Van Lare v. Vogt, Inc. ( 2004 )

N. PATRICK CROOKS, J.

(concurring).

¶ 47. While I agree with the majority's holding in this case, I write, today, to emphasize the action taken in our decision in Digicorp, Inc. v. Ameritech Corporation, 2003 WI 54, 262 Wis. 2d 32, 662 N.W.2d 652, regarding the fraud in the inducement exception to the economic loss doctrine. Even though the majority only briefly discusses Digicorp, majority op., ¶ 30, I write separately to stress that the Digicorp majority clearly rejected a broad fraud in the inducement exception to the economic loss doctrine. Digicorp, 262 Wis. 2d 32, ¶ 3.

¶ 48. The Digicorp decision extensively discussed Huron Tool and Engineering Company v. Precision Consulting Services, Inc., 209 Mich. App. 365, 532 N.W.2d 541 (1995), and Douglas-Hanson Company, Inc. v. BF Goodrich Company, 229 Wis. 2d 132, 598 N.W.2d 262 (Ct. App. 1999), two cases dealing with fraud in the inducement exceptions to the economic loss doctrine.

¶ 49. The Huron Tool decision adopted a narrow fraud in the inducement exception, concluding that a "plaintiff may only pursue a claim for fraud in the inducement extraneous to the alleged breach of contract." Huron Tool, 209 Mich. App. at 374. This narrow exception to the economic loss doctrine does not apply when the fraud in the inducement is interwoven with the contract. Digicorp, 262 Wis. 2d 32, ¶ 3. Thus, in applying this narrow exception, a court must "determine whether the fraud involved matters for which risks and responsibilities were extraneous to, or interwoven into, the contract." Id., ¶ 53.

¶ 50. In contrast, the Douglas-Hanson decision proposed a broad fraud in the inducement exception to the economic loss doctrine, holding "that the economic loss doctrine does not bar claims for intentional misrepresentation when the misrepresentation fraudulently induces a party to enter into a contract." Douglas-Hanson, 229 Wis. 2d at 149-50. In other words, this exception would appear to permit a tort action whenever it is claimed that a contract was induced by fraud. Digicorp, 262 Wis. 2d 32, ¶ 39.

¶ 51. Even though a majority in Digicorp did not adopt Huron Tool's narrow fraud in the inducement exception, a majority of the justices participating in Digicorp clearly rejected Douglas-Hanson's broad fraud in the inducement exception to the economic loss doctrine. Id., ¶ 3. Five members of the court participated in the Digicorp decision. While four justices recognized a fraud in the inducement exception to the economic loss doctrine, only two of these four justices would have adopted a narrow exception similar to Huron Tool, and two other justices would have adopted the broader exception set forth in Douglas-Hanson. Digicorp, 262 Wis. 2d 32, ¶ 5 n.2. See also Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶¶ 32-34, 270 Wis. 2d 146, 677 N.W.2d 233. The fifth justice rejected the Douglas-Hanson exception, and would not recognize any fraud in the inducement exception.¹ Thus, while we did not reach a decision in Digicorp as to the extent of the fraud in the inducement exception to the economic loss doctrine, a majority recognized that there is such an exception, and rejected the broad Douglas-Hanson exception. Digicorp, 262 Wis. 2d 32, ¶ 5 n.2.

¶ 52. For the foregoing reasons, I respectfully concur.

¶ 53. I am authorized to state that Justice JON E WILCOX joins this concurrence.

1 Our decision in Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, ¶ 5 n.2, 262 Wis. 2d 32, 662 N.W.2d 652, explained the division of the court on the fraud in the inducement exception as follows:

A majority of this court, Justices Crooks, Prosser and Sykes, rejects the broad exception that the court of appeals adopted in Douglas-Hanson. However, because Justice Sykes would not adopt any fraud exception, there is also a majority of this court, Justices Bradley, Bablitch and Sykes, that rejects the narrow exception that was adopted by the Huron Tool court. Two Justices, Bradley and Bablitch, dissent stating that the Douglas-Hanson exception should apply. A majority holds that a fraud in the inducement exception to the economic loss doctrine exists, but there is an even split as to what the fraud in the inducement exception entails. While four Justices agree that there should be an exception, only two Justices, Crooks and Prosser, agree that the Huron Tool exception should be adopted. Chief Justice Ábrahamson and Justice Wilcox did not participate in this case.