
statute as the court did in Southern Life Insurance, the court 
did cite Southern Life Insurance for concluding the lender 
failed in its duty when disbursing the loan proceeds.  Id. at 
372.  Mississippi statutes control both Southern Life Insurance 
and 
Cook; 
however, 
Wisconsin 
has 
no 
parallel 
statutory 
provision.   
In Speights v. Arkansas Savings & Loan Ass'n, 393 S.W.2d 
228 (Ark. 1965), the lender and the borrower had a written 
agreement on how the loan proceeds were to be disbursed.  The 
lender did not follow that agreement, resulting in the general 
contractor abandoning the job without paying the subcontractors 
and material suppliers to the damage of the borrower.  Id. at 
230.  The court held the lender was liable because it did not 
follow its agreement with the borrower.  Id. at 230-31.  Here, 
the lender did not contravene any agreement with the borrower; 
the borrower stole the construction funds that were to go to 
Hoida.  Falls Lumber Co. v. Heman, 181 N.E.2d 713 (Ohio Ct. App. 
1961) is similar to Speights in that liability for the lender 
followed from the lender's breach of its contract with the 
borrower, id., 181 N.E.2d at 715-16, and it is similar to 
Southern Life Insurance, in that Ohio has a statute that the 
lender did not follow, id., 181 N.E.2d at 716.   
No. 
2003AP2108   
 
32 
 
III.  CONCLUSION 
¶51 We conclude that Hoida has not stated a third-party 
beneficiary claim and that it has not provided facts to 
controvert M&I's prima facie showing that it did not breach the 
duty of ordinary care under the circumstances.  We also conclude 
that the negligence claim Hoida seeks to establish against M&I 
is barred by the legislative determination of priority as 
between a lender and a subcontractor set out in Wis. Stat. 
§ 779.01(4) and Wis. Stat. § 706.11.  And finally, while we do 
not conclude that Hoida has overcome McDonald Title's prima 
facie showing that it did not breach the duty of ordinary care 
under the circumstances, if we were to do so, Hoida's negligence 
claim 
would 
be 
precluded 
by 
judicial 
public 
policy.  
Accordingly, we affirm the court of appeals. 
By the Court.—The decision of the court of appeals is 
affirmed. 
¶52 SHIRLEY S. ABRAHAMSON, C.J., did not participate. 
                                                                                                                                                             
In Jordan v. Atlanta Neighborhood Housing Services, Inc., 
320 S.E.2d 215 (Ga. Ct. App. 1984), the lender undertook 
inspection of the construction for the borrower's benefit as 
well as for its own benefit, which resulted in liability for the 
lender when it did so negligently.  Id. at 216-17.  Here, 
neither M&I nor McDonald Title assumed the role of property 
inspector for the benefit of anyone other than M&I.  And 
finally, in Connor v. Great Western Savings & Loan Ass'n, 69 
Cal. 2d 850 (Cal. 1968), the lender wore two hats:  one as a 
developer of a subdivision under construction and the second as 
the financing entity for it.  Id. at 858.  Liability followed 
that broad relationship to the construction.  Id. at 864.  M&I 
did not assume any role except that of the lender; it wore only 
one hat.  
No.  2003AP2108.awb 
 
1 
 
¶53 ANN WALSH BRADLEY, J.   (dissenting).   
I 
¶54 I begin with a simple premise:  our job is to clarify, 
not to confuse the law. 
¶55 Thus, I am perplexed by the majority's approach here.  
It is as though the majority initially wrote the opinion 
limiting liability based on duty.  See majority op., ¶¶20-40.  
Then, recognizing that such an approach is inconsistent with 
Wisconsin law, it reworded some things and tagged on an ending 
that limits liability based on public policy, without deleting 
the initial duty analysis.  See id., ¶¶41-43. 
¶56 Today's majority inexplicably seems to cloud what this 
court recently clarified.  In Gritzner v. Michael R., 2000 WI 
68, ¶24 n.4, 235 Wis. 2d 781, 611 N.W.2d 906, Justice Wilcox, 
writing on behalf of the court, carefully analyzed the prior 
confusion and explained the rudimentary principle that limiting 
liability based on duty is "incorrect under Wisconsin law." 
[S]ome 
Wisconsin 
cases 
have 
examined 
liability 
limitations in terms of duty.  See Estate of Becker v. 
Olson, 218 Wis. 2d 12, 579 N.W.2d 810 (Ct. App. 1998); 
Zelco v. Integrity Mut. Ins. Co., 190 Wis. 2d 74, 527 
N.W.2d 357 (Ct. App. 1994); Erickson v. Prudential 
Property and Cas. Ins. Co., 166 Wis. 2d 82, 479 N.W.2d 
552 (Ct. App. 1991).  This formulation of the analysis 
is incorrect under Wisconsin law.  In Wisconsin, 
everyone has a duty to act with reasonable care. 
Liability for breach of that duty is limited on public 
policy grounds. 
Gritzner, 235 Wis. 2d 781, ¶24 n.4 (emphasis added). 
¶57 Three years after Gritzner, the court reaffirmed this 
passage, noting that the Gritzner court had "aptly" clarified 
the previous confusion.  Alvarado v. Sersch, 2003 WI 55, ¶16 & 
No.  2003AP2108.awb 
 
