Western Leather Lofts Condominium Association, Inc. v. Busalacchi, No. 2009AP1451 (Wis. App. 6/15/2010)

• Decision Date: 15 June 2010
• Docket Number: No. 2009AP1451.,2009AP1451.
• Parties: Western Leather Lofts Condominium Association, Inc., A Wisconsin Non-Stock Corporation, Plaintiff, v. Andrew G. Busalacchi, Rainmaker Enterprises, Inc. and Andy Busalacchi Heating and air Conditioning Corp., Defendants-Third-Party Plaintiffs-Appellants, v. Rundle-Spence MFG. Co., Defendant-Third-Party Defendant-Respondent.
• Court: Wisconsin Court of Appeals

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Western Leather Lofts Condominium Association, Inc., A Wisconsin Non-Stock Corporation, Plaintiff, v. Andrew G. Busalacchi, Rainmaker Enterprises, Inc. and Andy Busalacchi Heating and air Conditioning Corp., Defendants-Third-Party Plaintiffs-Appellants, v. Rundle-Spence MFG. Co., Defendant-Third-Party Defendant-Respondent.

No. 2009AP1451.

Court of Appeals of Wisconsin, District I.

Opinion Filed: June 15, 2010.

APPEAL from a judgment of the circuit court for Milwaukee County: DENNIS P. MORONEY, Judge. Reversed and cause remanded.

Before Fine, Kessler and Brennan, JJ.

¶ 1 KESSLER, J

Andrew G. Busalacchi, Rainmaker Enterprises, Inc., and Andy Busalacchi Heating and Air Conditioning Corp. (referred to collectively as "Busalacchi" unless otherwise specifically identified), appeal from a judgment dismissing their third-party claims against Rundle-Spence Mfg. Co.¹ Busalacchi argues that the trial court erroneously dismissed his claims for promissory estoppel, breach of contract, breach of warranty, equitable indemnification and equitable contribution from Rundle-Spence. We agree. Therefore, we reverse the summary judgment dismissing Busalacchi's claims against Rundle-Spence and remand for further proceedings consistent with this opinion.

BACKGROUND

¶ 2 Rainmaker Enterprises, Inc., owned by Andrew Busalacchi, was the developer of Western Leather Lofts Condominiums in Milwaukee. Busalacchi initially installed twelve German-manufactured Buderus boilers as part of the radiant heat system for the condominium building. For a variety of reasons, Busalacchi decided to replace the Buderus boilers before he transferred control of the building to the Western Leather Lofts Condominium Association, Inc. ("the Association").

¶ 3 Busalacchi discussed his interest in replacing the Buderus boilers with Ed Sharpe,² an employee of Rundle-Spence, a boiler distributor. According to Busalacchi, Sharpe suggested French-manufactured Monitor boilers and represented the Monitor boilers as "relatively safe, energy-efficient, technologically advanced, high-quality and durable." However, the Monitor boilers were not "ASME-certified."³ ASME certification is a safety and quality certification, given by an ASME-accredited organization, that a particular product has been tested by the accredited organization and passed the ASME Boiler and Pressure Vessel Code. The ASME itself, as a group, does not test products for compliance with its code, but other organizations may test a product using the ASME code and then certify that the product meets the code. The fact that a boiler does not have ASME certification does not necessarily mean that the boiler does not meet standards set forth in the ASME Boiler and Pressure Vessel Code; but it does mean that an ASME-accredited organization has not yet made a determination that the boiler meets those code provisions.

¶ 4 ASME certification is important because § 223-7.3 of the CITY OF MILWAUKEE CODE OF ORDINANCES ("MCO") requires that boilers of the kind at issue here comply with ASME codes and safety provisions, i.e., they must be ASME-certified.⁴ Variances from the MCO requirements may be obtained by appeal to the City of Milwaukee Department of Neighborhood Services. See MCO ch. 200, subch. 3.

¶ 5 According to Busalacchi, when he and Sharpe discussed the need for ASME-certified boilers that would comply with the ordinance, Sharpe said that "the ASME certification was on the way, don't worry about it," and promised that Rundle-Spence would "either make sure that the Monitor boilers were soon ASME certified or would obtain variances from the City of Milwaukee ordinances and state safety codes that required ASME certification." Sharpe further indicated that he was certain that the Monitor boilers would be ASME-certified in the near future. According to Busalacchi, Sharpe's representations concerning ASME certification were a "major reason" that he decided to purchase the Monitor boilers from Rundle-Spence and have them installed in the condominium building. At the time Busalacchi considered them, and later when he actually purchased and installed nine⁵ Monitor-brand boilers from Rundle-Spence, the boilers had not been ASME-certified. At some point after the Monitor boilers were installed, Busalacchi turned control of the building over to the Association.

