Court Opinion

ID: 9384607
Source: CourtListenerOpinion
Date Created: 2023-04-04 14:11:48.45719+00
Date Added: 2024-06-11T17:17:55.119142
License: Public Domain

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. Martens

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.
    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.

                                     2
                                                                     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.                                                          FILED
Marcus Keidl and Russell K. Berg d/b/a                        APR 4, 2023
Intervest Inspections,
                                                                Sheila T. Reiff
            Defendants,                                      Clerk of Supreme Court

Amy Keidl a/k/a Amy Jo Weyker,

            Defendant-Respondent-Petitioner.

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

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

       The Honorable Todd K. Martens of the Washington County
       1

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.

       The complaint also lists Hanna Pagoudis, Louis Pagoudis's
       2

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.

       The plaintiffs also brought a negligence claim against the
       3

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.

                                         2
                                                                            No.   2020AP225

     ¶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.

                                                3
                                                                         No.    2020AP225

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.

      5We 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.
      6We 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.

                                             4
                                                                              No.       2020AP225

       ¶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

       All subsequent references to the Wisconsin Statutes are to
       7

the 2019-20 version unless otherwise indicated.

                                                5
                                                                                No.    2020AP225

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
                                                   6
                                                                         No.    2020AP225

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

                                               7
                                                                  No.   2020AP225

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).

      8Wis. 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.

                                         8
                                                                           No.    2020AP225

      ¶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.

      9The 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.

                                             9
                                                                        No.    2020AP225

                                       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

       We note that since the appeal of this action, Wis. Stat.
      10

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.

                                            10
                                                                       No.    2020AP225

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

       LLCs may be either member-managed or manager-managed and
      11

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.

                                         11
                                                                      No.    2020AP225

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
                                         12
                                                                          No.    2020AP225

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

       The plaintiffs presented this scenario during oral
       12

arguments, claiming that Pagoudis was acting as an agent of Sead
LLC when signing the offer to purchase and that no assignment
was made.

                                               13
                                                                  No.     2020AP225

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.

                                          14
                                                                            No.     2020AP225

       ¶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.

       The complaint alleges that as part of the contract for
       13

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.

                                             15
                                                                          No.    2020AP225

       ¶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
                                         16
                                                                                  No.     2020AP225

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
                                              17
                                                                          No.     2020AP225

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

       Privity of contract is defined as the "relationship
      14

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).

                                           18
                                                                         No.   2020AP225

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

       Although representations to a potential real estate
      15

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.

                                            19
                                                                           No.   2020AP225

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.

       We do not decide whether Restatement § 533 may be adopted
      16

by a future court under different factual allegations.

                                           20
                                                                  No.     2020AP225

§ 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).

                                       21
                                                                 No.   2020AP225

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.

                                    22
                                                                       No.   2020AP225.akz

    ¶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."'"

                                            1
                                                                             No.    2020AP225.akz

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

       The plaintiffs also filed a second amended complaint. We
       1

review only the first amended complaint because the plaintiffs
appealed from the order dismissing that complaint.

                                                 2
                                                                            No.   2020AP225.akz

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

       We may accept such concessions for purposes of resolving a
       2

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).
                                                3
                                                                      No.   2020AP225.akz

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.").
                                4
                                                   No.   2020AP225.akz

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.

                                5
                                                                             No.   2020AP225.pdr

       ¶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.

       Essentially, Pagoudis's claim is
       2                                                             for     fraud       in     the
inducement based on those alleged torts.

                                                1
                                                                            No.    2020AP225.pdr

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.

       Id., RECR attached to the Amended Complaint has an unclear
       6

date of receipt by Pagoudis.

                                             2
                                                            No.   2020AP225.pdr

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.
                                       3
                                                           No.   2020AP225.pdr

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

     15Id., ¶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.
     19Pagoudis v. Keidl, 2021 WI App. 56, ¶2, 399 Wis. 2d 75,
963 N.W.2d 803.
     20   Id.

                                       4
                                                                  No.    2020AP225.pdr

                                 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.
                               5
                                                                  No.    2020AP225.pdr

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).

                                         6
                                                                 No.    2020AP225.pdr

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

       The parties seem to agree that Pagoudis contracted to
       22

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.

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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.

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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.

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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

       Without the assignment from Pagoudis to Sead, it is also
       26

not possible to determine whether it was "unqualified" in regard
to contract rights.
       27   Amended Complaint, ¶3.

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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.

       The type of injury alleged would not produce duplicative
      29

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.

                                           11
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       ¶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.

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    ¶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,
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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

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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.

      1The 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").

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