Court Opinion

ID: 9883402
Source: CourtListenerOpinion
Date Created: 2023-10-06 01:41:59.968943+00
Date Added: 2024-06-11T07:48:15.995366
License: Public Domain

ANN WALSH BRADLEY, J.
¶ 68. (dissenting). "Like the ever-expanding, all-consuming alien life form portrayed in the 1958 B-movie classic The Blob, the economic loss doctrine seems to be a swelling globule on the legal landscape of this state." Grams v. Milk Prods., Inc., 2005 WI 112, ¶ 57, 283 Wis. 2d 511, 699 N.W.2d 167 (Abrahamson, C. J., dissenting).
¶ 69. These words ring as true now as they did a year ago. The majority of this court once again expands the already-swollen body of economic loss doctrine jurisprudence in Wisconsin. That jurisprudence continues to devour unsuspecting tort claims that it finds in its path. Like the Blob, the more it eats, the more it grows.
¶ 70. I am hardly alone in my concern for the unbridled expansion of the economic loss doctrine in this state. Recently, legal commentary has critiqued Wisconsin's approach to the development of the economic loss doctrine.
¶ 71. For example, in an award-winning article highlighting the instability in the law that this court's economic loss doctrine cases have engendered, the authors observe: "Over the last decade... the doctrine's application has been radically expanded, narrowing and in some cases effectively eliminating a variety of common-law tort causes of action." *449R. Thomas Cane & Sheila Sullivan, More Litigation to Come: Exceptions to the Economic Loss Doctrine, 78 Wis. Lawyer 10, 10 (Nov. 2005).1
¶ 72. At oral argument, counsel for 1325 advised that Wisconsin leads the nation in the number of cases involving the economic loss doctrine, far outpacing almost all other jurisdictions:
[T]here's been an awful lot of them. A tremendous number of them. In fact, I did a [] search just before I came here, putting in the term "economic loss doctrine” in all the states and the state with the most case law by far is this state. By far. I mean, you outrank New York, you outrank California, Texas. I mean, Florida comes close....
See also John J. Laubmeier, Demystifying Wisconsin's Economic Loss Doctrine, 2005 Wis. L. Rev. 225, 225 ("The doctrine ... was at issue in the Wisconsin Court of Appeals or the Wisconsin Supreme Court forty-seven times between 2000 and 2004.").
¶ 73. Only Florida rivals Wisconsin in its use of the economic loss doctrine.2 The Supreme Court of Florida, however, recently reversed course, retreating *450from an expansive approach to the doctrine. Acknowledging error, it now endorses a return to the principles underlying the doctrine's origins.3
¶ 74. Nonetheless, a majority of this court demonstrates — yet again — its willingness to continue to expand the economic loss doctrine far beyond its principled origins.4 The majority of this court is increasingly out of step with any sensible approach to the doctrine that can be justified based on its origins in commercial products liability.5 Accordingly, I respectfully dissent.
*451H-I
¶ 75. Today the majority applies the economic loss doctrine based on a contract for "construction management services" to "substantially renovat[e] an existing industrial warehouse into a 42-unit condominium building with attached parking garages." Majority op., ¶¶ 2, 5, 7. (Emphasis added.) Its decision purports to be grounded in the "predominant purpose" test that this court adopted in Linden v. Cascade Stone Co., 2005 WI 113, 283 Wis. 2d 606, 699 N.W.2d 189, a case in which I dissented.
¶ 76. I continue to believe that the court's decision in Linden was misguided. In Linden, the same majority of the court applied this "predominant purpose" test to a contract for the construction of a new home. Linden, 283 Wis. 2d 606, ¶¶ 8-11. A fundamental problem with Linden was that the majority used one party's contract to bar the tort claims of another with whom there was no contract. Id., ¶ 36 (Bradley, J., dissenting).6
¶ 77. Now the majority makes apparent that Linden has another fundamental problem. The test from *452Linden can be difficult to apply and is a malleable means for the majority to achieve its desired economic loss doctrine ends.
¶ 78. Even granting the majority the predominant purpose test, I would still not reach the result the majority reaches today. I would decline to apply the economic loss doctrine because I would conclude that the contract was predominantly for services.
II
¶ 79. The majority's continued expansion of the economic loss doctrine is signaled by its initial focus on a number of "preliminary considerations." Majority op., ¶ 29. Many of these considerations have nothing to do with whether a contract is one for a product, one for services, a mixed contract that was predominantly for a product, or a mixed contract that was predominantly for services. The considerations include the "sophistication of the parties," the "commercial nature of the transaction," and the "representation of the parties by counsel." Id., ¶¶ 28-29. The majority appears to conclude that, given the presence of these considerations here, this case is "tailor made" for the economic loss doctrine. Id., ¶ 28.
¶ 80. That the majority is expanding the doctrine is then made clear by its selective application of the Linden factors to the facts of this case. Under Linden, the predominant purpose test is a fact-intensive one, requiring a "totality of the circumstances" inquiry into "both quantitatively objective and subjective factors." Linden, 283 Wis. 2d 606, ¶ 18. In applying the test, the court is to consider these factors:
*453(1) the language of the contract;
(2) the nature of the business of the supplier;
(3) the intrinsic worth of the materials;
(4) the circumstances of the parties; and
(5) the primary objective they hoped to achieve by entering into the contract.
Id., ¶ 21. Let us examine the majority's application of these factors.
