Stuart v. Weisflog's Showroom Gallery, Inc., 2005AP886.

• Decision Date: 28 March 2008
• Docket Number: No. 2005AP886.,2005AP886.
• Parties: Robert STUART and Lin Farquhar-Stuart, Plaintiffs-Appellants-Cross-Respondents, v. WEISFLOG'S SHOWROOM GALLERY, INC., and Ronald R. Weisflog, Defendants-Respondents-Cross-Appellants-Petitioners, American Family Mutual Insurance Co., Defendant-Respondent-Petitioner.
• Court: Wisconsin Supreme Court

746 N.W.2d 762

2008 WI 22

Robert STUART and Lin Farquhar-Stuart, Plaintiffs-Appellants-Cross-Respondents, v. WEISFLOG'S SHOWROOM GALLERY, INC., and Ronald R. Weisflog, Defendants-Respondents-Cross-Appellants-Petitioners, American Family Mutual Insurance Co., Defendant-Respondent-Petitioner.

No. 2005AP886.

Supreme Court of Wisconsin.

Argued September 5, 2007.

Decided March 28, 2008.

For the defendant-respondent-petitioner there were briefs by Paul J. Pytlik, Michelle M. Stoeck, and Hills Legal Group, Ltd., Waukesha.

For the defendants-respondents-cross-appellants-petitioners there were briefs by James C. Ratzel, Joya J. Santarelli, and Ratzel and Associates, L.L.C., Brookfield, and oral argument by James C. Ratzel.

For the plaintiffs-appellants-cross-respondents there was a brief by James J. Carrig, Matthew R. Jelenchick, and Niebler, Pyzyk, Klaver & Carrig L.L.P., Menomonee Falls; Ryan M. Benson and Benson Law Office, Siren; and Roy E. Wagner and von Briesen & Roper S.C., Milwaukee, and oral argument by Roy E. Wagner.

An amicus curiae brief was filed by Lori M. Lubinsky, Robert C. Procter, Carl A. Sinderbrand, and Axley Brynelson, L.L.P., Madison, on behalf of the Wisconsin Builders Association, and oral argument by Lori M. Lubinsky.

An amicus curiae brief was filed by Alan G.B. Kim, Jr., Abigail C.S. Potts, and Anderson & Kent, S.C., Madison, on behalf of NARI of Madison, Inc.

An amicus curiae brief was filed by John S. Greene, assistant attorney general, Nelle R. Rohlich, assistant attorney general, and J.B. Van Hollen, attorney general.

¶ 1 N. PATRICK CROOKS, J

This is a review of a published decision of the court of appeals,¹ affirming in part, reversing in part, and remanding with directions, an order of the Circuit Court for Waukesha County, Judge Patrick C. Haughney.²

¶ 2 Petitioners, Weisflog's Showroom Gallery, Inc. (WSGI), Ronald Weisflog (Weisflog) individually, and American Family Mutual Insurance Company, WSGI's and Weisflog's insurer, seek review of the court of appeals' decision that affirmed in part and reversed in part the circuit court's judgment in favor of the respondents, Robert Stuart and Lin Farquhar-Stuart (collectively, the Stuarts). This case involves the interpretation and application of the Home Improvement Practices Act (HIPA), which is contained in Wis. Admin. Code § ATCP 110 (Oct., 2004)³ (ATCP 110), and Wis. Stat. § 100.20(5) (2003-04)⁴.

¶ 3 There are six principal issues upon review: 1) Whether the HIPA and negligence claims of the respondents are barred by a statute of limitations? 2) Whether the HIPA, which provides for the doubling of damages "because of a violation . . . of any order" (Wis.Stat. § 100.20(5)) issued pursuant to HIPA, authorizes the doubling of an entire damage award even if a HIPA violation is combined with additional wrongdoing that contributes to the loss in question? 3) Whether, given the evidence presented in the present case, the circuit court committed error in asking the jury to apportion damages between the Stuarts' HIPA claims and their negligence claims? 4) Whether the economic loss doctrine (ELD) applies to bar the HIPA violation claims or the negligence claims of the respondents? 5) Whether a corporate employee may be held personally liable for acts, he or she takes on behalf of the corporate entity that employs him or her, that violate the HIPA? and 6) Whether the circuit court erred in its determination of the appropriate attorney fee award?

¶ 4 We affirm the decision of the court of appeals. In doing so, we hold as follows on each of the six principal issues. First, we hold that the Stuarts' HIPA claims and their negligence claims are not barred by the statute of limitations because their claims are governed by the discovery rule and the six-year statute of limitations set forth in Wis. Stat. § 893.93(1)(b). Second, we are satisfied that Wis. Stat. § 100.20(5) authorizes the doubling of an entire damage award, even if a HIPA violation is combined with additional wrongdoing that contributes to the loss in question. Third, based on the evidence in the record and on the facts of the present case, we hold that the circuit court erred by asking the jury to apportion damages between the Stuarts' HIPA claims and their negligence claims. Fourth, we are satisfied that the ELD is inapplicable to the Stuarts' claims, and, therefore, does not bar their claims. Fifth, we hold that a corporate employee may be held personally liable for acts, he or she takes on behalf of the corporate entity that employs him or her, that violate the HIPA. Lastly, we hold that the circuit court erred in its determination of an appropriate attorney fee award.

