# Kaloti Enterprises, Inc. v. Kellogg Sales Co.

> Wisconsin Supreme Court · July 8, 2005 · 283 Wis. 2d 555

URL: https://www.frixlaw.com/law-library/cases/9664008

## Case

- **Full name:** Kaloti Enterprises, Inc., Plaintiff-Appellant, v. Kellogg Sales Company and Geraci & Associates, Inc., Defendants-Respondents
- **Court:** Wisconsin Supreme Court
- **Decided:** July 8, 2005
- **Citations:** 283 Wis. 2d 555; 699 N.W.2d 205; 2005 WI 111; 2005 Wisc. LEXIS 348
- **Precedential status:** Published
- **Opinion:** Concurrence by Abrahamson
- **Judges:** Abrahamson, Roggensack
- **Cited by:** 154 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9664008

## How later opinions describe it (automated extraction)

- noting that Wisconsin’s middle burden of proof applies to intentional misrepresentation claims
- stating that Wisconsin’s economic loss doc- trine precludes tort recovery only for economic losses
- noting that a duty to disclose arises where “the fact is material to the transac‐ tion” and “the mistaken party would reasonably expect dis‐ closure of the fact”

## Opinion text

SHIRLEY S. ABRAHAMSON, C.J.
¶ 53. {concurring). I write separately for two reasons.
¶ 54. First, I write to highlight what is an expansion, without full discussion and recognition of its implications, of this court's decision in Ollerman v. O'Rourke Co. 1 The majority opinion in this case extends a duty to disclose to all business transactions, well beyond the residential real estate context in which a duty was imposed in Ollerman. The majority opinion *590 also extends a duty to disclose in business transactions beyond the boundaries set forth in the Restatement (Second) of Torts § 551. 2
¶ 55. Second, I write to state that although I agree with the majority opinion's bottom line that the economic loss doctrine should not bar Kaloti's inten *591 tional misrepresentation tort claim against Kellogg and Geraci, I disagree with the majority opinion's rationale and its adoption of "a narrow fraud in the inducement exception" like that established in the Michigan Huron Tool case 3 and explained in the lead opinion in Digi- corp. 4
¶ 56. For many years Wisconsin law has recognized that one who intentionally deceives another with the intent and effect of inducing reliance to the other's detriment will be liable in tort. 5 "Yet the economic loss doctrine, in its more aggressive tort-devouring strains, [is being held] to trump this fundamental common law precept." 6 Fraud is fraud and if proved is a good tort claim. In principle or in practice, the Huron Tool fraud exception to the economic loss doctrine just doesn't work.
HH
¶ 57. The majority opinion imposes a duty to disclose in business transactions that is well beyond the residential real estate context in which a duty to disclose was imposed in the Ollerman case and is well beyond our caselaw. The majority opinion also imposes *592 a duty to disclose in business transactions beyond the boundaries set forth in the Restatement (Second) of Torts § 551.
¶ 58. The general, traditional common law rule, recognized in Wisconsin, is that in misrepresentation claims, absent a duty to disclose, there will be no tort liability for the failure to disclose. 7 "[S]ilence, a failure to disclose a fact, is not an intentional misrepresentation unless the seller has a duty to disclose." 8 If there is a duty to disclose a fact, a party's failure to disclose is treated in the law as the equivalent of an affirmative misrepresentation of the nonexistence of the fact. 9
¶ 59. In Ollerman, this court declared that "a subdivider-vendor of a residential lot has a duty to a 'non-commercial' purchaser to disclose facts which are known to the vendor, which are material to the transaction, and which are not readily discernible to the purchaser." 10 Ollerman involved a residential real estate transaction between a sophisticated seller and an unsophisticated buyer new to the area. 11 The buyer made an offer to purchase a vacant lot on which the buyer planned to build a residence, and the seller, a real estate development corporation, knew that an underground well was on the property but failed to disclose that information to the buyer. When the excavation started, the well was uncapped and water released. The *593 released water added costs to the construction of the residence and caused other damage. The buyer sued for intentional misrepresentation; the defendant argued that it had no duty to disclose the existence of the well on the property.