2 
 
n.2, 262 Wis. 2d 74, 662 N.W.2d 350.  Quoting Gritzner, we again 
stated that limiting liability based on duty "is incorrect under 
Wisconsin law."  Id. (emphasis added). 
¶58 Nevertheless, the 
majority 
seems 
to 
ignore 
this 
rudimentary principle.  In analyzing Hoida's claim, it spends 
approximately 
twenty 
lengthy 
paragraphs 
of 
discussion 
to 
determine, in essence, that M&I and McDonald Title's liability 
is limited because they did not owe certain duties to Hoida.  
See majority op., ¶¶20-40.  Substituting the word "obligation" 
for the word "duty," the majority concludes that neither M&I nor 
McDonald Title had "the obligation to undertake the tasks Hoida 
seeks to impose on M&I.  Furthermore, Hoida cites no Wisconsin 
case that would create the obligations for an agent that it 
ascribes to McDonald Title."  Id., ¶39; see also id., ¶44.  
¶59 This rudimentary principle of Wisconsin negligence 
jurisprudence has been recognized by the court over and over 
again.  In Wisconsin we have rejected the no duty-no liability 
approach and instead limit liability based on the application of 
public policy factors.   See, e.g., Stehlik v. Rhoads, 2002 WI 
73, ¶52, 253 Wis. 2d 477, 645 N.W.2d 889 ("[I]n Wisconsin, 
common law limitations on liability are determined not by 
reference to the absence of a duty, but as a matter of public 
policy.") 
(emphasis 
added); 
Rockweit 
v. 
Senecal, 
197 
Wis. 2d 409, 425, 541 N.W.2d 742 (1995) (Justice Wilcox writing 
for the majority) ("[T]he determination to deny liability is 
essentially one of public policy rather than of duty . . . .") 
(emphasis added); Bowen v. Lumbermens Mut. Cas. Co., 183 
No.  2003AP2108.awb 
 
3 
 
Wis. 2d 627, 644, 517 N.W.2d 432 (1994) ("[T]he doctrine of 
public policy, not the doctrine of duty, limits the scope of the 
defendant's liability.") (emphasis added); see also Alvarado, 
262 Wis. 2d 74, ¶16; Smaxwell v. Bayard, 2004 WI 101, ¶39, 274 
Wis. 2d 278, 682 N.W.2d 923; Physicians Plus Ins. Corp. v. 
Midwest Mut. Ins. Co., 2002 WI 80, ¶¶32, 45, 254 Wis. 2d 77, 646 
N.W.2d 777. 
¶60 With the majority's primary focus on duty, is it sub 
silentio overruling our pronouncements in Stehlik and Rockweit?  
Is it retreating from Bowen, Smaxwell, and Physicians Plus?  Is 
the majority saying that Gritzner was wrong when it said that to 
limit liability based on duty is "incorrect"? 
¶61 I doubt it, but it is hard to know for sure. 
¶62 On the one hand, the majority cites Gritzner with 
approval, but on the other hand it states that courts can limit 
liability in examining the question of "whether a duty exists 
and the scope of such a duty."  Majority op., ¶23 n.12 (emphasis 
added).  In one paragraph it cites favorably to Smaxwell, id., 
¶24, but then in the next paragraph it states that "even if an 
appellate court can directly consider the judicial public policy 
factors to preclude liability," it still must first consider 
whether there is a duty.  Id., ¶25.  It cites Alvarado for this 
latter premise, id., but Alvarado says no such thing. 
¶63 What are courts, lawyers, and litigants to think?  
Does Wisconsin limit liability for negligence based on public 
policy, or based on duty? 
No.  2003AP2108.awb 
 