¶ 81. In applying the first factor, the majority acknowledges that "under the plain language of the contract, 'The Project' was the '[rjenovation of a warehouse into a 42-unit condominium and construction of adjacent parking garages." Majority op., ¶ 46. It concludes that the predominant purpose of the contract was either to "construct" or to "provide" a "condominium complex." Id., ¶¶ 5, 50. The majority is apparently confident that this type of renovation of an existing structure constitutes a product, not a service. Under the majority's logic I wonder when, if ever, a contract for the renovation of an existing structure will be something other than a contract that is predominantly for a product.
¶ 82. The majority then analyzes the "pricing of the contract," the "process of bidding" for the contract, and "1325's understanding of the contract," selectively focusing on portions of the record that arguably support its analysis. Id., ¶¶ 47-49. These may be relevant considerations in a predominant purposes analysis under Linden. However, the majority opinion leaves unclear, at best, whether it has applied the "nature of the business of the supplier" factor or the "the intrinsic worth of the materials" factor.
¶ 83. What is the nature of T-3's business? The majority does not tell us.
*454¶ 84. What is the intrinsic worth of the materials used in the renovation project? The majority does not say.
¶ 85. Similarly, the majority gives short shrift to the "circumstances of the parties" factor, the amorphous catch-all factor under Linden.
¶ 86. Indeed, despite the fact-intensive nature of the Linden test, and despite the voluminous record in this case, the majority needs only four modest paragraphs to complete its totality of the circumstances inquiry under Linden. See majority op., ¶¶ 46-49. This is hardly surprising because if the majority faithfully applied all the Linden factors, then it would be unable to find for T-3. Instead, the majority selectively applies the highly malleable Linden factors to achieve its intended result.
¶ 87. As revealed by a footnote in the majority opinion, the majority may be re-interpreting the Linden test. Lest the reader think I exaggerate, I will allow the majority's opinion to speak for itself:
In Linden, we collected these factors from other jurisdictions as examples of what other courts had looked at in determining the predominant purpose of a contract. However, we focused our attention primarily on two factors — the primary objective the parties hoped to achieve and the fixed contract price — in concluding that the contract was primarily for the construction of a house. Linden, 283 Wis. 2d 606, ¶ 25.
Majority op., ¶ 42 n.11.
¶ 88. Is the majority now suggesting that Linden is really a two-factor test? Litigants in Wisconsin will be left to guess until the next time the majority has the opportunity to re-interpret Linden.
¶ 89. It should not be overlooked that this case comes to us on summary judgment. Before applying the *455economic loss doctrine, the majority should be reviewing the facts presented in the light most favorable to 1325. See majority op., ¶ 22. What does the majority do instead? It selects facts from the record that are favorable to T-3, seeming to construe reasonable inferences in the wrong direction. In this way, the majority concludes as a matter of law that the predominant purpose of 1325's contract with T-3 was to provide a product.7
¶ 90. For example, the majority is highly persuaded by T-3's argument that only $176,000 of the nearly $6.1 million contract price was for "construction management services." Majority op., ¶ 47. The rest, T-3 argues, was for "physical improvements to the building." In accepting this argument, the majority ignores the most reasonable inference: that the cost of these "improvements" must have included the extensive services necessary to make them.
¶ 91. The list of "improvements" to which the majority is referring includes the following:
General Conditions $290,000.00
Sitework $250,000.00
Finishes $1,300,000.00
Specialties $93,454.00
Contingency $200,000.00
¶ 92. Is the only reasonable inference on the record before us that the $1.3 million for "Finishes” was a cost primarily for a product? This is the type of question the majority dare not answer.
*456¶ 93. Unlike the majority, the unanimous court of appeals provided a fair and more balanced description of the contract in this case: "Essentially, T-3 was to provide professional construction management services and hire subcontractors to renovate the building and complete the project." 1325 North Van Buren, LLC v. T-3 Group, Ltd., 2005 WI App 121, ¶ 3, 284 Wis. 2d 387, 701 N.W.2d 13.
¶ 94. Based on its description of the contract, the court of appeals declined to apply the predominant purpose test, rejecting T-3's argument that the contract could be characterized even as mixed. Id., ¶ 20 n.6. It concluded that the contract was one for services and not for a product. Id., ¶ 14.8 The majority's conclusion stands in stark contrast.
¶ 95. In the end, the majority's initial focus on considerations that apply to all commercial parties and its faint-hearted application of the Linden factors demonstrate two things: the difficulty in applying the Linden test and the majority's willingness to use the test's malleability in order to further expand the economic loss doctrine beyond the doctrine's principled origins. Reaching well beyond what Linden dictates, it now applies the economic loss doctrine to a contract that is predominantly for a service.
HH HH HH
¶ 96. One year ago, in Linden, I lamented:
Perhaps a day will come when this court will rein in this recent evolution of the economic loss doctrine and *457'return to the doctrine's principled roots.'... Unfortunately ... that day is not today.
Linden, 283 Wis. 2d 606, ¶ 65 (Bradley, J., dissenting) (footnote omitted). Sadly for Wisconsin, that day is not today either.
¶ 97. I am authorized to state that Chief Justice SHIRLEY S. ABRAHAMSON and Justice LOUIS B. BUTLER, JR. join this dissent.

