Stuart v. Weisflog's Showroom Gallery, Inc.

• Decision Date: 03 May 2006
• 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,<SMALL><SUP>†</SUP></SMALL> American Family Mutual Insurance Co., Defendant-Respondent.<SMALL><SUP>†</SUP></SMALL>
• Court: Wisconsin Court of Appeals

721 N.W.2d 127

2006 WI App 109

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

No. 2005AP886.

Court of Appeals of Wisconsin.

Submitted on Briefs February 17, 2006.

Opinion Filed May 3, 2006.

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On behalf of the plaintiffs-appellants-cross-respondents, the cause was submitted on the briefs of Roy E. Wagner and Matthew R. Jelenchick, of Niebler, Pyzyk, Klaver & Wagner, L.L.P., of Menomonee Falls.

On behalf of the defendants-respondents-cross-appellant, the cause was submitted on the brief of James C. Ratzel and Joya J. Santarelli, of Ratzel and Associates, L.L.C., of Brookfield.

On behalf of the defendant-respondent American Family Mutual Insurance Company, a brief was filed by Paul J. Pytlik and Michelle M. Stoeck, of Hills Legal Group, Ltd., of Waukesha.

Before SNYDER, P.J., BROWN and NETTESHEIM, JJ.

¶ 1 NETTESHEIM, J

We address a novel question in this case and hold that WIS. STAT. § 100.20(5) (2003-04)¹ authorizes doubling of an entire damage award when a violation of the Home Improvement Practices Act, WIS. ADMIN. CODE ch. ATCP 110 (Oct. 2004)² (ATCP 110), is coupled with additional wrongdoing, separate and apart from the § 100.20/ATCP 110 violation, which contributes to the loss.

¶ 2 A jury found that Weisflog's Showroom Gallery, Inc., (the Gallery) induced Robert Stuart and his wife, Lin Farquhar-Stuart, to enter into an architectural contract and a subsequent remodeling contract by false, deceptive or misleading trade practices contrary to WIS. ADMIN. CODE ATCP § 110.02. The jury further found that the Gallery had negligently performed the construction called for in the remodeling contract. The jury awarded the Stuarts $95,000 and apportioned 25% to the ATCP 110 misrepresentations and 75% to the negligence. Postverdict, the trial court doubled only the misrepresentation damages and, fashioning a formula derived from that logic, awarded attorney fees of $15,675, well short of the $200,000 in fees the Stuarts had sought. The Stuarts appeal the trial court's inclusion of the damage apportionment question on the special verdict and the court's refusal to submit a question as to Ronald Weisflog's personal liability. The Stuarts also appeal the attorney fee award.

¶ 3 Weisflog and the Gallery³ cross-appeal. They claim that the Stuarts' action was barred by the statute of limitations governing contract actions and otherwise was barred by the economic loss doctrine. They also challenge several evidentiary rulings of the trial court and the structure of the special verdict. Finally, Weisflog contends that he was a "prevailing party" and should have been awarded costs.

¶ 4 We affirm the judgment as it relates to the cross-appeal. We hold that the action is not time-barred, as the Stuarts' claims are statutory and tort based, not contract-based. We also hold that the economic loss doctrine does not apply because the core agreement between the parties was one for services within the meaning of Insurance Co. of North America v. Cease Electric Inc., 2004 WI 139, 276 Wis.2d 361, 688 N.W.2d 462. Finally, we do not address the remaining cross-appeal issues because the Weisflog parties have failed to support their arguments with necessary cites to the record and have otherwise conceded the issues by failing to respond in their reply brief to the Stuarts' arguments in their cross-respondent's brief.

¶ 5 However, as to the issues the Stuarts raise on appeal, we reverse. We hold that the apportionment of damages between the Gallery's ATCP 110 violations and its negligence was error and that pursuant to WIS. STAT. § 100.20, the Stuarts are entitled to twice the full measure of their damages. We remand for the entry of judgment to reflect the doubling of the damages. From that, it follows that we must also reverse the attorney fees award since the award was based, at least in part, on the apportionment of the damages. We remand for a redetermination of the Stuarts' attorney fees.

¶ 6 In addition, under Rayner v. Reeves Custom Builders, Inc., 2004 WI App 231, 277 Wis.2d 535, 691 N.W.2d 705, review denied, 2005 WI 60, 281 Wis.2d 114, 697 N.W.2d 472, we hold that the trial court erred in excluding from the verdict a question as to Weisflog's personal liability. We remand for a retrial of that limited question.