¶ 60. The court in Ollerman discussed § 551 of the Restatement (Second) of Torts as the embodiment of several situations in which courts, at the time of adoption of the Restatement (Second) in 1976, were withdrawing from the traditional rule of caveat emptor (let the buyer beware). Ollerman concluded that subsection (1) of § 551 restated the traditional rule "that one who fails to disclose a fact that he knows may induce reliance in a business transaction is subject to the same liability as if he had represented the nonexistence of the matter that he failed to disclose if, and only if, he is under a duty to exercise reasonable care to disclose the matter in question." 12
¶ 61. The Ollerman court then discussed subsection (2) of § 551 of the Restatement (Second) of Torts setting forth the conditions under which a seller has a duty to disclose certain information. 13 The court was careful to highlight subsection (2)(e), noting that the provision "states that a party to a transaction is under a duty to exercise reasonable care to disclose to the other 'facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect a disclo *594 sure of those facts.' " 14 The Ollerman court acknowledged that this provision was limited to disclosure of "basic facts" to the transaction and that the Restatement differentiated between "basic" facts and "material" facts as follows:
A basic fact is a fact that is assumed by the parties as a basis for the transaction itself. It is a fact that goes to the basis, or essence, of the transaction, and is an important part of the substance of what is bargained for or dealt with. Other facts may serve as important and persuasive inducements to enter into the transaction, but not go to its essence. These facts may be material, but they are not basic. 15
*595 ¶ 62. The Ollerman court expanded § 551(2)(e) to encompass a duty on the part of a sophisticated real estate vendor selling to an unsophisticated consumer to disclose material facts, writing:
Where the vendor is in the real estate business and is skilled and knowledgeable and the purchaser is not, the purchaser is in a poor position to discover a condition which is not readily discernible, and the purchaser may justifiably rely on the knowledge and skill of the vendor. Thus, in the instant case a strong argument for imposing a duty on the seller to disclose material facts is this "reliance factor." The buyer portrayed in this complaint had a reasonable expectation of honesty in the marketplace, that is, that the vendor would disclose material facts which it knew and which were not readily discernible. Under these circumstances the law should impose a duty of honesty [disclosure] on the seller. 16
¶ 63. Based on the existence of the duty to disclose in the narrow circumstances presented by Oller-man, the court allowed the buyer's intentional misrepresentation claim to go forward.
¶ 64. Ollerman represents an expansion of the duty to disclose under the circumstances, in that case, of a consumer sale, from "[t]he traditional legal rule that there is no duty to disclose in an arm's-length transaction [which] is part of the common law doctrine of caveat emptor ... ," 17 Ollerman also represents an expansion of § 551(2) (e) in imposing a duty to disclose material facts instead of just basic facts.
*596 ¶ 65. Ollerman itself specified that it was a "narrow holding," and in 2004 in Tietsworth v. Harley-Davidson, Inc., which involved the sale of motorcycles, the court reiterated that Ollerman was a " 'narrow holding,' premised on certain policy considerations present in non-commercial real estate transactions." 18 In fact, the Tietsworth court explained that "it is an open question whether the duty to disclose recognized in Ollerman extends more broadly to sales of consumer goods. This is a significant common-law policy issue." 19
¶ 66. I have attempted to examine numerous cases citing Ollerman. Most of the cases involve real estate. In commercial real estate transactions, sometimes the court declares a duty to disclose and sometimes not. 20 Other than in the instant case, Ollerman has not been used, as far as I can tell, to extend a duty *597 to disclose material facts outside of the real estate context.
¶ 67. At least two federal courts interpreting Wisconsin law have rejected the application of Ollerman to commercial transactions between businesses.
