economic loss doctrine in Wisconsin

2021The economic loss doctrine is inapplicable to the Millers’ claims for breach of the Easement because there is no product or sales 9 Further, the record shows that the appeal and the cross-appeal were timely filed within the statutory rules to initiate an appeal after the trial court issued its final order. 9 No. 2019AP1248 contract at issue.10 See Daanen & Janssen, Inc. v. Cedarapids, Inc., 216 Wis. 2d 395, 402 , 573 N.W.2d 842 (1998).

2021The economic loss doctrine is inapplicable to the Millers’ claims for breach of the Easement because there is no product or sales 9 Further, the record shows that the appeal and the cross-appeal were timely filed within the statutory rules to initiate an appeal after the trial court issued its final order. 9 No. 2019AP1248 contract at issue.10 See Daanen & Janssen, Inc. v. Cedarapids, Inc., 216 Wis. 2d 395, 402 , 573 N.W.2d 842 (1998).

2024Under the integrated systems limitation, “[d]amage by a defective component of an integrated system to either the system as a whole or other system components is not damage to ‘other property’ [that would preclude] the application of the economic loss doctrine.” Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 246, 249 , 593 N.W.2d 445 (1999) (citation omitted).

2024Under the integrated systems limitation, “[d]amage by a defective component of an integrated system to either the system as a whole or other system components is not damage to ‘other property’ [that would preclude] the application of the economic loss doctrine.” Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 246, 249 , 593 N.W.2d 445 (1999) (citation omitted).

2024Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870 (1986), for the proposition that “the failure of the purchaser to receive the benefit of its bargain” is “traditionally the core concern of contract law”). 18 The economic loss doctrine originated in the context of defective product claims, see Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 148 Wis. 2d 910, 911 , 437 N.W.2d 213 (1989), and, over time, “Wisconsin courts have gradually enlarged the doctrine from its root to apply in other contexts,” Van Lare v. Vogt, Inc., 2004 WI 110, ¶19 , 274 Wis. 2d 631 , 683 N.W.2d 46 .

2023See East River S.S., 476 U.S. at 866 - 68. ¶84 In commenting on Wausau Tile, Haley asserts that, "[a]s the cement was an integral component of the finished blocks, the cement had not damaged any 'other property,' and the economic-loss doctrine applied." Haley, 866 F.3d at 828 .

2024The economic loss doctrine is a judicially created rule that precludes contracting parties from asserting tort causes of action as a means to recover “economic or commercial losses associated with the contract relationship.” Kaloti Enters., Inc. v. Kellogg Sales Co., 2005 WI 111, ¶27 , 283 Wis. 2d 555 , 699 N.W.2d 205 (citations omitted). ¶48 For purposes of the doctrine, recovery for “economic loss” means the recovery of damages that a party incurs as the result of “a product failing in its intended use, or failing to live up to a contracting party’s expectations.” Id., ¶29 25 No. 2023AP778 (

2024The economic loss doctrine is a judicially created rule that precludes contracting parties from asserting tort causes of action as a means to recover “economic or commercial losses associated with the contract relationship.” Kaloti Enters., Inc. v. Kellogg Sales Co., 2005 WI 111, ¶27 , 283 Wis. 2d 555 , 699 N.W.2d 205 (citations omitted). ¶48 For purposes of the doctrine, recovery for “economic loss” means the recovery of damages that a party incurs as the result of “a product failing in its intended use, or failing to live up to a contracting party’s expectations.” Id., ¶29 25 No. 2023AP778 (

2024Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870 (1986), for the proposition that “the failure of the purchaser to receive the benefit of its bargain” is “traditionally the core concern of contract law”). 18 The economic loss doctrine originated in the context of defective product claims, see Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 148 Wis. 2d 910, 911 , 437 N.W.2d 213 (1989), and, over time, “Wisconsin courts have gradually enlarged the doctrine from its root to apply in other contexts,” Van Lare v. Vogt, Inc., 2004 WI 110, ¶19 , 274 Wis. 2d 631 , 683 N.W.2d 46 .

