Wisconsin Supreme Court doubles damages for home improvement violations.

• Author: Ziemer, David

Byline: David Ziemer

Homeowners can recover double damages and reasonable attorney fees for a violation of the Home Improvement Practices Act (HIPA).

In 1995, Robert Stuart and Lin Farquhar Stuart contracted with Weisflog's Showroom Gallery, Inc., for a home remodeling project at a cost of $278,000.

In 2001, the Stuarts discovered that the floor had rotted through, and that the project contained many serious construction defects and building code violations. The total cost to repair the project was $96,000.

The Stuarts then sued for breach of contract, negligence, and misrepresentation in violation of HIPA, but dismissed the breach of contract claim before trial.

The jury awarded $95,000, and apportioned 75 percent of the damages to negligence and 25 percent to the HIPA misrepresentation claim. Consistent with that verdict, the circuit court only applied the double damage and attorney fee provisions of HIPA to 25 percent of the jury's award.

In a decision by Justice N. Patrick Crooks, the Supreme Court held it was improper to apportion damages in this way -- the entire damage award should be doubled, and the Stuarts should recover full reasonable attorney fees.

The court concluded that allowing double damages and attorney fees on the entire award would serve the legislative purpose of deterring "contractor malfeasance."

As a result, the court further concluded that the jury should never have been asked to apportion damages between the negligence and the misrepresentation claim. Only in those cases where there is a clear way to apportion damages between the two should such a jury question be submitted.

The court also held that the economic loss doctrine does not bar the misrepresentation claim, because the contract was primarily one for services, rather than goods.

In addition, the damages were caused by negligence in the construction, rather than faulty construction materials.

Furthermore, in Kailin v. Armstrong, 2002 WI App 70, 252 Wis.2d 676, 643 N.W.2d 132, the court had noted that applying the doctrine to HIPA claims would eliminate the consumer protection that the legislature intended.

The court also disagreed with the trial court's method of awarding attorney fees.

The circuit court awarded $15,675, which he calculated by taking the entire damage award, dividing it by four (pursuant to the jury's apportionment), doubling that amount (pursuant to HIPA), and then applying a one-third contingency fee to that amount.

The Supreme Court...