By Christine Bremer Muggli
From the moment we begin to learn, one common theme is drummed into our minds – it is wrong to lie. Many of us vividly remember what happened when we lied to our parents!
For over a century, this state has allowed injured homeowners to pursue a fraudulent misrepresentation claim in tort against the homeowner who lied about the condition of the home. Now the Court says that claim no longer exists.
Chief Justice Abrahamson, and Justices Butler and Bradley did not agree with the decision of the Court and for good reason. Writing for the dissent, Justice Bradley put it very clearly:
“According to the majority, a person selling a home can look the buyer in the eye, lie about the condition of the home and escape legal consequences in tort for the lie because of the economic loss doctrine.”
The economic loss doctrine was created by judges to prevent parties to a contract from pursuing a recovery in tort when the damages suffered were economic or commercial losses. It was thought to be a private matter between the buyer and the seller and the contract should control how the dispute is resolved. With the Court’s decision, this very narrow doctrine has now been expanded to prevent a private homebuyer from seeking remedies against a seller who lies to him.
The basic underlying purpose of tort law is to require each of us to act as a reasonable person to prevent harm to another. When a person lies, he violates this basic duty each of us owe one another. That is why the tort of fraudulent misrepresentation was created, to find a remedy for a serious wrong against community values.
This split decision of the Wisconsin Supreme Court is important for a number of reasons. For the first time, many victims of real estate fraud will go without any remedies against the seller.
The decision also signals a dangerous turn for the Court.
As Justice Bradley wrote in her dissent, good public policy that recognizes the need for truth in human relationships is no longer recognized by the Wisconsin Supreme Court.
This decision is bad for the welfare of Wisconsin consumers and bad for the real estate market which must operate in an environment of trust and honesty.
We must ask, is this the direction some members of Wisconsin Supreme Court will take in the future? Much is at stake. We all need to be much more vigilant, not only as purchasers of homes but as voters in the next Wisconsin Supreme Court election.
Christine Bremer Muggli is the President of the Wisconsin Association for Justice (formerly the Wisconsin Academy of Trial Lawyers), Wisconsin’s largest statewide voluntary attorney organization defending the civil justice system. Look for Christine’s columns each month.