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Kaloti Enterprises7/8/2005
lie or material omission in these limited circumstances.
For the foregoing reasons, we conclude that a narrow fraud in the inducement exception to the economic loss doctrine applies in the present case and that, as the allegations made by Kaloti satisfy that exception, Kaloti's claim of intentional misrepresentation is not barred by the economic loss doctrine.
III. CONCLUSION
Based solely on Kaloti's allegations, we conclude that Kellogg and Geraci had a duty of disclosure that they failed to satisfy, thereby providing a basis for Kaloti's intentional misrepresentation claim, and that Kaloti's intentional misrepresentation claim is not barred by the economic loss doctrine. Therefore, we reverse the circuit court's decision to dismiss Kaloti's amended complaint, and we remand for further proceedings.
By the Court.--The order of the Waukesha County Circuit Court is reversed and the cause remanded.
SHIRLEY S. ABRAHAMSON, C.J. (concurring).
I write separately for two reasons.
First, I write to highlight what is an expansion, without full discussion and recognition of its implications, of this court's decision in Ollerman v. O'Rourke Co. The majority opinion in this case extends a duty to disclose to all business transactions, well beyond the residential real estate context in which a duty was imposed in Ollerman. The majority opinion also extends a duty to disclose in business transactions beyond the boundaries set forth in the Restatement (Second) of Torts § 551.
Second, I write to state that although I agree with the majority opinion's bottom line that the economic loss doctrine should not bar Kaloti's intentional misrepresentation tort claim against Kellogg and Geraci, I disagree with the majority opinion's rationale and its adoption of "a narrow fraud in the inducement exception" like that established in the Michigan Huron Toolcase and explained in the lead opinion in Digicorp.
For many years Wisconsin law has recognized that one who intentionally deceives another with the intent and effect of inducing reliance to the other's detriment will be liable in tort. "Yet the economic loss doctrine, in its more aggressive tort-devouring strains, [is being held] to trump this fundamental common law precept." Fraud is fraud and if proved is a good tort claim. In principle or in practice, the Huron Tool fraud exception to the economic loss doctrine just doesn't work.
I.
The majority opinion imposes a duty to disclose in business transactions that is well beyond the residential real estate context in which a duty to disclose was imposed in the Ollerman case and is well beyond our caselaw. The majority opinion also imposes a duty to disclose in business transactions beyond the boundaries set forth in the Restatement (Second) of Torts § 551.
The general, traditional common law rule, recognized in Wisconsin, is that in misrepresentation claims, absent a duty to disclose, there will be no tort liability for the failure to disclose. " ilence, a failure to disclose a fact, is not an intentional misrepresentation unless the seller has a duty to disclose." If there is a duty to disclose a fact, a party's failure to disclose is treated in the law as the equivalent of an affirmative misrepresentation of the nonexistence of the fact.
In Ollerman, this court declared that "a subdivider-vendor of a residential lot has a duty to a 'non-commercial' purchaser to disclose facts which are known to the vendor, which are material to the transaction, and which are not readily discernible to the purchaser." Ollerman involved a residential real estate tra
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