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Kaloti Enterprises7/8/2005
2001, Geraci representative Michael Angele told Kaloti employee Mary Beth Welhouse that Geraci had not advised Kaloti of Kellogg's anticipated change in marketing strategy because of a confidentiality agreement between Kellogg and Geraci in respect to Kellogg's new marketing strategy. The same day, Kaloti notified Geraci and Kellogg that it was rescinding the May 14, 2001 purchase, advising them that it would not have placed the order or accepted the product if it had known that Kellogg had changed to a direct-sales mode of marketing. Kaloti attempted to return the product, but Kellogg has refused to accept delivery and has refused to reimburse Kaloti.
Kaloti alleges that Geraci and Kellogg acted intentionally in concealing facts material to Kellogg's change in marketing strategy, which change caused Kaloti to be shut out of the market it had utilized in the past to resell Kellogg's products. Kaloti attempted to mitigate its damages and claims that, notwithstanding those efforts, it has lost $100,000 due to Kellogg's intentional misrepresentation.
II. DISCUSSION
A. Standard of Review
We review a dismissal for failure to state a claim as a question of law, without deference to the circuit court's decision. Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, , 270 Wis. 2d 146, 677 N.W.2d 233; Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 245, 593 N.W.2d 445 (1999). In the present case, our inquiry begins with consideration of whether the amended complaint states an intentional misrepresentation claim, the determination of which turns on whether Geraci and Kellogg had a duty to disclose certain facts to Kaloti. Whether a duty exists is also a question of law that we review independently of the circuit court. See Ritchie v. Clappier, 109 Wis. 2d 399, 403, 326 N.W.2d 131 (Ct. App. 1982). And finally, the application of the economic loss doctrine to a set of facts presents another question of law for our independent review. Ins. Co. of N. Am. v. Cease Elec. Inc., 2004 WI 139, , 276 Wis. 2d 361, 688 N.W.2d 462.
B. Failure to State a Claim
A motion to dismiss for failure to state a claim tests the legal sufficiency of the complaint to state a claim for which relief may be granted. Tietsworth, 270 Wis. 2d 146, . When testing the legal sufficiency of a claim, all facts alleged in the complaint, as well as all reasonable inferences from those facts, are accepted as true. Ollerman v. O'Rourke Co., 94 Wis. 2d 17, 24, 288 N.W.2d 95 (1980). Furthermore, pleadings are liberally construed. Id. The complaint need not state all the ultimate facts constituting the cause of action, but rather, the complaint should be dismissed as legally insufficient only if there are no conditions under which the plaintiff can recover. Id.
C. Intentional Misrepresentation
There are three categories of common law misrepresentation: intentional, negligent and strict liability misrepresentation. Tietsworth, 270 Wis. 2d 146, . Kaloti's claim is for intentional misrepresentation, sometimes referred to as fraudulent misrepresentation, Ramsden v. Farm Credit Services of North Central Wisconsin ACA, 223 Wis. 2d 704, 718 n.9, 590 N.W.2d 1 (Ct. App. 1998), or common-law fraud, see Tietsworth, 270 Wis. 2d 146, . To state a claim for intentional misrepresentation, the following allegations must be made:
(1) the defendant made a factual representation; (2) which was untrue; (3) the defendant either made the representation knowing it was untrue or made it recklessly without caring whether it was true or false; (4) the defendant made the representation with intent to defraud and to induce another to act upon it; and (5) the
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