Ramsden v. Farm Credit Services of North Cent. Wisconsin ACA

• Decision Date: 23 December 1998
• Docket Number: No. 97-2769,97-2769
• Citation: 223 Wis.2d 704,590 N.W.2d 1
• Parties: Mark A. RAMSDEN, Individually and d/b/a Ramsden Dairy, Raelynn Ramsden, Individually and d/b/a Ramsden Dairy, and Milton R. Ramsden, Individually and d/b/a Ramsden Dairy, Plaintiffs-Appellants, v. FARM CREDIT SERVICES OF NORTH CENTRAL WISCONSIN ACA, and Agribank, FCB, Defendants, Thomas E. Hass, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

Page 1

590 N.W.2d 1

223 Wis.2d 704

Mark A. RAMSDEN, Individually and d/b/a Ramsden Dairy,

Raelynn Ramsden, Individually and d/b/a Ramsden

Dairy, and Milton R. Ramsden,

Individually and d/b/a Ramsden

Dairy, Plaintiffs-Appellants, v. FARM CREDIT SERVICES OF NORTH CENTRAL WISCONSIN ACA, and Agribank, FCB, Defendants, Thomas E. Hass, Defendant-Respondent.

No. 97-2769.

Court of Appeals of Wisconsin.

Submitted on Briefs Aug. 7, 1998.

Opinion Released Dec. 23, 1998.

Opinion Filed Dec. 23, 1998.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Charles B. Harris and Martha Heidt of Doar, Drill Skow, S.C. of Baldwin.

On behalf of the defendant-respondent, the cause was submitted on the brief of Craig T. Maxwell of Peterson, Wieting, Calewarts, Duffy Maxwell of Green Bay.

Before EICH, VERGERONT and ROGGENSACK, JJ.

ROGGENSACK, Judge.

Mark, Raelynn and Milton Ramsden appeal an order of the circuit court dismissing their complaint as to Thomas Hass, an agent of Agribank, FCB and Farm Credit Services of North Central Wisconsin, ACA (FCS). The circuit court concluded that the Ramsdens did not state a claim against Hass for negligent misrepresentation ¹ in connection with the sale of a dairy farm to the Ramsdens, because absent a special duty of care, agents are not liable to third persons under theories of negligence. We conclude that under certain circumstances agents may be liable to third persons for both their untrue statements of material fact and for failing to disclose material facts concerning the condition of property and that the Ramsdens stated claims for intentional and negligent misrepresentation. Therefore, we reverse and remand for further proceedings consistent with this opinion.

BACKGROUND

According to the complaint, ² on March 19, 1996, the Ramsdens were the high bidders on a dairy farm sold at public auction by Agribank. FCS, who had financed the prior owners, Triple L Dairy, also financed the Ramsdens' purchase, which closed on April 17, 1996. Hass, an Agribank employee and an agent of both Agribank and FCS, was the auctioneer and he also handled the details of the Ramsdens' purchase from Agribank.

While Triple L Dairy was the owner of the property, it had complained to Hass, Agribank and FCS that its cattle were sick and dying. After investigation and prior to selling the property to the Ramsdens, Agribank, FCS, and Hass learned that an underground gasoline storage tank on the property was leaking and contaminating the soil. On June 15, 1995, Hass reported to the Department of Natural Resources that groundwater on the property was contaminated. Thereafter, Agribank was directed to remove the underground storage tank and to remedy the contamination to the property, in both the soil and in the groundwater. Agribank removed the tank, but it did not remedy the contamination. Notwithstanding their knowledge of the contamination and its effect on dairy cows, Agribank and Hass sought to sell the property as a dairy farm.

At the auction, Hass told the Ramsdens, who said they were considering buying the property for a dairy farm, that: (1) Agribank would be responsible for any contamination, cleanup or problems associated with an underground storage tank that had leaked; (2) the property was suitable for use as a dairy farm; and (3) there was plenty of good, clean water available for the cattle. Hass did not mention that the groundwater had been contaminated or that Triple L's cattle had died. Based on Hass's factual representations and the failure of Hass, Agribank and FCS to disclose that the groundwater was not fit for consumption and that the prior owner's cattle had died, the Ramsdens bought the property.

On April 18, 1996, the Ramsdens moved their cattle onto the property. By April 20, 1996, the cows began to appear depressed As a result of the benzene poisoning, the Ramsdens suffered the loss of 186 head of cattle and the loss of profits from the operation of their dairy. Additionally, Mark Ramsden suffered personal injuries, both physical and emotional, due to benzene poisoning. On February 17, 1997, the Ramsdens filed a pro se complaint alleging thirteen claims for relief against Agribank, FCS, and Hass. Hass moved to dismiss the complaint for failure to state a claim upon which relief can be granted, pursuant to § 802.06(2)(a)6., STATS. On June 16, 1997, the circuit court granted Hass's motion to dismiss because Hass made the representations as an agent. This appeal followed.

ceased producing milk, and exhibited sunken eyes, general weakness, bellowing, and a lack of appetite. By April 23, 1996, four of the cows had died. Mark Ramsden also became ill. To determine the cause of these problems, the Ramsdens submitted water samples to the University of Wisconsin at Stevens Point. The samples showed benzene contamination from the underground storage tank that had leaked. The Ramsdens also had a local toxicologist perform a necropsy on one of the dead cows. The toxicologist determined that the cow had died of benzene poisoning.