 For discussion and criticism of the expansion of the economic loss doctrine in jurisdictions in addition to Wisconsin, see Daniel Rapaport, et al., Tort Killer: The Applicability of the Economic Loss Doctrine to Service Contracts, 20 Me. B. J. 100 (Summer 2005); R. Joseph Barton, Drowning in a Sea of Contract: Application of the Economic Loss Rule to Fraud and Negligent Misrepresentation Claims, 41 Wm. & Mary L. Rev. 1789 (May 2000); Paul J. Schwiep, The Economic Loss Rule Outbreak: The Monster that Ate Commercial Torts, 69 Fla. B. J. 34 (Nov. 1995).

 My electronic search yielded results similar to those of 1325's counsel. In my search, only Florida topped Wisconsin in number of cases citing "economic loss doctrine" or "economic loss rule."

 More specifically, the Supreme Court of Florida explained as follows in Moransais v. Heathman, 744 So. 2d 973, 983 (Fla. 1999):
Today, we again emphasize that by recognizing that the economic loss rule may have some genuine, but limited, value in our damages law, we never intended to bar well-established common law causes of action, such as those for neglect in providing professional services. Rather, the rule was primarily intended to limit actions in the product liability context, and its application should generally be limited to those contexts or situations where the policy considerations are substantially identical to those underlying the product liability-type analysis.
Accord Indemnity Ins. Co. v. American Aviation, Inc., 891 So. 2d 532, 542 (Fla. 2004) ("We now agree that the economic loss rule should be expressly limited.").

 See also, e.g., Linden v. Cascade Stone Co., 2005 WI 113, ¶ 37, 283 Wis. 2d 606, 699 N.W.2d 189 (Bradley, J., dissenting) ("[T]he majority has once again expanded the economic loss doctrine well beyond its principled origins of products liability."); Grams v. Milk Prods., Inc., 2005 WI 112, ¶ 58, 283 Wis. 2d 511, 699 N.W.2d 167 (Abrahamson, C. J., dissenting) ("Courtesy of this majority opinion and other opinions of this court, this legal doctrine with modest, or even 'obscure' beginnings, is fast growing.") (footnotes omitted).

 See Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 148 Wis. 2d 910, 921, 437 N.W.2d 213 (1989) (holding *451that "a commercial purchaser of a product cannot recover solely economic losses from the manufacturer under negligence or strict liability theories, particularly. . . where the warranty given by the manufacturer specifically precludes the recovery of such damages"); see also R. Thomas Cane & Sheila Sullivan, The Future of the Economic Loss Doctrine in Wisconsin, 78 Wis. Lawyer 13,14 (May 2005) ("The economic loss doctrine is, in its purest form, a judicially created doctrine that bars commercial purchasers of goods from recovering solely economic losses from manufacturers under tort theory.").

 Cf. Trinity Lutheran Church v. Dorschner Excavating, Inc., 2006 WI App 22, ¶¶ 19-20, 289 Wis.2d 252, 710 N.W.2d 680 (holding that the economic loss doctrine does not apply *452when there was "no contractual relationship of any kind between two parties" and distinguishing Linden as a case involving "vertical privity").

 This is not the first time that the same majority of this court has jettisoned the requirements of summary judgment methodology as a means to achieve its economic loss doctrine ends. See Grams, 283 Wis. 2d 511, ¶¶ 92-97 (Abrahamson, C. J., dissenting).

 The court of appeals issued its decision before this court issued Linden. It declined, however, to reconsider its decision in light of Linden.