¶ 68. The Seventh Circuit Court of Appeals declined to impose a duty in the context of negligent misrepresentation in Badger Pharmacal, Inc. v. Colgate-Palmolive Co. 21 The court wrote: "When two *598 corporations, with the benefit of counsel, negotiate a commercial transaction at arms length, neither owes nor assumes a duty to disclose information to the other." 22
¶ 69. Recently, in Fleming Cos., Inc. v. Krist Oil Co., the district court, quoting Ollerman, declared that the parties to a business transaction are to "use their faculties and exercise ordinary business sense" and "not call on the law to stand in loco parentis to protect them in their ordinary dealings with other business people." 23
¶ 70. As I see it, the majority's holding extends beyond the facts in the instant case to impose a duty on parties in commercial transactions to disclose material facts under certain circumstances. Specifically, the majority holds:
[A] party to a business transaction has a duty to disclose a fact where: (1) the fact is material to the transaction; (2) the party with knowledge of that fact knows that the other party is about to enter into the transaction under a mistake as to the fact; (3) the fact is peculiarly and exclusively within the knowledge of one party, and the mistaken party could not reasonably be expected to discover it; and (4) on account of the objective circumstances, the mistaken party would reasonably expect disclosure of the fact. 24
*599 ¶ 71. I conclude that based on the facts before us, the instant case may be shoehorned into the duty to disclose set forth in Restatement (Second) of Torts § 551(2)(e) and that it is not necessary to extend the duty to disclose beyond the Restatement. 25
¶ 72. For those who favor more disclosure in business transactions rather than less, the majority opinion's expansion of the duty to disclose material facts in commercial transactions will be welcome news. As we said in Ollerman, over the years society's attitudes toward good faith and fair dealing in business transactions have undergone (and continue to undergo) significant change from the traditional caveat emptor rule, and this change is reflected in the law. 26
¶ 73. Accepting that Kellogg had a duty to disclose its change in marketing, I conclude that fraud in the inducement does not fall within the economic loss doctrine. I would adopt a rule that the tort action of fraud is outside the reach of the economic loss doctrine. A rule that actionable fraud precludes application of the economic loss doctrine makes it easy for defendants to foresee that they will be liable for material representations.
¶ 74. I depart from the majority opinion because it adopts a "narrow fraud rule," which, as I view it, defies consistent and principled application. After all, how can parties allocate, insure against, or otherwise assess risk attendant to a contract, all goals the economic loss doctrine strives to foster, when one party is *600 intentionally misled by affirmative misrepresentations or by a breach of a duty to disclose material facts by another party? 27 Everyone knows the common sense answer: they can't.
¶ 75. A tort remedy should be available when the tortious conduct harms commerce. A fraud action advances the public interest in deterring misrepresentations. Not only do the parties want a transaction free of fraud, but the State has an interest in ensuring a fraud- and deceit-free business atmosphere. If fraud claims are enforced, parties will be more confident in the terms of the contracts into which they enter. 28 In a valid fraud action for intentional misrepresentation, we have less concern about the cost and uniformity of contractual relationships and extended liability for the manufacturer.
¶ 76. As I stated in my dissent in Tietsworth:
Allowing a fraud in the inducement exception to the economic loss rule for intentional false statements made prior to a contract in a consumer purchase preserves a distinction between tort law and contract law and fosters the values of each. It maintains the value of contract by ensuring that consumers are in a position to make intelligent decisions in allocating the risk of loss, thereby increasing the likelihood that losses can be resolved in contract. It furthers the purposes of tort law by sustaining a financial deterrent for those who intentionally misrepresent their goods.
*601 A fraud in the inducement exception to the economic loss rule for intentional false statements made to consumers is founded on the tort of intentional misrepresentation, a tort action protecting intangible economic interests. This tort action is separate and distinct from the duty created solely by contract. "[T]he interest protected by fraud is a plaintiffs right to justifiably rely on the truth of a defendant's factual representation in a situation where an intentional lie would result in loss to the plaintiff." An overextension of the economic loss rule drowns fraudulent misrepresentation claims in a sea of contract.