FACTS⁴

¶ 7 Weisflog is a home builder/remodeler. In 1995, the Stuarts met with Weisflog to discuss the design and construction of a sizeable addition to their existing home in the City of Brookfield. Weisflog testified that for an architectural fee of $1000, he would consult with the Stuarts about their remodeling needs and provide them with finalized drawings and a home design. However, Weisflog also testified that he had no degree in architecture, nor a license or registration to that effect with the state, and did not recall whether he had had any licensed architect review the plans. Weisflog's son, Robert, was the project manager. Robert also is not degreed or licensed in architecture.

¶ 8 Following these consultations, the Stuarts entered into a "Remodeling Architectural Contract" (Architectural Contract) in November 1995 with the Gallery for the design and drawings of the addition. Weisflog was listed as the salesperson. The Architectural Contract required the Stuarts to pay a $1000 "remodeling architectural fee." The drawings provided by Weisflog to the Stuarts state, "Drawn by Ronald and Robert Weisflog." Neither Weisflog nor anyone working for the Gallery was a licensed architect. The plans list as the provider "Weisflog's Showroom Gallery," but do not include "Inc." or any corporate reference.

¶ 9 With the Architectural Contract in place, the Stuarts then entered into a second contract in May 1996 designated the "Remodeling Contract." The contract price totaled approximately $278,000. The Remodeling Contract generally laid out the work to be done, with many items listed as being "per plan." Drafted on stationery bearing the logo "Weisflog Homes Specialty Drywalling & Repairs," it made no reference to the Gallery or any corporate entity. The contract was signed by Robert Weisflog. The parties dispute whether Weisflog himself was present at the signing. According to the Stuarts, Weisflog professed familiarity with local code requirements and assured the Stuarts that the home would be built in compliance with them. The jury heard testimony from Weisflog, however, that he was unfamiliar with certain aspects of the code and from Robert Weisflog that he "[didn't] even know that there's a Brookfield code. . . . I don't think there is such a thing."

¶ 10 In due course, the Gallery constructed and completed the addition to the Stuart residence. Sometime in 2001, Robert Stuart was in the new hot tub room when his foot went through a soft spot in the floor. He pulled back the carpeting, exposing a "rotted hole." Further investigation revealed that the room's windowsills also were warping and rotting. The Stuarts engaged a professional engineer/home inspector whose examination revealed numerous other serious construction defects and building code violations, some unobservable before that because of their location in the attic or other inaccessible places.

¶ 11 The Stuarts then commenced this action against Weisflog personally and the Gallery, alleging negligence in the design and construction of the addition to their home.⁵ The Stuarts later amended their complaint to allege breach of contract and ATCP 110 violations against the Weisflog parties.

¶ 12 Twice Weisflog unsuccessfully moved for partial summary judgment seeking dismissal of the claims against him in his individual capacity. The second summary judgment motion also requested dismissal of the contract claims against the Weisflog parties. An interlocutory petition to the court of appeals seeking review similarly failed.

¶ 13 At the outset of the jury trial, the Stuarts dismissed their breach of contract claims and proceeded on the remaining theories of negligence and the ATCP 110 misrepresentations. The Stuarts' witnesses included a licensed architect who testified that the architectural plans were deficient, incomplete and did not follow the applicable building codes. The architect's report stated that the plans showed that "major areas of construction are missing or devoid of detail. . . . [and][t]he plans are deficient in many other respects based on accepted standard architectural practices."

¶ 14 The Stuarts also introduced the inspection report prepared by their engineer/home inspector. This report detailed various examples of the work not being completed per the plans and specifications, as well as numerous code violations such as improper ventilation; venting of the clothes dryer into the attic; lack of access to the attic and to mechanical, electrical and plumbing items; improper clearance to floor joists; and improper surface drainage. The Weisflog parties' defense expert later agreed with the inspector's conclusion that the damage was so significant that demolishing and rebuilding the hot tub room would be more prudent than repairing it.

¶ 15 The Stuarts also presented the testimony of a certified indoor environmentalist who stated that he found mold growing in a number of locations, some in "very high concentrations," and some of it of the type Stachybotrys, commonly known as "toxic mold." The remediation of this condition called for physical removal of the mold, cleaning the contaminated surfaces and purifying the air at a cost of between approximately $7500 and $9500. Demolition and rebuilding the project was projected to cost $96,300.

¶ 16 Following the close of the evidence, the trial court and the parties addressed the form of the special verdict. The...