2024Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870 (1986), for the proposition that “the failure of the purchaser to receive the benefit of its bargain” is “traditionally the core concern of contract law”). 18 The economic loss doctrine originated in the context of defective product claims, see Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 148 Wis. 2d 910, 911 , 437 N.W.2d 213 (1989), and, over time, “Wisconsin courts have gradually enlarged the doctrine from its root to apply in other contexts,” Van Lare v. Vogt, Inc., 2004 WI 110, ¶19 , 274 Wis. 2d 631 , 683 N.W.2d 46 .

2025Rather, those cases considered the predominant purpose of the contracts at issue—whether the contract was predominantly one for goods or one for services—to determine the applicability of the economic loss doctrine, see Linden, 283 Wis. 2d 606, ¶¶4-10 , or whether the “mixed contract for goods and services is a sale of goods” for the purposes of applying the Uniform Commercial Code, see Van Sistine, 95 Wis. 2d at 684 . 22 LIRC makes much of WIS.

2024In a situation where there is a dispute over whether a contract is primarily for services or primarily for product, we apply the “predominant purpose test” to determine whether the contract is “predominantly a sale of a product and therefore subject to the economic loss doctrine, or predominantly a contract for services and therefore not subject to the economic loss doctrine.” Linden v. Cascade Stone Co., 2005 WI 113, ¶8 , 283 Wis. 2d 606 , 699 N.W.2d 189 (citations omitted).

2009On the December 2004 report, the Patels left blank the statement on the form that they had knowledge that remodeling was done that might increase the property's assessed value. 3 All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted. 4 Shister also claimed $3380 in damages related to his purchase of a new vehicle in order to comply with undisclosed subdivision rules; however, he does not pursue that claim on leave to appeal. 5 Kailin v. Armstrong, 2002 WI App 70, ¶¶ 43-44 , 252 Wis. 2d 676 , 643 N.W.2d 132 (the economic loss doctrine does not apply to fraud

2009On the December 2004 report, the Patels left blank the statement on the form that they had knowledge that remodeling was done that might increase the property's assessed value. 3 All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted. 4 Shister also claimed $3380 in damages related to his purchase of a new vehicle in order to comply with undisclosed subdivision rules; however, he does not pursue that claim on leave to appeal. 5 Kailin v. Armstrong, 2002 WI App 70, ¶¶ 43-44 , 252 Wis. 2d 676 , 643 N.W.2d 132 (the economic loss doctrine does not apply to fraud

2022Inc., 2004 WI 139, ¶52 , 276 Wis. 2d 361 , 688 N.W.2d 462 . ¶61 In its primary cross-appeal brief, Carved Stone acknowledges the Waschers’ argument that the economic loss doctrine does not apply to the Waschers’ negligence claim stemming from Carved Stone’s later repair work because that work was performed pursuant to a contract for services.

2022Inc., 2004 WI 139, ¶52 , 276 Wis. 2d 361 , 688 N.W.2d 462 . ¶61 In its primary cross-appeal brief, Carved Stone acknowledges the Waschers’ argument that the economic loss doctrine does not apply to the Waschers’ negligence claim stemming from Carved Stone’s later repair work because that work was performed pursuant to a contract for services.

2020Huron Tool and Eng'g Co. v. Precision Consulting Servs., Inc., 532 N.W.2d 541, 545 (Mich. Ct. App. 1995). ¶35 Pursuant to this exception, "a fraud in the inducement claim is not barred by the economic loss doctrine where the fraud is extraneous to, rather than interwoven with, the contract." 11 No. 2017AP2361 Kaloti Enters., 283 Wis. 2d 555, ¶42 (citations and internal quotation omitted).

