Plaintiff
can add new claims after remand
By
David Ziemer
Wisconsin Law Journal
Dec.
21, 2005
| What
the court held Case:
Tietsworth v. Harley-Davidson, Inc., No. 2004AP2655 Issue:
Can a plaintiff amend his complaint to pursue contract remedies after the supreme
court has held his tort claims were properly dismissed pursuant to the economic
loss doctrine. Holding:
Yes. Where the Supreme Court specifically held that the plaintiff could proceed
only in contract, justice requires that the plaintiff be allowed to amend his
complaint to add contract claims. Counsel:
Guri Ademi, Cudahy; Shpetim Ademi, Cudahy; David J. Bershad, New York, NY; Michael
M. Buchman, New York, NY; Frank T. Crivello II, Milwaukee, for appellant; Robert
L. Binder, Milwaukee; W. Stuart Parsons, Milwaukee; Patrick W. Schmidt, Milwaukee;
Kelly H. Twigger, Milwaukee, for respondent. |
The
Wisconsin Court of Appeals held on Dec. 13 that, where the Supreme Court dismissed
a plaintiff’s tort claims pursuant to the economic loss doctrine, the plaintiff
must be allowed to amend his complaint to add contract claims.
On
June 28, 2001, Steven C. Tietsworth filed a proposed nationwide class action against
Harley-Davidson, Inc., alleging problems with the design, manufacture, and sale
of a particular model of motorcycle.
Tietsworth’s
causes of action included: (1) a violation of sec. 100.18 (the “Deceptive
Trade Practices Act” or “DTPA”); (2) negligence; (3) strict products
liability; and (4) common-law fraudulent concealment. Tietsworth did not allege
breach of contract or any warranty claims.
Harley-Davidson
moved to dismiss the complaint on the basis that Tietsworth’s claims were
premature as they incurred no actual injury, either personal or economic.
Harley-Davidson
also argued that plaintiffs’ tort claims were barred by the economic loss
doctrine, and that the statutory fraud under sec. 100.18, and the common law fraudulent
concealment claims should be dismissed for lack of particularity.
On
Feb. 27, 2002, the trial court granted the motion to dismiss. Tietsworth appealed
only the dismissal of its DTPA and the fraudulent concealment claims. The court
of appeals reversed, and reinstated the actions. Tietsworth v. Harley-Davidson,
Inc., 2003 WI App 75, 261 Wis. 2d 755, 661 N.W.2d 450.
The
Supreme Court granted review, and reversed the court of appeals, holding that
the economic loss doctrine bars the tort claims. The court wrote, “The plaintiffs
may have contract remedies — breach of contract/warranty or rescission and
restitution — but may not pursue a tort claim for misrepresentation premised
on having purchased allegedly defective motorcycles.”
Tietsworth
v. Harley-Davidson, Inc., 2004 WI 32, par. 37, 270 Wis. 2d 146, 677 N.W.2d 233.
Other
than reversing the court of appeals, however, the Supreme Court gave no further
instructions on remand.
Upon
remittitur to the circuit court, Tietsworth moved the trial court to reopen the
matter pursuant to sec. 808.08(3), and for leave to amend the complaint pursuant
to sec. 802.09, in order to pursue contract and warranty remedies.
Milwaukee
County Circuit Court Judge Michael D. Guolee denied the motion, and dismissed
the complaint, holding that a trial court may not allow amendment of pleadings
after the Supreme Court has affirmed a judgment dismissing a case. Tietsworth
appealed, and the court of appeals reversed in a decision by Judge Ted E. Wedemeyer,
Jr.
The
court first held that the trial court had authority under sec. 808.08(3) to grant
the motion to reopen.
The
statute provides that, when a remittitur is received in the trial court, a party
may move for further proceedings within one year after receipt of the record.
The
court found, “The mandate by the supreme court in this case simply ‘reversed
the decision of the court of appeals’ and remanded the matter to the trial
court. The Supreme Court’s decision did not affirm a judgment of dismissal
or direct that a judgment of dismissal be entered. The only trial court order,
which this court reversed on appeal, was dismissal of the tort claims.”
The
court added, “This action involved a matter not specifically resolved by
the Supreme Court and was not inconsistent with the mandate. The mandate left
open the opportunity for the plaintiffs to pursue contract and warranty claims.
The opinion itself suggested that this option was available as a remedy to the
plaintiffs.”
Harley-Davidson
argued that, if the Supreme Court had intended to permit Tietsworth to have the
opportunity to amend its complaint, it would have directed that the action be
remanded for further proceedings. Rejecting the argument, the court noted that
the Supreme Court cannot order a party to file an amended complaint.
The
court distinguished Sutter v. State, 69 Wis.2d 709, 233 N.W.2d 391 (1975), in
which the Supreme Court held that a party could not amend a complaint to include
tort claims after losing on its contract claims in a previous trip to the Supreme
Court. In Sutter, the case had previously been tried, while in Tietsworth’s
case, there had been no trial, but only motions and “seemingly unending appellate
proceedings.”
Thus,
the court held that the trial court had authority to grant the motion to reopen,
and should have.
The
court further held, under sec. 802.09(1), the trial court should have granted
the motion to amend the complaint. The statute provides that leave to amend a
pleading “shall be freely given at any stage of the action when justice so
requires.”
The
court reasoned, “At the time that Tietsworth filed the tort claims, the law
was unclear as to whether those claims were viable under the dictates of the economic
loss doctrine. The Supreme Court clarified the law in this area in its decision
in that case. Tietsworth, 270 Wis. 2d 146, pars. 36, 37. The Supreme Court specifically
stated that the economic loss doctrine would not bar Tietsworth’s contract
and warranty claims against Harley-Davidson. Id.”
For support,
the court cited Wussow v. Commercial Mechanisms, Inc., 97 Wis. 2d 136, 293 N.W.2d
897 (1980), in which the Supreme Court allowed amendment of a complaint to add
a punitive damages claim, after the parties had settled the question of compensatory
damages.
The
court concluded, “There is no dispute that the amended complaint arises out
of the same transaction or set of facts. There is no dispute that Harley-Davidson
is well aware of the transactions at issue here and what Tietsworth’s claims
are. It has known since the date of the Supreme Court’s decision in this
case, March 26, 2004, that these claims exist and that the highest court in this
state concluded that Tietsworth is entitled to pursue them.”
Accordingly,
the court reversed, and remanded with specific directions to allow Tietsworth
to file an amended complaint asserting the contract and warranty claims.
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David
Ziemer can be reached by email.