I

¶ 5 The Stuarts hired WSGI to remodel and to put an addition onto their home in Brookfield, Wisconsin. Weisflog is the president of WSGI, a home building and remodeling company. In 1995, the Stuarts met with Weisflog to discuss their project. The Stuarts claim that Weisflog promised them that, for an architectural fee of $1,000, he would provide them with a design and final drawings for the remodeling and for the addition. Robert Stuart testified at trial that Weisflog promised him "independent architectural service[s]." In addition, Weisflog stated that he understood Brookfield building codes and regulations, and that he would comply with them. The Stuarts signed a "Remodeling Architectural Contract" (Architectural Contract) encompassing this agreement.⁵ Neither Weisflog nor his son, Robert, who was the project manager, was a licensed architect. Furthermore, no outside architects were retained for the project. This claimed misrepresentation that the Stuarts would receive "Architectural" services, when the services of an architect were not provided, is one of the bases for the Stuarts' HIPA and negligence claims. In May 1996, after receiving the drawings, the Stuarts entered into a second contract for the remodeling and for the construction of their home addition (Remodeling Contract), which called for a total payment of $278,000.

¶ 6 In support of the Stuarts' misrepresentation claims, Robert Stuart testified at trial that Weisflog had promised the Stuarts that the products Weisflog would use on their project were high quality, that he was familiar with and understood the local building codes and regulations, and that "he could provide architectural service" for the Stuarts, which included doing the "architectural design work."⁶ However, in contrast to Weisflog's representations, the Stuarts highlighted at trial the poor quality of the services and products they had received, and also emphasized Ronald and Robert Weisflog's admissions at trial about their lack of familiarity with local building codes and regulations. For example, at trial, Ronald Weisflog admitted he was not familiar with certain relevant portions of the City of Brookfield's building code.⁷ Furthermore, Robert Weisflog testified he was not even aware that Brookfield had a building code.

¶ 7 Under Robert Weisflog's direction, WSGI remodeled the home and built the addition, which included a room containing a hot tub. In 2001, Robert Stuart stepped through the floor of the hot tub room. When he lifted up the carpet in that room, he discovered that the floor had rotted through. The Stuarts then hired an engineer/home inspector who found many other serious construction defects and building code violations.

¶ 8 In April 2003, approximately two years after the Stuarts discovered the problems and approximately seven years after construction commenced, the Stuarts filed this lawsuit. In the various versions of their complaint, the Stuarts initially alleged negligence in design and construction, breach of contract, and the HIPA violations by virtue of the claimed misrepresentations made by WSGI and Weisflog. However, just before the trial began, the Stuarts dismissed their breach of contract claims.

¶ 9 At trial, the Stuarts presented the testimony of an architect who stated that WSGI's plans were deficient in multiple respects, including their nonconformance with applicable building codes. The Stuarts also introduced the report of their engineer/home inspector that discussed many deficiencies in the construction. The report concluded that some of these deficiencies stemmed from the nonconformance of the plans and some resulted from the actual construction. The report also concluded that the hot tub room had to be demolished and rebuilt, which was an assessment that WSGI's expert at trial was forced to concede. The total cost to repair the faulty project was estimated to be about $96,000.

II

¶ 10 We begin with a discussion of our standards of review. Determining the appropriate statutes of limitations to apply to the HIPA violations and to the negligence claims are questions of statutory and administrative regulation construction that are subject to our de novo review. DaimlerChrysler v. LIRC, 2007 WI 15, ¶ 10, 299 Wis.2d 1, 727 N.W.2d 311.

¶ 11 When determining whether Wis. Stat. § 100.20(5) authorizes the doubling of an entire damage award, even if a HIPA violation is combined with additional wrongdoing that contributes to the loss in question, we apply the same standard of review as we do for other issues of statutory construction. We must give effect to statutory enactments by determining the statute's meaning, especially through its language, which we presume expresses the intent of the legislature. State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶ 44, 271 Wis.2d 633, 681 N.W.2d 110. We favor a construction that will fulfill the intent of a statute or a regulation, over a construction that defeats its manifest object. Shands v. Castrovinci, 115 Wis.2d 352, 356, 340 N.W.2d 506 (1983). However, for questions of statutory construction, such as this one, our review is de novo. DOR v. River City Refuse Removal, Inc., 2007 WI 27, ¶ 26, 299 Wis.2d 561, 729 N.W.2d 396. Administrative rules or regulations are to be...