Pagoudis v. Keidl

Decision Date14 July 2021
Docket NumberAppeal No. 2020AP225
Citation2021 WI App 56,963 N.W.2d 803,399 Wis.2d 75
Parties Louis PAGOUDIS, Hanna Pagoudis, Sead Properties, LLC and Kearns Management, LLC, Plaintiffs-Appellants, v. Marcus KEIDL and Russell K. Berg d/b/a Intervest Inspections, Defendants, Amy Keidl a/k/a Amy Jo Weyker, Defendant-Respondent.
CourtWisconsin Court of Appeals

399 Wis.2d 75
963 N.W.2d 803
2021 WI App 56

Louis PAGOUDIS, Hanna Pagoudis, Sead Properties, LLC and Kearns Management, LLC, Plaintiffs-Appellants,
v.
Marcus KEIDL and Russell K. Berg d/b/a Intervest Inspections, Defendants,

Amy Keidl a/k/a Amy Jo Weyker, Defendant-Respondent.

Appeal No. 2020AP225

Court of Appeals of Wisconsin.

Submitted on Briefs: September 10, 2020
Opinion Filed: July 14, 2021


On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Thomas L. Frenn of Frenn Law Offices, Wauwatosa, and James R. Shaw of James Shaw Law, Brookfield.

On behalf of the defendant-respondent, the cause was submitted on the brief of Laura E. O'Gorman of Schloemer Law Firm, S.C. of West Bend.

Before Neubauer, C.J., Reilly, P.J., and Davis, J.

DAVIS, J.

¶1 This case involves a run-of-the-mill fact pattern—buyer purchases house, discovers defects, and sues seller—complicated by a thorny standing issue stemming from the buyers having purchased and owned the property as three related but separate legal entities. The question now is which, if any, party has standing to sue the original seller, where one party contracted to purchase the property and the second initially took title before conveying title to the third.

¶2 The circuit court determined that none of these parties had standing—meaning that these transactions effectively destroyed whatever claims might otherwise

963 N.W.2d 805

exist against the seller. We conclude otherwise. Although the issue is clouded by inartful pleadings and a confusing series of procedural machinations, we conclude that at least one of these parties has standing to pursue these claims. The question of which party can pursue which claims will depend, in part, on facts further developed under the legal frameworks set forth herein. Accordingly, we reverse and remand for further proceedings.

BACKGROUND

¶3 Elias "Louis" Pagoudis (Louis); his wife, Hanna Pagoudis (Hanna); Sead Properties, LLC (Sead); and Kearns Management, LLC (Kearns) (collectively, Plaintiffs) appeal from an order dismissing, with prejudice, all claims against Amy Keidl (Amy) arising out of their purchase of residential real estate (the Property). For the purpose of this appeal we accept as true the following facts from the amended complaint1 and warranty deeds.2

¶4 Louis, through a standard offer to purchase, contracted to purchase the Property from Amy and Marcus Keidl (the Keidls). The offer to purchase states that it is between the Keidls and Louis "or assigns." In signing the offer, Louis relied on a real estate condition report signed by Amy.

¶5 Sead is an LLC that Louis owns and operates. As Louis's assignee, per the offer to purchase, Sead purchased the Property from the Keidls using Louis's funds. Several months later, Sead transferred title to the Property to Kearns, another related

963 N.W.2d 806

LLC which Louis purportedly formed as part of a reorganization of entities he owned. As we understand the pleadings, Kearns currently owns the Property.

¶6 At some point after Sead's purchase, Louis discovered undisclosed defects in the Property. This prompted Louis, Sead, and Kearns3 to sue for breach of contract and various forms of common-law and statutory misrepresentation.

¶7 Amy moved to dismiss. She argued that none of the parties had standing to sue: Louis and Sead because they no longer owned the Property, and Kearns because it was not a party to the transaction in which the alleged fraud occurred. The circuit court agreed, holding that Sead, as Louis's assignee, might have had standing to bring claims based on fraud in the real estate condition report, but "[t]hose representations do not follow the property through to subsequent owners" (i.e., Kearns). Plaintiffs appeal this ruling. We will set forth additional facts where relevant to the analysis that follows.

DISCUSSION

¶8 This appeal comes to us from a dismissal on the pleadings, meaning that our review is de novo. See McConkey v. Van Hollen , 2010 WI 57, ¶¶12, 14 n.5, 326 Wis. 2d 1, 783 N.W.2d 855. We address each issue using the same methodology as the circuit court, accepting as true all well-pleaded facts in the complaint and all reasonable inferences therefrom. See id. , ¶14 n.5 ; Data Key Partners v. Permira Advisers LLC , 2014 WI 86, ¶¶17-19, 356 Wis. 2d 665, 849 N.W.2d 693.