4 
 
¶64 I thought that this question was answered decades ago 
when Wisconsin rejected the no duty-no liability approach of the 
majority in Palsgraf v. Long Island Railroad Co., 162 N.E. 99 
(1928).  In A. E. Investment Corp. v. Link Builders, Inc., 62 
Wis. 2d 479, 483, 214 N.W.2d 764 (1974), this court set forth 
"[t]he history of this court's rejection of the no duty-no 
liability concept of the majority in Palsgraf. . . ."  Likewise, 
in Smaxwell, we explained that "Wisconsin has rejected the 'no 
duty' approach of the majority opinion in Palsgraf . . . .  As 
we have previously explained:  'In this state all persons have a 
duty of reasonable care to refrain from those acts that 
unreasonably threaten the safety of others. . . .'"  Smaxwell, 
274 Wis. 2d 278, ¶32 (citations omitted). 
¶65 What is problematic about the majority's approach, 
however, is not only that it limits liability based on duty.  
Rather, what is particularly problematic here is the confusion 
that the majority engenders with respect to the development of 
our law.  It purports to undertake an authoritative outline of 
the development of Wisconsin's approach to negligence law that 
is at odds with our legal history.  See majority op., ¶¶23-29.  
After reinterpreting our history, it ultimately employs a 
liability analysis that, in reality, focuses on duty.  Thus, the 
majority opinion in both its re-interpretation of our legal 
history and in its analysis contradicts Wisconsin's historical 
No.  2003AP2108.awb 
 
5 
 
rejection of the no duty-no liability approach of the Palsgraf 
majority.1 
¶66 In focusing primarily on duty, the majority relies 
heavily on Klassa v. Milwaukee Gas Light Co., 273 Wis. 176, 77 
N.W.2d 397 (1956).  Citing that case as authority, it says that 
in Klassa "we reviewed the established concept that in order to 
find negligence, a court must first decide whether the defendant 
                                                 
1 In her dissenting opinion in Alvarado v. Sersch, 2003 WI 
55, 262 Wis. 2d 74, 662 N.W.2d 350, then-Justice Diane Sykes 
discussed the genesis of Wisconsin's approach to negligence.  
After observing that "in Wisconsin, common law limitations on 
liability are determined not by reference to the absence of a 
duty, but as a matter of public policy," id., ¶36 (citation 
omitted), she proceeded to examine the dissenting opinion in 
Palsgraf v. Long Island Railroad Co., 162 N.E. 99 (1928), 
written by Judge Andrews.  Justice Sykes explained: 
What we in Wisconsin refer to as public policy 
limitations on liability, Judge Andrews catalogued as 
factors that govern the court's determination of legal 
or "proximate cause." 
Judge Andrews said that the duty of ordinary care 
is owed to all who might be injured as a consequence 
of an unreasonably risky (i.e., negligent) act or 
omission, but he also said "there is one limitation.  
The damages must be so connected with the negligence 
that the latter may be said to be the proximate cause 
of the former."  Palsgraf, 162 N.E. at 103. The 
negligence, he said, might be "[a] cause, but not the 
proximate cause.  What we [] mean by the word 
'proximate' is, that because of convenience, of public 
policy, 
of 
a 
rough 
sense 
of 
justice, 
the 
law 
arbitrarily declines to trace a series of events 
beyond a certain point.  This is not logic. It is 
practical politics."  Id.  This judicial line-drawing 
relies upon "common sense" and "fair judgment," and 
"endeavor[s] to make a rule in each case that will be 
practical 
and 
in 
keeping 
with 
the 
general 
understanding of mankind."  Id. at 104. 
Alvarado, 262 Wis. 2d 74, ¶¶42-43 (Sykes, J., dissenting). 
No.  2003AP2108.awb 
 
