Sellers' brokers liable to buyers in tort: Wisconsin Court of Appeals rules economic loss doctrine doesn't bar buyer's claims.
Byline: David Ziemer
Can the purchaser of property sue the seller's real estate broker in tort for misrepresentation?
The Wisconsin Court of Appeals addressed that question twice recently, but disagreed on the answer.
However, only one of the opinions was recommended for publication - the one holding that the economic loss doctrine does not bar the buyer's tort claims. And since the other opinion was a per curiam opinion only, it is neither eligible for publication, nor even citable as persuasive authority.
Shister
In the first case, Alexander Shister bought a house from Bipin and Ranjan Patel. Rajul Bhagwanjee was the Patel's real estate broker.
After the purchase, Shister brought suit against them all, alleging that they failed to disclose that the basement had been remodeled without obtaining the proper permits, and that the property had recently been reassessed. Shister claimed that Bhagwanjee told Bipin Patel not to disclose the remodeling.
The circuit court granted summary judgment in favor of Bhagwanjee on all claims, holding they were barred by the economic loss doctrine.
Shister appealed, and in an opinion recommended for publication, a panel of the Court of Appeals, District II, held that the doctrine did not bar the tort claims against Bhagwanjee.
At issue was the application of the Wisconsin Supreme Court's opinion in Below v. Norton, 2008 WI 77, 310 Wis.2d 713, 751 N.W.2d 351, in which the court held that the economic loss doctrine bars tort claims based on residential real estate transactions.
The Court of Appeals held Below inapplicable, however, because there is no contractual relationship between a buyer and the seller's broker.
The court also noted that a real estate broker provides services, not goods; and that the doctrine does not apply to claims arising from the provision of services.
In addition, Chapter 452.133 imposes duties on a real estate broker toward all parties involved in a real estate transaction.
Finally, prior case law permits claims against a seller's agent for misrepresentation. (Ramsden v. Farm Credit Servs., 223 Wis.2d 704, 715, 590 N.W.2d 1 (Ct.App.1998).)
Accordingly, the court reversed...
To continue reading
Request your trialCOPYRIGHT GALE, Cengage Learning. All rights reserved.