2007We held that "a fraud in the inducement claim is not barred by the economic loss doctrine 'where the fraud is extraneous to, rather than interwoven with, the contract.'" Id. (quoting Digicorp, 262 Wis. 2d 32, ¶ 47 , and citing Huron Tool & Eng'g Co. v. Precision Consulting Servs., Inc., 532 N.W.2d 541, 545 (Mich. Ct. App. 1995)).

2006However, when no contractual relationship exists, it is equally important to prevent an allegedly damaged party from "fall[ing] between the stools of tort and contract." See Miller v. U.S. Steel Corp., 902 F.2d 573, 575 (7th Cir. 1990).

2006However, when there is no contractual relationship of any kind between two parties, it is equally important to prevent an allegedly injured party from "fall[ing] between the *265 stools of tort and contract." See Miller v. U.S. Steel Corp., 902 F.2d 573, 575 (7th Cir. 1990).

2007As a general rule, "the economic loss doctrine requires transacting parties in Wisconsin to pursue only their contractual remedies when asserting an economic loss claim, in order to preserve the distinction between contract and tort law." Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, ¶ 34 , 262 Wis. 2d 32 , 662 N.W.2d 652 . ¶ 40.

2007As a general rule, "the economic loss doctrine requires transacting parties in Wisconsin to pursue only their contractual remedies when asserting an economic loss claim, in order to preserve the distinction between contract and tort law." Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, ¶ 34 , 262 Wis. 2d 32 , 662 N.W.2d 652 . ¶ 40.

2020Pursuant to this exception, the economic loss doctrine "does not bar a commercial purchaser's claims based on personal injury or damage to property other than the product, or economic loss claims that are alleged in combination with noneconomic losses." Daanen & Janssen, Inc., 216 Wis. 2d at 402 ; Grams v. Milk Products, Inc., 2005 WI 112, ¶24 , 283 Wis. 2d 511 , 699 N.W.2d 167 .

2020Pursuant to this exception, the economic loss doctrine "does not bar a commercial purchaser's claims based on personal injury or damage to property other than the product, or economic loss claims that are alleged in combination with noneconomic losses." Daanen & Janssen, Inc., 216 Wis. 2d at 402 ; Grams v. Milk Products, Inc., 2005 WI 112, ¶24 , 283 Wis. 2d 511 , 699 N.W.2d 167 .

2024The economic loss doctrine bars “recovery in tort for economic losses resulting from the failure of a product to live up to a contracting party’s expectations.” Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶24 , 270 Wis. 2d 146 , 677 N.W.2d 233 .

2024The economic loss doctrine bars “recovery in tort for economic losses resulting from the failure of a product to live up to a contracting party’s expectations.” Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶24 , 270 Wis. 2d 146 , 677 N.W.2d 233 .

2019There simply is no support for Secura’s attempt to eviscerate the distinction between tort and contract law by precluding the economic loss doctrine’s application any time a party can allege damage to “other property.” Allowing tort recovery for damage to, or loss in value of, the defective product under these circumstances “would render contractual protections a nullity and destroy any freedom to allocate economic risk by contract. “[M]anufacturers, in effect, would be deprived of their freedom to negotiate, allocate, and limit liability.” Ford, 225 Wis. 2d at 328 (citations omitted).

2007Co. v. Ford Motor Co., 225 Wis.2d 305, 311, 324 , 592 N.W.2d 201 (1999). [7] Other cases have addressed the application of the economic loss doctrine in contracts for services and in mixed contracts for services and products.

2011The circuit court dismissed the claim based on the economic loss doctrine, concluding that the complaint did not allege "damage to other property." Id. at 922-23 .

2003Id., ¶¶ 23-24.) In Northridge, the plaintiff sought recovery in tort for damages caused by asbestos and the court decided the claims were not barred by the economic loss doctrine because the alleged damage was physical injury to other property. 162 Wis. 2d at 923 . ¶ 36.