What kind of "freedom of contract" and "ability to assess and insure against the risk" is being fostered or protected when a party to a contract commits an intentional tort in inducing a contract that causes monetary loss to another party? On what basis can we say that an individual consumer does not need the tort remedy of intentional misrepresentation against a manufacturer? 29
¶ 77. The California Supreme Court recently acknowledged that it is impossible for parties to allocate risk when fraud is involved:
A breach of contract remedy assumes that the parties to a contract can negotiate the risk of loss occasioned by a breach. "[W]hen two parties make a contract, they agree upon the rules and regulations which will govern their relationship; the risks inherent in the agreement and the likelihood of its breach. The parties to the contract in essence create a mini-universe for themselves, in which each voluntarily chooses his contracting partner, each trusts the other's willingness to keep his word and honor his commitments, and in which they define their respective obligations, rewards and risks. *602 Under such a scenario, it is appropriate to enforce only such obligations as each party voluntarily assumed, and to give him only such benefits as he expected to receive; this is the function of contract law." 30
¶ 78. Not only is the Huron Tool fraud rule deficient as a matter of principle, it is inherently defective because it cannot be applied in a principled way. The fraud rule with which the majority opinion is enamored is as follows: If the fraud is "extraneous" to the contract, the economic loss doctrine will not bar the plaintiffs tort claims. If the fraud is "interwoven" with the contract, the economic loss doctrine applies to bar the plaintiffs tort suit. 31
¶ 79. Judges cannot agree about the meaning or the application of the Huron Tool fraud exception. "Critics contend that the exception is dead on arrival because almost all actionable misrepresentations will deal with the contract matter, and thus be 'interwoven,' for purposes of the Huron Tool exception and therefore, barred by the economic loss doctrine." 32 The Huron Tool rule "renders the fraud in the inducement excep *603 tion a nullity" as this limitation "is so broad that it swallows the exception whole." 33
¶ 80. As one court noted:
In all fraud in the inducement cases the alleged fraudulent misrepresentations will either concern the quality and characteristics of the underlying subject matter, because that is the definition of "fraud in the inducement itself."... Because the contract concerning the "particular thing" will always be considered "interwoven" with the deceit under Huron, fraud in the inducement claims will always be barred. The tort, after all, is inducing someone to enter into a contract, so to say it does not apply where the tort involves the contract or its subject matter analytically makes no sense. 34
¶ 81. In applying the Huron Tool rule to the instant case, I conclude that Kellogg's fraudulent misrepresentations can easily be classified as either extraneous or interwoven. 35
¶ 82. The majority opinion concludes that Kellogg's change in marketing strategy was "extraneous to" the contract. Why? Because the fraud did "not regard the quality or character of the NutriGrain and Rice Krispie Treat products that Kellogg sold to *604 Kaloti." 36 Furthermore, the "alleged misrepresentation concerned a matter whose risk was never contemplated to be a part of the contract to purchase Kellogg's products." 37 Under the approach the majority opinion takes, marketing has nothing to do with the parties' sale and purchase of the products, so the fraud is extraneous to the contract and the economic loss doctrine does not apply.
¶ 83. An alternative view of the instant case applying Huron Tool is that Kellogg's marketing strategy is interwoven with the contract. When Kaloti agreed to purchase the products from Kellogg, Kaloti thought it was buying a product Kaloti could sell to stores (as it had in the past) and that Kellogg would continue its marketing practices so as not to interfere with Kaloti's resale of the products purchased. Kellogg's change in marketing related to the performance of the contract; performance of the contract is generally viewed as interwoven with the contract.
¶ 84. To help determine how central Kaloti's ability to sell the product was to the contract, imagine that during contract negotiations the alleged fraudulently omitted information was disclosed. Here is how the conversation might have gone:
Kaloti: I'd like to order $124,000 in tasty treats for the upcoming quarter for sale to the stores to which you know I sell.
Geraci/Kellogg: Sure, no problem. Just send in your check. We'll ship the product right away.
Kaloti: Thanks. Talk to you next quarter.
Geraci/Kellogg: Oh wait, one more thing. We're aware you sell the treats to various large stores, but Kellogg *605 and Keebler just merged and we're going to sell the exact same product you sell to the exact same large stores to which you already sell. The market to which you have sold in the past is now probably closed. We are not sure where you will sell that $124,000 in tasty treats.
Kaloti: Uh....
¶ 85. How would Kaloti respond? "No problem!" Or, "What are you smoking?" Or, "How much weight do you think I'll gain if I have to eat them all myself?" Or, "No deal!"
¶ 86. These are perishable products. I am confident that Kaloti would not have agreed to purchase the products at all, or at least not for the same amount of money, knowing that it might not be able to sell the product. Quite simply, the ability to sell a product is interwoven with the commercial purchase of that product for resale, especially as here given the parties' pattern of dealing. 38
¶ 87. Because the Huron Tool exception does not further the policies justifying the existence of the economic loss doctrine and cannot be applied in a principled way, I do not join the majority in adopting this exception. I would say fraud is fraud and a tort action lies when the elements of fraud are proved in a commercial contractual setting. In the instant case a fraud action lies, and I therefore concur.
¶ 88. For the reasons set forth, I concur.
¶ 89. I am authorized to state that Justices ANN WALSH BRADLEY and LOUIS B. BUTLER, JR. join this opinion.
Ollerman v. O'Rourke Co., 94 Wis. 2d 17 , 288 N.W.2d 95 (1980).