6 
 
owed a duty to the plaintiff."  Majority op., ¶28.  But today's 
majority 
more 
than 
"reviews" 
this 
supposedly 
established 
concept.  The majority seems to revive it. 
¶67 Klassa is recognized as establishing exactly the 
opposite of the no duty-no liability approach that the majority 
now appears to revive.  The court in A. E. Investment, 62 
Wis. 2d at 483-86, recognized that it was in Klassa that 
Wisconsin expressly adopted the position of the dissent in 
Palsgraf, rejecting the no duty-no liability approach of the 
Palsgraf majority.  
¶68 Likewise, the court in Bowen proclaimed Klassa the 
death knell of the duty analysis that the majority here 
seemingly resurrects:  
The Klassa court attempted to harmonize Waube [v. 
Warrington, 216 Wis. 603, 258 N.W. 497 (1935)]'s zone 
of danger rule with the Wisconsin approach to the law 
of negligence by renouncing Palsgraf's concept of 
duty.  Wisconsin law considers conduct to be negligent 
if it involves a foreseeable risk of harm to anyone.  
In Wisconsin, the doctrine of public policy, not the 
doctrine of duty, limits the scope of the defendant's 
liability. . . .  Klassa's public policy formulation 
is a more realistic description of how Wisconsin 
courts decide whether to impose liability upon a 
negligent 
tortfeasor 
than 
the 
foreseeability 
formulation in Palsgraf and Waube. 
Bowen, 183 Wis. 2d at 644-645 (footnotes omitted).   
¶69 In any event, those cases and other cases of even more 
recent vintage (cited above), dispel the interpretative cast 
over Klassa that today's majority appears to advance.  Under 
those cases, it is fundamental that courts in Wisconsin do not 
"first decide whether the defendant owed a duty to the 
No.  2003AP2108.awb 
 
7 
 
plaintiff" as the majority suggests.  See majority op., ¶28.  
Rather, those cases establish that in Wisconsin everyone has a 
duty to exercise ordinary care under the circumstances.2   
¶70 Wisconsin 
follows 
the 
approach 
of 
the 
Palsgraf 
dissent.  In this approach the duty and breach elements are 
integrated into a "more general inquiry which asks simply 
whether the defendant's conduct was 'negligent,' then separately 
address[es] the issue of causation and damages."  Vincent R. 
Johnson & Alan Gunn, Studies in American Tort Law 217 (1994).  
¶71 For example, in an ordinary negligence case, the jury 
is not asked separate questions of whether there exists a duty 
and whether that duty was breached.  Rather, those concepts are 
incorporated into our negligence inquiry.  Thus, the jury is 
asked the question of whether a party was negligent.3 
                                                 
2 Hatleberg v. Norwest Bank Wisconsin, 2005 WI 109, ¶17, 283 
Wis. 2d 234, 700 N.W.2d 15; Smaxwell v. Bayard, 2004 WI 101, 
¶32, 274 Wis. 2d 278, 682 N.W.2d 923; Alvarado, 262 Wis. 2d 74, 
¶¶13-14; Stephenson v. Universal Metrics, Inc., 2002 WI 30, ¶16, 
251 Wis. 2d 171, 641 N.W.2d 158; Gritzner v. Michael R., 2000 WI 
68, ¶20, 235 Wis. 2d 781, 611 N.W.2d 906; Rockweit v. Senecal, 
197 Wis. 2d 409, 419-420, 541 N.W.2d 742 (1995). 
3 Negligence is defined in Wisconsin as follows: 
A person is negligent when [he/she] fails to 
exercise ordinary care.  Ordinary care is the care 
which a reasonable person would use in similar 
circumstances.  A person is not using ordinary care 
and is negligent, if the person, without intending to 
do harm, does something (or fails to do something) 
that a reasonable person would recognize as creating 
an unreasonable risk of injury or damage to a person 
or property. 
No.  2003AP2108.awb 
 
8 
 
¶72 Curiously, the majority criticizes this dissent for 
relying heavily on the Palsgraf dissent, which is the law of 
Wisconsin.  See majority op., ¶23 n.12.  How odd to be 
criticized for relying on what the law is rather than what it is 
not. 
 
