Stuart v Weisflog's Showroom Gallery (WI)

2008 WI 86, 2005 AP 001287 (Wis 2008).

Facts: The Stuarts entered into two contracts with Weisflog's Showroom Gallery, Inc. (WSGI) for the design and building of an addition to their home. Subsequently, an examination revealed numerous construction defects and building code violations. In April 2003, approximately two years after the Stuarts discovered the problems and approximately seven years after the construction commenced, the Stuarts filed suit. The complaint alleged negligence in design and construction and violations of the Home Improvement Practices Act (HIPA).

The trial court found that the evidence concluded that WSGI did not conform with applicable plans and codes and that there were deficiencies in construction. The trial court awarded the Stuarts damages, but the Stuarts appealed the postverdict decision to double only the misrepresentation damages. WSGI cross appealed. The court of appeals affirmed and remanded. The Stuarts appealed and the Supreme Court of Wisconsin reviewed six issues:

  1. Whether the HIPA and negligence claims were barred by a statute of limitations.
  2. Whether the HIPA, which provides for the doubling of damages "because of a violation …of any order" (Wis. Stat. §100.20(5)) issued pursuant to HIPA, authorizes the doubling of an entire damage award even if a HIPA violation is combined with additional wrongdoing that contributes to the loss in question.
  3. Whether, given the evidence presented, the trial court erred in asking the jury to apportion damages between the Stuart's HIPA claims and their negligence claims.
  4. Whether the economic loss doctrine applies to bar the HIPA violation claims or the negligence claims.
  5. Whether a corporate employee may be held personally liable for acts, he or she takes on behalf of the corporate entity, that violate the HIPA.
  6. Whether the trial court erred in its determination of the appropriate attorney fee award.

Holding: Affirmed. The Supreme Court of Wisconsin held as follows on the six principal issues:

  1. The Stuarts' HIPA and negligence claims were not barred by a statute of limitations because they are governed by the discovery rule, which the court noted is applicable to all tort actions. Accordingly, the claims were subject to the six year statute of limitations set forth in Wisconsin Statutes Section 893.91(b), which extend the acceptable period to file until 2007. The Stuarts filed in 2003, less than two years after discovery.
  2. Wisconsin Statutes Section 100.20(5) authorizes the doubling of an entire damage award, even if a HIPA violation is combined with additional wrongdoing that contributes to the loss in question. The court called for a liberal construction of the remedial statute and agreed with the appellate court that double damages and attorney fees help dispel the reluctance of parties injured by unfair trade practices to bring forward their causes of action and help deter similar and future contractor malfeasance.
  3. The trial court erred by asking the jury to apportion damages between the Stuarts' HIPA claims and their negligence claims. The court held that to obtain apportionment in lawsuits that contain HIPA claims, before a party may request apportionment, it must meet the burden of showing that the damages can be separated. WSGI did not do so.
  4. The economic loss doctrine is inapplicable to the Stuarts' claims, and therefore does not bar their claims. The court held the economic loss doctrine cannot apply to statutory claims because that would be contrary to public policy. Furthermore, the economic loss doctrine is not applicable to service contracts, which both of the contracts in question were.
  5. A corporate employee may be held personally liable for acts that violate the HIPA. The court looked to the HIPA definition of a 'seller' which includes the agents and employees of corporations. See Wis. Admin. Code § ATCP 110(5).
  6. The trial court erred in its determination of an appropriate attorney fee award. The supreme court affirmed the appellate court and remanded the issue of attorney fees to the trial court for the determination of what constitutes a reasonable attorney fee award using the lodestar method.
Opinion Year: 
2008
Jurisdiction: 
Wisconsin
By: ATG Underwriting Department | Posted on: Thu, 11/06/2008 - 1:31pm