Restatement (Second) of Torts § 551 (1977) provides as follows:
§ 551. Liability for Nondisclosure
(1) One who fails to disclose to another a fact that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of the matter that he has failed to disclose, if, but only if, he is under a duty to the other to exercise reasonable care to disclose the matter in question.
(2) One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated,
(a) matters known to him that the other is entitled to know because of a fiduciary or other similar relation of trust and confidence between them; and
(b) matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading; and
(c) subsequently acquired information that he knows will make untrue or misleading a previous representation that when made was true or believed to be so; and
(d) the falsity of a representation not made with the expectation that it would be acted upon, if he subsequently learns that the other is about to act in reliance upon it in a transaction with him; and
(e) facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect a disclosure of those facts.
Huron Tool & Eng'g Co. v. Precision Consulting Servs., Inc., 532 N.W.2d 541 (Mich. Ct. App. 1995).
Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, ¶ 91 , 262 Wis. 2d 32 , 662 N.W.2d 652 .
See Cotzhausen v. Simon, 47 Wis. 103, 106 , 1 N.W. 473 (1879); Restatement of Torts §§ 525, 549 (1938); Restatement (Second) of Torts §§ 525, 549 (1977).
Paul J. Schwiep, The Economic Loss Rule Outbreak: The Monster That Ate Commercial Torts, Fla. B.J., Nov. 1995, at 34, 36.
Lecic v. Lane Co., 104 Wis. 2d 592, 604 , 312 N.W.2d 773 (1981); Southard v. Occidental Life Ins. Co., 31 Wis. 2d 351, 359 , 142 N.W.2d 844 (1966).
Ollerman, 94 Wis. 2d at 26 (citing Restatement (Second) of Torts § 551, cmt. b (1977)).
Ollerman, 94 Wis. 2d at 26 .
Id at 42.
Id. at 21 .
Id. at 36 .
Id.
Id. at 37 (emphasis added), quoting Restatement (Second) of Torts § 551(2)(e), which provides as follows:
(2) One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated,
(e) facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect a disclosure of those facts.
At least one court of appeals decision, although citing Oller-man for support, applied the "basic" facts standard of this subsection in an employment setting. See Hennig v. Ahearn, 230 Wis. 2d 149 , 601 N.W.2d 14 (Ct. App. 1999) (applying Restatement (Second) of Torts § 551(2)(e) to impose a duty on a party to a business transaction to disclose a "significant, last-minute revision" that greatly reduced Hennig's compensation under an executive compensation agreement because given the course of dealing between the parties, Hennig could have reasonably expected the disclosure of a revision of a basic term of the contract).
Ollerman, 94 Wis. 2d at 38 (citing Restatement (Second) of Torts § 551, cmt. j).
Id. at 41-42.
Id. at 29. "Under the doctrine of caveat emptor no person was required to tell all that he or she knew in a business transaction, for in a free market the diligent should not be deprived of the fruits of superior skill and knowledge ...." Id. at 30.
Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶ 14 , 270 Wis. 2d 146 , 677 N.W.2d 233 .
Tietsworth, 270 Wis. 2d 142 , ¶ 15 (declining to resolve the issue because the parties did not brief the issue of whether to extend Ollerman).
See, e.g., Lundin v. Shimanski, 124 Wis. 2d 175 , 368 N.W.2d 676 (1985) (duty found in real estate transaction where real estate agency misrepresented to the buyer that the house was suitable for use as a rental property); Kailin v. Armstrong, 2002 WI App 70 , 252 Wis. 2d 676 , 643 N.W.2d 132 (duty imposed in commercial real estate transaction; vendor did not disclose that a tenant in the building being sold has a history of delinquent rent payments and was in default); Ramsden v. Farm Credit Servs. of N. Cent. Wis. ACA, 223 Wis. 2d 704 , 590 N.W.2d 1 (Ct. App. 1998) (duty found in commercial real estate; misrepresentations about availability of clean water on an auctioned dairy farm); Grube v. Daun, 173 Wis. 2d 30 , 496 N.W.2d 106 (Ct. App. 1992) (duty imposed in the commercial purchase of farm buildings based on affirmative misrepresentations despite an "as is" clause); Green Springs Farms v. Spring Green Farm Assoc. Ltd. P'ship, 172 Wis. 2d 28 , 492 N.W.2d 392 *597 (Ct. App. 1992) (duty imposed in commercial real estate transaction in which vendor failed to disclose salmonella contamination on the chicken farm being sold); Ritchie v. Clappier, 109 Wis. 2d 399 , 326 N.W.2d 131 (Ct. App. 1982) (no duty found in commercial lease context, and even if there was, plaintiff did not justifiably rely on representations about quit claim deed).
