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Grams v. Milk Products7/8/2005
REVIEW of a decision of the Court of Appeals. Affirmed.
Petitioners Gerald and Joliene Grams (the Grams) seek review of an unpublished court of appeals decision affirming a grant of summary judgment to Milk Products, Inc. (Milk Products) by the circuit court for Rock County, John W. Roethe, Judge. The court of appeals affirmed the circuit court's determination that the economic loss doctrine barred the Grams' tort claims against Milk Products and Cargill, Inc. (Cargill).
The economic loss doctrine is a judicial doctrine intended to preserve the fundamental distinction between contract and tort. Ins. Co. of N. Am. v. Cease Elec., Inc., 2004 WI 139, , 276 Wis. 2d 361, 688 N.W.2d 462. It works to prevent a party to a contract from employing tort remedies to compensate the party for purely economic losses arising from the contract. There are exceptions. For instance, we noted several years ago that "The economic loss doctrine does not preclude a product purchaser's claims of personal injury or damage to property other than the product itself." Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 247, 593 N.W.2d 445 (1999) (emphasis added). Over time, however, the parameters of this "other property" exception have proved elusive. In this case, we must decide whether the Grams' claimed damages fall within the scope of the "other property" exception.
We hold that if claimed damages are the result of disappointed expectations of a bargained-for product's performance, the economic loss doctrine applies to bar the plaintiff's tort claims and the plaintiff must rely upon contractual remedies alone. In this case, the Grams allege in tort that the object of the contract, a "milk replacer" intended for livestock nourishment, did not adequately nourish their calves and that some died. Because we find that this tort claim is, at bottom, based on disappointed performance expectations, we hold that it does not fit within the "other property" exception and is therefore barred by the economic loss doctrine. Accordingly, we affirm the decision of the court of appeals.
I. FACTS AND PROCEDURAL POSTURE
Because this case is before us on the defendants' motion for summary judgment, we take the Grams' version of the facts as true.
Gerald and Joliene Grams have specialized in raising calves since 1992. The Grams acquire the calves when they are between three and five days old and raise them until they are approximately four months old, at which time they resell them. At the time of this dispute, the Grams were raising approximately 6000 calves each year.
For the first few weeks of their lives, the calves are fed a milk substitute which, in farming parlance, is called a "milk replacer." The Grams used a Cargill milk replacer known as "Half-Time." This product included medications designed to keep the calves healthy during the first few weeks of their lives, a critical time in which the calves' immune systems are developing. The "Half-Time" milk replacer was manufactured for Cargill by Milk Products, Inc.
In November 2000, the Grams asked a Cargill representative about obtaining a less expensive milk replacer. The representative told the Grams that they could purchase "Half-Time" milk replacer without medication at a lower price than the medicated version. The Grams began using this non-medicated version in January 2001. As with the medicated "Half-Time," the non-medicated version was sold by Cargill and manufactured by Milk Products.
Soon after they began using the non-medicated "Half-Time," the Grams noticed certain problems developing in their calves. Specifically, the calves were not gaining wei
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