Tuesday, April 07, 2009

PI Attorneys Pushing Another "Damages" Bill in WI

You're aware, of course, that attorneys have what's called "self-interest." The bad part? They usually get their "self-interest" enacted into law. UPDATE: See Combox!!

...It wasn’t until the couple moved in with their two young sons — and a chance conversation with a neighbor — that they discovered the house wasn’t what it appeared.

“We thought that we had that American dream,” Joseph Murphy said, adding, “It’s just been a total nightmare.”

Well, there are problems.

...Murphys have sued the seller, real-estate agent and home inspector in Rock County Circuit Court for what they allege are misrepresentations and breach of contract. They are asking a judge to order the seller to buy back the $192,000 property — and repay the couple for $40,000 in improvements — because of what they charge are serious defects with the town of Newark house.

But getting punitive damages is out of the question, thanks to a Wisconsin Supreme Court ruling last summer.

Meaning that a certain class of attorneys cannot extract a few hundred pounds of flesh.


A proposal that would allow home buyers such as the Murphys to seek punitive damages is quickly making its way through the Legislature.

Senate Bill 9, introduced by Sen. Dave Hansen, D-Green Bay, passed the Senate. A companion proposal, Assembly Bill 6, sponsored by Rep. Mark Radcliffe, D-Black River Falls, also appears headed for approval, Hansen aide Jay Wadd said.

The legislation, which enjoys wide support from the Wisconsin Realtors Association and others, is in response to the July ruling by the Supreme Court that home buyers can’t sue sellers for fraud if that remedy isn’t specifically spelled out in the real estate contract.

The attentive reader noted the operative language above, beginning with the word "if"...

Which begs the question: why not make that clause a fixture in the real estate contracts?

And another question: if the transaction was fraud, why not JAIL the lying bastard(s), instead of going for Big Munnies? (Just rhetorical...sorry)

You 'll be happy to know that the State Bar has an opinion.

The State Bar of Wisconsin also favors changing the law, saying existing laws “offer less protection to buyers because sellers are subject only to compensatory (actual) — not punitive — damages.

"Less protection"? Talk about propaganda!

“Thus, sellers who misrepresent the condition of their home could only be compelled to pay for repairs that should have been done in the first place ... creating less of an incentive for sellers to be completely honest with buyers,” the bar said in a position statement

Umnnnhhhh....No. It will create "less of an incentive" for sellers to actually KNOW anything. In other words, sellers will continue to lie (if necessary)--they'll just lie more. And, by the way, do you know every single thing that is 'defective' about the house you currently occupy? Every SINGLE THING? And what do you regard as a "defect"? What does a PI shark regard as a "defect"? Think there might be some differences of opinion?

Anyone who's been around the block once, even on their tricycle, can tell you that most sellers won't have the resources to pay "punitive" damages in the amounts that PI sharks need to support their lifestyles.

That means that Realtors and Home Inspectors will have to purchase large-amount liability policies.

That means that the fees for selling and buying homes will go up.

Obviously, the remedy is legislation which favors PI sharks!

By the way, read the whole story at the link above. There's a lot less to this 'grievance' than you might suspect...

HT: Overlawyered


Super Id said...


Your wrong on this one. In fact, you get on the wrong tack right out of the box: PI stands for personal injury, these are property damage claims, which are rarely taken on a contingency basis.

But back to the point, this is the so-called Below v. Norton bill, which is in response the the Wisconsin Supreme's Court activist decision last term in Below v. Norton. In that case, the Wisconsin Supreme Court applied the judicially created ecnomic loss doctrine to bar misrepresentation claims (Despite Wisconsin's recognition of such claims for over 100 years). In plain terms, your only cause of action if a seller intentionally lied to sell their house would be in contract or the two relevant statutory claims (false advertising and Theft-by-fraud).

However, this law doesn't drastically change the remedies. Arguably, the statutory remedies are better anyway as they permit recovery of attorney fees and triple damages) But this law would affects the statute of limitations by imposing the discovery date as the date the statute begins to run instead of the contract date.

"That means that Realtors and Home Inspectors will have to purchase large-amount liability policies."

Actually this helps the Realtors and home inspectors. Realtors and Home inspectors provide "services" and thus, never fell within the ambit of the Economic loss doctrine. (The ELD only applies to "goods" which now includes houses thanks to the most liberal definition of goods in the entire country.)

This creates in unequitible result for the realtors because even if the home owner could not be sued because of a statute of limitation problem, the realtors could (they too have certain obligations with regard to inspections). For that reason, the Wisconsin realtors filed amicus briefs in Below in support of the plaintiffs. After all, if they were also mislead by the defendant shouldn't they be entitled to contribution?

Frankly, had the Wisconsin Supreme court not engaged in such activist interpretation of the ELD, this law would be unnessesary.

Dad29 said...

Thanks for your corrections (which will be noted in the main entry.)

Seems to me that JAILTIME plus actual damages (plus fees, expenses, etc.) would be a fine remedy. If Realtors and Inspectors have to be exculpted from potential liability, (given the usual caveats), fine.

What's with the "damages"?

IOW, who you trying to kid, Super?

Super Id said...

The Theft-by-fraud statute is the civil remedy for victims criminal fraud, but reduces the burden of proof from beyond a reasonable doubt to the civil burden of proof. But good luck trying to get a D.A. to prosecute such a case.