DISCUSSION

Standard of Review.

Whether a complaint states a claim upon which relief can be granted is a question of law, which we review de novo. Heinritz v. Lawrence Univ., 194 Wis.2d 606, 610, 535 N.W.2d 81, 83 (Ct.App.1995). A motion to dismiss for failure to state a claim tests the legal sufficiency of the claim. Ollerman v. O'Rourke Co., Inc., 94 Wis.2d 17, 24, 288 N.W.2d 95, 98 (1980). Therefore, we admit as true all facts pleaded and all reasonable inferences from the pleadings, but only for the purpose of testing the legal sufficiency of the claim, not for the purpose of trial. Id. A complaint does not need to state all the ultimate facts constituting each cause of action, and we will not affirm the dismissal of a complaint as legally insufficient unless "it is quite clear that under no conditions can the plaintiff recover." Id. at 24, 288 N.W.2d at 98-99.

Ramsdens' Complaint.

The Ramsdens' complaint alleges thirteen claims for relief. The first claim, negligence per se, is premised on Agribank's failure to provide a condition of real estate disclosure form as required by § 709.02, STATS. Because that statute applies only to property owners, the first claim for relief is not directed at Hass. Similarly, the second claim, negligent remediation, is not directed at Hass because the claim is premised on Agribank's duty to remedy the contamination.

The third, fourth, fifth, and seventh claims are either breach of warranty claims directed at Agribank or breach of contract claims involving the contract between the Ramsdens and Agribank; and therefore, they do not pertain to Hass. The sixth claim, which alleges that the defendants maintained a nuisance on the property, is directed only at the owner, Agribank, as are the ninth and tenth claims. The eighth claim is strict liability for misrepresentation. However, there is no allegation that Hass had a financial interest in the property, a necessary element of a claim for strict liability for misrepresentation. Whipp v. Iverson, 43 Wis.2d 166, 169-70, 168 N.W.2d 201, 203 (1969).

Finally, the twelfth and thirteenth claims, alleging breaches of the requirement of good faith, do not state tort claims in Wisconsin under the facts set forth in the complaint. Hauer v. Union State Bank of Wautoma, 192 Wis.2d 576, 595, 532 N.W.2d 456, 463 (Ct.App.1995) (concluding that a breach of the covenant of good faith and fair dealing does not state a separate cause of action in Wisconsin from the contract claim from which it arises, absent special circumstances not present here); Alsteen v. Gehl, 21 Wis.2d 349, 356, 124 N.W.2d 312, 316 (1963) (concluding that a claim for intentional infliction of emotional distress requires extreme and outrageous conduct undertaken for the purpose of inflicting psychological harm).

Therefore, of the thirteen claims presented in the complaint, only the eleventh claim Misrepresentation.

which is directed at [223 Wis.2d 713] Hass and is based on representations he made, will be the focus of our discussion. In this claim, which incorporates all allegations previously made, it is asserted that Hass told the Ramsdens that Agribank would remedy the contamination from an underground storage tank that had leaked; that the property was suitable for use as a dairy farm; and that the property had plenty of clean water for the cattle. The Ramsdens also allege that: (1) Hass failed to disclose that the cattle of the previous dairy farmer had died over the last several years; (2) the groundwater was contaminated and that Agribank had been ordered to remedy the contamination and it had not done so; (3) Hass had a duty to disclose the true condition of the property; (4) if facts about the property had not been misrepresented by the defendants' false statements and their failures to disclose the true condition of the property, the Ramsdens would not have purchased it; and (5) the misrepresentations caused them to suffer economic loss and personal injuries, both physical and emotional.

There are three types of misrepresentation: strict liability for misrepresentation, negligent misrepresentation, and intentional misrepresentation. Whipp, 43 Wis.2d at 169, 168 N.W.2d at 203. The development of the law of misrepresentation in regard to each of these three types of claims has divided into two lines of cases. One line of cases is based on claims that arise from the failure to disclose a material fact and the other line is bottomed on the statement of a material fact which is untrue. Southard v. Occidental Life Ins. Co., 31 Wis.2d 351, 359, 142 N.W.2d 844, 848 (1966).

For example, in Ollerman, 94 Wis.2d at 51-52, 288 N.W.2d at 112, the supreme court concluded that a claim for intentional misrepresentation exists for intentionally failing to disclose a material fact, ³ when there is a duty to speak, but it left open the question of whether a claim for negligent misrepresentation...