2024Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870 (1986), for the proposition that “the failure of the purchaser to receive the benefit of its bargain” is “traditionally the core concern of contract law”). 18 The economic loss doctrine originated in the context of defective product claims, see Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 148 Wis. 2d 910, 911 , 437 N.W.2d 213 (1989), and, over time, “Wisconsin courts have gradually enlarged the doctrine from its root to apply in other contexts,” Van Lare v. Vogt, Inc., 2004 WI 110, ¶19 , 274 Wis. 2d 631 , 683 N.W.2d 46 .

2024Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870 (1986), for the proposition that “the failure of the purchaser to receive the benefit of its bargain” is “traditionally the core concern of contract law”). 18 The economic loss doctrine originated in the context of defective product claims, see Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 148 Wis. 2d 910, 911 , 437 N.W.2d 213 (1989), and, over time, “Wisconsin courts have gradually enlarged the doctrine from its root to apply in other contexts,” Van Lare v. Vogt, Inc., 2004 WI 110, ¶19 , 274 Wis. 2d 631 , 683 N.W.2d 46 .

2022Such an application does not, however, leave parties without a remedy to seek, as “the [economic loss doctrine] still leaves statutory and contractual remedies available where misrepresentation has occurred.” Below v. Norton, 2008 WI 77, ¶42 , 310 Wis. 2d 713 , 751 N.W.2d 351 . ¶40 For purposes of the economic loss doctrine, an “economic loss” is defined as “damages resulting from inadequate value because the product is inferior and does not work for the general purposes for which it was … sold,” id., ¶29 (citation omitted), and extends to consumer transactions.

2022Such an application does not, however, leave parties without a remedy to seek, as “the [economic loss doctrine] still leaves statutory and contractual remedies available where misrepresentation has occurred.” Below v. Norton, 2008 WI 77, ¶42 , 310 Wis. 2d 713 , 751 N.W.2d 351 . ¶40 For purposes of the economic loss doctrine, an “economic loss” is defined as “damages resulting from inadequate value because the product is inferior and does not work for the general purposes for which it was … sold,” id., ¶29 (citation omitted), and extends to consumer transactions.

2023Vogel, 236 Wis. 2d 504, ¶¶17, ¶21 ; Wis. Label, 233 Wis. 2d 314, ¶¶27, ¶33 . ¶82 The majority opinion finds fault with Pharmacal's use of the integrated systems analysis.17 The majority also characterizes the economic loss doctrine as "tort principles" that "[implicate] the integrated systems analysis."18 "Although ¶27. 16 Majority op., ¶23. 17 Id., ¶24. 18 Id., ¶26. 16 Nos. 2019AP1085 & 2019AP1086.pdr both the economic loss doctrine and the integrated systems analysis may appear in the same opinion, they address different commercial concerns.

2023Vogel, 236 Wis. 2d 504, ¶¶17, ¶21 ; Wis. Label, 233 Wis. 2d 314, ¶¶27, ¶33 . ¶82 The majority opinion finds fault with Pharmacal's use of the integrated systems analysis.17 The majority also characterizes the economic loss doctrine as "tort principles" that "[implicate] the integrated systems analysis."18 "Although ¶27. 16 Majority op., ¶23. 17 Id., ¶24. 18 Id., ¶26. 16 Nos. 2019AP1085 & 2019AP1086.pdr both the economic loss doctrine and the integrated systems analysis may appear in the same opinion, they address different commercial concerns.

2023Vogel, 236 Wis. 2d 504, ¶¶17, ¶21 ; Wis. Label, 233 Wis. 2d 314, ¶¶27, ¶33 . ¶82 The majority opinion finds fault with Pharmacal's use of the integrated systems analysis.17 The majority also characterizes the economic loss doctrine as "tort principles" that "[implicate] the integrated systems analysis."18 "Although ¶27. 16 Majority op., ¶23. 17 Id., ¶24. 18 Id., ¶26. 16 Nos. 2019AP1085 & 2019AP1086.pdr both the economic loss doctrine and the integrated systems analysis may appear in the same opinion, they address different commercial concerns.