¶73 I have no quarrel with the four-element test for 
ordinary negligence as stated by the majority and numerous 
Wisconsin cases.  See id., ¶23.  In Wisconsin, however, the 
existence of a duty is always present in an ordinary negligence 
determination.4 
 This is because we are all held to a duty of 
exercising ordinary care under the circumstances. 
¶74 The majority compounds the confusion and seems to 
corrupt the four-element formulation of the test by breaking the 
duty element into two sub-parts:  "(1) the existence of a duty 
of ordinary care; and, (2) an assessment of what ordinary care 
requires under the circumstances."  Id., ¶27 (emphasis added).  
The majority cites Hatleberg v. Norwest Bank Wisconsin, 2005 WI 
109, ¶¶17-18, 283 Wis. 2d 234, 700 N.W.2d 15, for this two-
pronged formulation of duty, see majority op., ¶27, but the 
                                                                                                                                                             
Wis. JI Civil——1005 ("NEGLIGENCE: DEFINED"); accord Alvarado, 
262 Wis. 2d 74, ¶34 & n.1; Gritzner, 235 Wis. 2d 781, ¶22; 
Morden v. Continental AG, 2000 WI 51, ¶53, 235 Wis. 2d 325, 611 
N.W.2d 659; Rockweit, 197 Wis. 2d at 424 & n.7; Schuster v. St. 
Vincent Hosp., 45 Wis. 2d 135, 141, 172 N.W.2d 421 (1969); 
Osborne v. Montgomery, 203 Wis. 223, 242-43, 234 N.W. 372 
(1931). 
4 This case is pled as and presents a claim of ordinary 
negligence.  No special relationship is alleged that would 
impose a heightened duty and take this case out of the normal 
negligence analysis.  See A. E. Inv. Corp. v. Link Builders, 
Inc., 62 Wis. 2d 479, 486, 214 N.W.2d 764 (1974). 
No.  2003AP2108.awb 
 
9 
 
cited portions of Hatleberg do not support this two-pronged 
approach.  Why today's majority perceives a need to divide the 
duty element into two further elements is unclear. 
¶75 Also 
confusing 
is 
the 
majority's 
repeated 
characterization of Hoida's cause of action as a "new" type of 
claim.  See majority op., ¶26 (referring to "this new claim that 
Hoida seeks to develop"); ¶48 ("if this court were to develop a 
new lender liability claim . . . .").  What new type of claim is 
the majority talking about?  There is no dispute that Hoida pled 
a claim for ordinary negligence.  Perhaps today's majority 
opinion applies only to such a "lender liability claim"?  
Majority 
op., 
¶48. 
 
I 
am 
uncertain. 
 
The 
majority's 
characterization of Hoida's ordinary negligence as some "new" 
type of claim seems to be without support. 
¶76 In addition to characterizing Hoida's claim as a "new" 
type of claim, the majority also unexpectedly creates a unique 
pleading requirement for this new claim.  Contrary to our 
general notice pleading requirements, the majority imposes a new 
mandate for particularity:  "In the future, when attempting to 
plead lender liability based on negligently failing to undertake 
certain tasks, a plaintiff must allege why the duty of ordinary 
care of the lender or disbursing agent includes the obligation 
to affirmatively undertake the tasks that plaintiff claims the 
lender or disbursing agent reasonably failed to perform under 
the circumstances."  Id., ¶46. 
¶77 I am not sure what will be deemed sufficient under the 
majority's new mandate.  Maybe it means here that the plaintiffs 
No.  2003AP2108.awb 
 
10 
 
should have pled that: "the duty to get lien waivers is part of 
the duty to exercise ordinary care under the circumstances 
because the evidence reveals that it is the standard in the 
industry to get such lien waivers."  Even so, that is exactly 
what the evidence here seems to reveal.5  Yet, the majority 
apparently concludes as a matter of law that the standard in the 
industry is not part of the duty to exercise ordinary care.  
Therefore, such a pleading would have been insufficient.  It 
seems to me that this new requirement is nothing more than a 
trap for the unwary. 
¶78 I return to the simple premise that our job is to 
clarify, not to confuse the law.  As we explained in Gritzner, 
the "no duty" approach to limiting liability used by the 
majority today is plainly "incorrect under Wisconsin law."  
Gritzner, 235 Wis. 2d 781, ¶24 n.4. 
¶79 What reason could today's majority have for seeming to 
cloud what this court has repeatedly clarified?  Why does the 
majority assert a reinterpretive cast over Wisconsin's approach 
to negligence law that is at odds with our legal history?   
¶80 Perhaps the answer lies in the confusion observed in 
Mohr v. St. Paul Fire & Marine Insurance Co., 2004 WI App 5, 
¶40, 269 Wis. 2d 302, 674 N.W.2d 576 (Ct. App. 2003), review 
denied, 2004 WI 50, 271 Wis. 2d 109, 679 N.W.2d 544:  "Although 
courts have sometimes used the language that a defendant had 'no 
duty' to the injured person, they are in reality making a 
                                                 