¶9 The question before us is whether any of the plaintiffs has standing to sue. Amy contends that the answer is no, for varying reasons. Again, Amy argues that: (1) Louis and Sead lack standing because they do not own the Property; and (2) Kearns, the current owner, lacks standing because it was not a party to the original transaction involving Amy's misrepresentations about the Property.

General Principles of Standing

¶10 Threshold procedural arguments aside (see supra note 2), the sole issue on appeal is which plaintiff, if any, has the legal right to pursue relief against Amy for her alleged misstatements in the course of selling the Property. The technical legal term here is "standing" to sue, but the test to determine standing is not particularly technical. "Standing" has been defined as "a concept that restricts access to judicial remedies to those who have suffered some injury because of something that someone has either done or not done." Munger v. Seehafer , 2016 WI App 89, ¶48, 372 Wis. 2d 749, 890 N.W.2d 22. The concept, however, is not quite as broad as that might suggest—the plaintiff must still show that the injury suffered is one for which the law provides a remedy. In addition to injury, "plaintiffs must show that they suffered or were threatened with an injury to an interest that is legally protectable." Marx v. Morris , 2019 WI 34, ¶35, 386 Wis. 2d 122, 925 N.W.2d 112 (citation omitted). Thus, a party has standing where (1) it has a personal interest (or "personal stake") in the controversy, (2) that interest has or will be injured or adversely affected, and (3) judicial policy calls for protecting that interest. Foley-Ciccantelli v. Bishop's Grove Condo. Ass'n , 2011 WI 36, ¶40, 333 Wis. 2d 402, 797 N.W.2d 789 (citation omitted).

¶11 The standing requirement, in essence, excludes would-be plaintiffs that have not suffered harm or whose alleged harm cannot be remedied within our legal system. Various policies and prudential

963 N.W.2d 807

considerations underlie this basic premise: we do not want courts deciding abstract legal questions, statutes invoked so as to protect interests outside their ambit, or plaintiffs asserting rights that are not their own. See Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc. , 454 U.S. 464, 474-75, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982) ; Foley-Ciccantelli , 333 Wis. 2d 402, ¶¶130-34, 797 N.W.2d 789 (Prosser, J., concurring) (noting that Wisconsin's law of standing, which does not contain a jurisdictional component, reflects the prudential considerations articulated in Valley Forge and other United States Supreme Court cases, and citing to relevant Wisconsin case law). On the other hand, we generally want our courts to enforce legal agreements and redress legitimate claims of harm, and the doctrine of standing should not be employed as a "gotcha" so as to thwart these goals. See Schill v. Wisconsin Rapids Sch. Dist. , 2010 WI 86, ¶38, 327 Wis. 2d 572, 786 N.W.2d 177 ("Courts construe standing broadly in favor of those seeking access.").

¶12 Our analysis is further informed by the closely related requirement that suits must be brought in the name of the real party in interest—that is, the party "who by substantive law has the right of action." State ex rel. State Bar of Wis. v. Bonded Collections, Inc. , 36 Wis. 2d 643, 651, 154 N.W.2d 250 (1967) (citation omitted); see Weissman v. Weener , 12 F.3d 84, 86 (7th Cir. 1993) (standing and real-party-in-interest requirements are "distinct" but "similar," in that both "are used to designate a plaintiff who possesses a sufficient interest in the action to entitle him [or her] to be heard on the merits" (citation omitted)). And that law allows for flexibility. For example, a suit shall not be dismissed for failure to prosecute in the name of the real party in interest "until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest." WIS. STAT. § 803.01(1). Too, representatives, guardians, and the like may sue on behalf of the real party in interest without joining that party. Sec. 803.01(2).

¶13 Here, Plaintiffs apparently sought to cover their bases by suing on behalf of all three parties with potential standing. And there seems little doubt that one of these parties—either Louis, who signed the offer to purchase and plans to live on the Property; or Sead, who bought the Property from Amy; or Kearns, the transferee from Sead—would ordinarily be able to seek redress if there were a material misrepresentation in a sale. In concluding otherwise, the circuit court adopted the premise that transfer of the Property operated to sever any harm suffered from the legal right to obtain redress for that harm. We will...

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