¶ 6 Contrary to Rundle-Spence's representations, ASME certification of the boilers was not forthcoming. In March 2004, a City of Milwaukee inspector issued a Notice of Violation advising that the boilers were not ASME-certified and must be removed. After the Association was notified of the violation, an appeal was filed and Busalacchi took the lead in responding to the City's inspection report. At the hearing, representatives of Monitor and of Rundle-Spence spoke in support of Busalacchi, discussed the ASME certification process and stressed the good performance of the Monitor boilers. The Commission decided to grant a three-year variance to allow the ASME certification process to be completed and also granted permits so that the three remaining Buderus boilers could be replaced with Monitor boilers. Rob Spence, a Rundle-Spence representative who appeared at the hearing, asked the Commission, "[I]f there are problems with getting [ASME] certification, we can come back here and ask for a variance again?" The Commission chairperson responded: "Oh, absolutely. The door's not closed three years from now. We would just hear the status of how it's progressing."

¶ 7 The variance was granted in May 2004. According to Busalacchi, Rundle-Spence did "very little" during the next three years to attempt to obtain ASME certification of the Monitor boilers or another variance.

¶ 8 In late 2006 or early 2007, the Association decided to remove the Monitor boilers and install ASME-certified boilers. According to the Association, that decision was based on maintenance and performance problems it experienced with the Monitor boilers. The Association did not seek another variance after the City issued an order to the Association's property management company in June 2007 directing that the non-ASME-certified boilers (the Monitor boilers) be removed.

¶ 9 The Association filed suit against Busalacchi in August 2007, alleging seven causes of action, including: (1) negligence; (2) breach of warranties; (3) negligently providing or failing to provide statement pursuant to Wis. Stat. § 703.33(2)(cm) (2007-08);⁶ (4) negligence per se—breach of safety statute; (5) breach of fiduciary duty; (6) strict liability; and (7) negligent design.⁷ The complaint alleged that the Monitor boilers did not comply with the building code and were unsafe. Busalacchi filed three counterclaims against the Association and also filed a third-party complaint against Rundle-Spence.

¶ 10 Busalacchi's third-party complaint alleged six claims based on Rundle-Spence's failure to procure ASME certification for the Monitor boilers, including: (1) promissory estoppel; (2) breach of contract; (3) breach of express warranty; (4) breach of implied warranty of merchantability; (5) breach of implied warranty of fitness for a particular purpose; and (6) breach of the duty of good faith and fair dealing.

¶ 11 Subsequently, the Association, for the first time, named Rundle-Spence as a defendant, asserting claims of negligence and strict liability based on allegations that Rundle-Spence's boilers did not comply with the building code and were "inherently dangerous." Busalacchi then amended its third-party complaint against Rundle-Spence, adding a claim for indemnification and/or contribution for liability Busalacchi may have to the Association.

¶ 12 Discovery ensued. Rundle-Spence moved for summary judgment against both the Association and Busalacchi, seeking dismissal of all claims. Neither the Association nor Busalacchi filed a motion for summary judgment and both opposed Rundle-Spence's motion.

¶ 13 The trial court granted summary judgment dismissing all Association claims against Rundle-Spence and all Busalacchi claims against Rundle-Spence.⁸ The trial court concluded that "the economic loss doctrine governs and bars the negligence and strict liability claims as between [the Association] and [Rundle-Spence]." The Association did not appeal.

¶ 14 As to Busalacchi, the trial court dismissed the breach of contract claims holding that the issue was "not ripe" because there had been no determination that Busalacchi had an obligation to the Association. The trial court dismissed the breach of warranty claims, holding that a specific time for performance should have been included in the contract, and that without such specificity, the warranty was too indefinite to enforce. Busalacchi's claim for contribution was dismissed because the Association's negligence claim against Rundle-Spence had been dismissed and, therefore, there was no joint and several liability to sustain a claim for contribution.

¶ 15 The trial court dismissed Busalacchi's promissory estoppel claim and claim for indemnification because there was no specific time in which Rundle-Spence was to obtain the ASME certification and, therefore, there was "no issue of indemnification ... or promissory estoppel in view of the indefiniteness of the requirement." Busalacchi appeals from the dismissal of its claims against Rundle-Spence.

STANDARD OF REVIEW

¶ 16 The claims at issue in this case were dismissed on summary judgment. On appeal, we review summary judgments de novo, using the same methodology as the trial court. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315-17, 401 N.W.2d 816 (1987). Summary judgment is proper if there are no genuine issues of material fact and one party is entitled to judgment as a matter of law. Wis. Stat. § 802.08(2). In evaluating the evidence, we draw all reasonable inferences from the evidence in the light most favorable to the non-moving party. Grams v. Boss, 97 Wis. 2d 332, 339, 294 N.W.2d 473 (1980), ...