5 See Part II of this dissent below. 
No.  2003AP2108.awb 
 
11 
 
decision that there should be no liability as a matter of public 
policy." 
¶81 I ultimately conclude that it cannot be discerned what 
today's majority opinion stands for in Wisconsin negligence law.  
I suspect that other readers of the majority opinion will reach 
the same conclusion. 
II 
¶82 In order to determine whether liability for negligence 
should be limited, Wisconsin courts apply six public policy 
considerations, asking whether: 
(1) the injury is too remote from the negligence; (2) 
the injury is too wholly out of proportion to the 
tortfeasor's culpability; (3) in retrospect it appears 
too highly extraordinary that the negligence should 
have resulted in the harm; (4) allowing recovery would 
place too unreasonable a burden on the tortfeasor; (5) 
allowing recovery would be too likely to open the way 
for fraudulent claims; [or] (6) allowing recovery 
would enter a field that has no sensible or just 
stopping point. 
Gritzner, 235 Wis. 2d 781, ¶27. 
¶83 "In most cases, the better practice is to submit the 
case to the jury before determining whether the public policy 
considerations preclude liability."  Alvarado, 262 Wis. 2d 74, 
¶18.  "Only in those cases where the facts are simple to 
ascertain and the public policy questions have been fully 
presented may a court review public policy and preclude 
liability 
before 
trial." 
 
Id.; 
see 
also 
Gritzner, 
235 
Wis. 2d 781, ¶26; Sawyer v. Midelfort, 227 Wis. 2d 124, 141, 595 
N.W.2d 423 (1999); Bowen, 183 Wis. 2d at 655; Schuster v. 
Altenberg, 144 Wis. 2d 223, 241, 424 N.W.2d 159 (1988); Coffey 
No.  2003AP2108.awb 
 
12 
 
v. City of Milwaukee, 74 Wis. 2d 526, 542, 247 N.W.2d 132 
(1976). 
¶84 Here, the facts are not so simple and the conclusions 
regarding negligence are mixed.  The majority ignores, for 
example, that the failure to obtain lien waivers was a violation 
of M&I's own policies.  Similarly, it downplays testimony that 
lien waivers are customarily obtained before the funding of 
subsequent draw requests.  See majority op., ¶20.   
¶85 In stark contrast to the majority's determination that 
M&I and McDonald Title were not negligent as a matter of law, 
the court of appeals in this case concluded the opposite.  It 
concluded that M&I and McDonald were negligent as a matter of 
law: 
Here, the act (or failure to act) was the failure to 
procure lien waivers.  M&I and McDonald witnesses 
stated that obtaining lien waivers was the industry 
standard, and that this was the usual practice of M&I 
and 
McDonald. 
 
Domaszek 
averred 
that 
it 
was 
inconsistent with M&I's policy to pay draws when lien 
waivers had not been obtained on previous draws.  
Robert McDonald averred that in Portage County, lien 
waivers are customarily obtained by disbursing agents 
before the funding of the next draw request.  McDonald 
also averred that the guidelines and procedures of the 
insurance manual governing the title insurance issued 
for the project stated that "we should make every 
effort to obtain [lien] waivers in full wherever 
possible."  It was foreseeable that the failure to 
obtain 
lien 
waivers 
could 
harm 
subcontractors, 
including Hoida. 
Hoida, Inc. v. M&I Midstate Bank, 2004 WI App 191, ¶14, 276 
Wis. 2d 705, 688 N.W.2d 691. 
¶86 One would think that the court of appeals' conclusion 
that M&I and McDonald were negligent as a matter of law should 
No.  2003AP2108.awb 
 
13 
 
at least cause the majority to pause.  When the majority 
determines to the contrary that M&I and McDonald cannot be 
negligent as a matter of law, what the majority should be 
pausing to ask is whether a reasonable jury could conclude that 
M&I or McDonald Title "[did] something (or fail[ed] to do 
something) that a reasonable person would recognize as creating 
an unreasonable risk of injury or damage."   Wis. JI Civil——1005 
("NEGLIGENCE: 
DEFINED"). 
 
