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Kaloti Enterprises7/8/2005
aw to stand in loco parentis to protect them in their ordinary dealings with other business people." Ollerman, 94 Wis. 2d at 30. Further, "in a free market the diligent should not be deprived of the fruits of superior skill and knowledge lawfully acquired." Id. at 29-30; see also Market St. Assocs. Ltd. P'ship v. Frey, 941 F.2d 588, 593-94 (7th Cir. 1991) (remarking that "the law contemplates that people frequently will take advantage of the ignorance of those with whom they contract, without thereby incurring liability").
However, it is another matter entirely when one party exclusively holds knowledge of facts material to the transaction that the other party has no means of acquiring. As we said in Ollerman, "where the [material] facts are peculiarly and exclusively within the knowledge of one party to the transaction and the other party is not in a position to discover the facts for himself [or herself]," disclosure is required. Ollerman, 94 Wis. 2d at 31. We similarly noted prominent legal commentator Dean Prosser's observation that courts have tended to find a duty to disclose in cases "where the defendant has special knowledge or means of knowledge not open to the plaintiff and is aware that the plaintiff is acting under a misapprehension as to facts which could be of importance to him, and would probably affect his decision." Id. at 31-32 (quoting William L. Prosser, The Law of Torts 697 (1971) (emphasis added).
Drawing on the above-stated principles from our case law, we conclude that a party to a business transaction has a duty to disclose a fact where: (1) the fact is material to the transaction; (2) the party with knowledge of that fact knows that the other party is about to enter into the transaction under a mistake as to the fact; (3) the fact is peculiarly and exclusively within the knowledge of one party, and the mistaken party could not reasonably be expected to discover it; and (4) on account of the objective circumstances, the mistaken party would reasonably expect disclosure of the fact.
In turning to application of this standard in the present case, we note the requirements of Wis. Stat. §§ 802.02 and 802.03(2) (2001-02) that regard, respectively, pleadings generally and pleadings in cases of fraud. While § 802.02(1)(a) provides that pleadings setting forth a claim for relief need to contain " short and plain statement of the claim," § 802.03(2) provides, "In all averments of fraud . . . the circumstances constituting fraud . . . shall be stated with particularity." Pursuant to § 802.03(2), "allegations of fraud must specify the particular individuals involved, where and when misrepresentations occurred, and to whom misrepresentations were made." Putnam v. Time Warner Cable of S.E. Wisconsin, Ltd. P'ship, 2002 WI 108, , 255 Wis. 2d 447, 649 N.W.2d 626 (citing Friends of Kenwood v. Green, 2000 WI App 217, , 239 Wis. 2d 78, 619 N.W.2d 271). Such detailed pleadings put defendants on notice "so that they may prepare meaningful responses to the claim." Id. (quotations and quoted source omitted).
We conclude that the allegations Kaloti made in its amended complaint satisfy the statutory pleading requirements and are sufficient, if proved at trial, to establish that Kellogg and Geraci each had a duty of disclosure. First, that Kellogg would be selling directly to the large stores in Kaloti's usual area of distribution is material, as Kaloti, a wholesaler and secondary supplier, bought products from Kellogg in order to resell them to these same large stores and would not have placed the May 14, 2001 order if it had known that Kellogg was going to sell directly. Second, Kellogg and Geraci knew that Kaloti was buying the products to resell them to the
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