2023Vogel, 236 Wis. 2d 504, ¶¶17, ¶21 ; Wis. Label, 233 Wis. 2d 314, ¶¶27, ¶33 . ¶82 The majority opinion finds fault with Pharmacal's use of the integrated systems analysis.17 The majority also characterizes the economic loss doctrine as "tort principles" that "[implicate] the integrated systems analysis."18 "Although ¶27. 16 Majority op., ¶23. 17 Id., ¶24. 18 Id., ¶26. 16 Nos. 2019AP1085 & 2019AP1086.pdr both the economic loss doctrine and the integrated systems analysis may appear in the same opinion, they address different commercial concerns.

2006In my search, only Florida topped Wisconsin in number of cases citing "economic loss doctrine" or "economic loss rule." [3] 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.

2006In 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.

2006III ¶ 24 We begin with a brief overview of the economic loss doctrine. "`The economic loss doctrine is a judicially created doctrine under which a purchaser of a product cannot recover from a manufacturer on a tort theory for damages that are solely economic.'" Linden v. Cascade Stone Co., 2005 WI 113, ¶ 6 , 283 Wis.2d 606 , 699 N.W.2d 189 (quoting Bay Breeze, 257 Wis.2d 511, ¶ 9 , 651 N.W.2d 738 ).

2006We begin with a brief overview of the economic loss doctrine. " 'The economic loss doctrine is a judicially created doctrine under which a purchaser of a product cannot recover from a manufacturer on a tort theory for damages that are solely economic.'" Linden v. Cascade Stone Co., 2005 WI 113, ¶ 6 , 283 Wis. 2d 606 , 699 N.W.2d 189 (quoting Bay Breeze, 257 Wis. 2d 511, ¶ 9 ).

2022Inc., 2004 WI 139, ¶52 , 276 Wis. 2d 361 , 688 N.W.2d 462 . ¶61 In its primary cross-appeal brief, Carved Stone acknowledges the Waschers’ argument that the economic loss doctrine does not apply to the Waschers’ negligence claim stemming from Carved Stone’s later repair work because that work was performed pursuant to a contract for services.

2012Relying on Insurance Co. of North America v. Cease Electric Inc., 2004 WI 139 , 276 Wis. 2d 361 , 688 N.W.2d 462 , Kalahari asserts that tort actions that include an allegation of professional negligence are categorically exempted from the economic loss doctrine, regardless of the predominant purpose of the contract.

2024Ltd., 2002 WI App 232, ¶33 , 257 Wis. 2d 809 , 652 N.W.2d 806 (addressing negligent and strict responsibility 26 No. 2023AP778 misrepresentation claims); Hinrichs, 389 Wis. 2d 669, ¶39 (addressing an intentional misrepresentation claim).18 ¶50 Ruby asserts that Ripp’s misrepresentation claims seek recovery for economic loss and are therefore barred by the economic loss doctrine.

2024Ltd., 2002 WI App 232, ¶33 , 257 Wis. 2d 809 , 652 N.W.2d 806 (addressing negligent and strict responsibility 26 No. 2023AP778 misrepresentation claims); Hinrichs, 389 Wis. 2d 669, ¶39 (addressing an intentional misrepresentation claim).18 ¶50 Ruby asserts that Ripp’s misrepresentation claims seek recovery for economic loss and are therefore barred by the economic loss doctrine.

2024Ltd., 2002 WI App 232, ¶33 , 257 Wis. 2d 809 , 652 N.W.2d 806 (addressing negligent and strict responsibility 26 No. 2023AP778 misrepresentation claims); Hinrichs, 389 Wis. 2d 669, ¶39 (addressing an intentional misrepresentation claim).18 ¶50 Ruby asserts that Ripp’s misrepresentation claims seek recovery for economic loss and are therefore barred by the economic loss doctrine.

2023The economic loss doctrine maintains "the fundamental distinction between tort law and contract law." Hinrichs v. DOW Chemical Co., 2020 WI 2, ¶29 , 389 Wis. 2d 669 , 937 N.W.2d 37 (quoting another source).