Asking 
the 
proper 
question, 
I 
determine that, at a minimum, a question of fact remains as to 
whether M&I and McDonald Title were negligent. 
¶87 Nevertheless, having concluded that the defendants are 
not negligent as a matter of law, the majority applies one of 
the 
six 
public 
policy 
considerations, 
essentially 
as 
an 
afterthought to its liability-limiting "duty" analysis.  By 
failing to recognize the rudimentary principle that liability 
for negligence is limited by public policy considerations, not 
duty, the majority front loads its negligence analysis focusing 
on duty.  Thus, it avoids any real discussion of those public 
policy considerations and of whether it is too soon to apply 
them. 
¶88 The majority does not explain why it departs from the 
better practice of submitting the case to the jury before 
determining whether the six public policy considerations should 
preclude liability.  It does not explain why this is one of the 
unusual cases where the facts are simple to ascertain and the 
public policy questions have been fully presented. 
No.  2003AP2108.awb 
 
14 
 
¶89 In applying only one of the six public policy 
considerations, the majority concludes that permitting recovery 
would place "too unreasonable a burden on McDonald Title, who 
acted solely at the direction of M&I."  Majority op., ¶43.6  The 
majority apparently believes that it would be unreasonable to 
require that McDonald Title "collect lien waivers from all 
subcontractors 
and 
materialmen" 
because 
"[t]racking 
who 
purchased what and when would be a never-ending task."  Id.  
¶90 Such a belief is unpersuasive here.  As already 
discussed, there was evidence that both M&I's policies and 
industry standards required the collection of lien waivers.  
Thus, as the evidence stands now——particularly if, following 
standard summary judgment methodology, all reasonable inferences 
are construed in favor of Hoida——the record hardly justifies a 
conclusion that requiring the collection of lien waivers places 
too unreasonable a burden on either McDonald Title or M&I. 
¶91 In addition, as the facts stand now, there is serious 
question as to whether Hoida's injury is too remote from any 
negligence, whether it is wholly out of proportion to the 
defendants' culpability, or whether in retrospect it appears too 
highly extraordinary that their negligence should have resulted 
in the harm that Hoida suffered.  Likewise, nothing in the 
record at this stage of the proceedings conclusively suggests 
that allowing recovery would be likely to open the way for 
                                                 
6 The majority does not explain why permitting recovery 
would place too unreasonable a burden on M&I. 
No.  2003AP2108.awb 
 
15 
 
fraudulent claims or would enter a field that has no sensible or 
just stopping point. 
¶92 As referenced above, it is worth repeating that the 
parties' arguments reflect significant factual disagreements, 
including a key disagreement over the precise role of McDonald 
Title.  The parties dispute whether McDonald Title was a 
"construction 
supervisor" 
or 
"disbursing agent," 
and 
what 
obligations flow from one role or the other.  In my view, the 
nature of McDonald Title's role is plainly relevant to the 
proper application of the public policy considerations. 
¶93 Consequently, I conclude that it is too early to apply 
the public policy considerations to limit liability at this 
stage of the proceedings.  In doing so, I follow the better 
practice of submitting the case to the jury before determining 
whether the six public policy considerations should preclude 
liability.  Here, the facts are not presently simple to 
ascertain.  The public policy questions are not sufficiently 
presented for this court to preclude liability at this time.   
III 
¶94 In sum, I cannot join the majority because it 
erroneously cuts off liability for potential negligence using 
the concept of duty rather than public policy.  In doing so, it 
seems to cloud one of Wisconsin's most rudimentary negligence 
principles.  Unlike today's confusing majority opinion, I apply 
that principle and conclude that it is too early to apply the 
public policy considerations to limit M&I's or McDonald Title's 
liability for their potential negligence.  I would therefore 
No.  2003AP2108.awb 
 
16 
 
reverse the court of appeals and remand this case to the circuit 
court for further proceedings.  Accordingly, I respectfully 
dissent. 
¶95 I am authorized to state that JUSTICE LOUIS B. BUTLER, 
JR. joins this opinion. 
 
 
No.  2003AP2108.awb 
 
1