The court of appeals has dealt with the duty issue in numerous unpublished opinions. See, e.g., Fulton v. Vogt, No. 1996AP1972, unpublished slip op. (Wis. Ct. App. June 16, 1998) (no duty because property sold "as is" and no affirmative misrepresentations; commercial real estate purchase of farm land to be used for construction of self-storage facility); Hlavna v. United Bank, No. 1986AP535, unpublished slip op. (Wis. Ct. App. Oct. 16, 1986) (duty imposed in commercial real estate transaction; dissent notes that "[t]he majority has used a howitzer to kill an ant."); Luebke v. Marine Nat'l Bank, No. 1983AP161, unpublished slip op. (Wis. Ct. App. Sept. 27, 1983) (duty to disclose problems with manufacturing plant; court of appeals declined to address whether Ollerman should be extended to commercial real estate transaction); Smith v. Moore, No. 1982AP1522, unpublished slip op. (Wis. Ct. App. July 8, 1983) (no duty to disclose in commercial property sale because builder could not have discovered alleged defect); County of Manitowoc v. Eis, No. 1980AP1824, unpublished slip op. (Wis. Ct. App. July 8, 1981) (no duty to disclose in county's option of real estate because the parties were in an arm's length transaction).
Badger Pharmacal, Inc. v. Colgate-Palmolive Co., 1 F.3d 621 (7th Cir. 1993).
Badger Pharmacal, 1 F.3d at 627 (citing Ollerman, 94 Wis. 2d at 29-30 ).
Fleming Cos., Inc. v. Krist Oil Co., 324 F. Supp. 2d 933, 946 (W.D. Wis. 2004).
Majority op., ¶ 20. The majority opinion does not adopt the Restatement (Second) of Torts § 551(2)(e), which imposes a duty to disclose "basic" facts in certain business settings. The majority opinion applies Ollerman's expanded duty to disclose "material" facts.
The duty to disclose is a question of law rooted in policy consideration. Ollerman, 94 Wis. 2d at 27-28 .
Ollerman, 94 Wis. 2d at 30 .
Alternatively, as one court has articulated: "How can parties freely allocate risk if they cannot rely on the opposite party to speak truthfully during negotiations regarding the subject matter of the contract — if they cannot tell what is a lie and what is not?" Budgetel Inns, Inc. v. Micros Sys., Inc., 8 F. Supp. 2d 1137, 1148 (E.D. Wis. 1998).
Robinson Helicopter Co., Inc. v. Dana Corp., 102 P.3d 268, 275 (Cal. 2004).
Tietsworth, 270 Wis. 2d 146, ¶¶ 69-71 (Abrahamson, C.J., dissenting) (citation omitted).
Robinson Helicopter Co., 102 P.3d at 275 (quoting Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 869 P.2d 454 (Cal. 1994)).
Majority op., ¶ 42. Fraud that is "interwoven" "relate[s] to the breaching party's performance of the contract and doles] not give rise to an independent cause of action in tort." Majority op., ¶ 34 (citing Huron Tool, 532 N.W.2d at 545 ). For the fraud to be "extraneous to the contract" it must be "[distinguishable] from the terms of the contract and warranty." Majority op., ¶ 35 (citing Huron Tool, 532 N.W.2d at 546 ).
John J. Laubmeier, Demystifying Wisconsin's Economic Loss Doctrine, 2005 Wis. L. Rev. 225 , 239-240 (citing Budgetel Inns, 8 F. Supp. 2d at 1146 ).
Budgetel Inns, 8 F. Supp. 2d at 1146 .
Id. at 1147 .
How can one possibly know in the instant case whether the fraudulent misrepresentations were interwoven with the contract? The contract is not part of this record. I would think a court would need to read the contract to know what is interwoven with it and take testimony about the contract from the parties to determine what matters are interwoven with or extraneous to the contract. To boldly assert, as the majority opinion does, what the contract does and does not provide is puzzling.
Majority op., ¶ 45.
Majority op., ¶ 45.
Budgetel Inns, 8 F. Supp. 2d at 1147 .

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9664008. Public record. Not legal advice.