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Brenner v. Amerisure Mutual Insurance Co.

Supreme Court of Wisconsin

April 18, 2017

Donna Brenner, as Personal Representative for the Estate of Russell T. Brenner and Donna Brenner, Individually, Plaintiffs-Respondents,
v.
Amerisure Mutual Insurance Company, Garland Brothers Joint Venture and Garland Brothers, Inc., Defendants, Charter Manufacturing Co. and Ace American Insurance Company, Defendants-Respondents, National Casualty Company and Milwaukee World Festival, Inc., Defendants-Appellants-Petitioners.

          Submitted on Briefs Oral Argument: October 26, 2016

         REVIEW OF A DECISION OF THE COURT OF APPEALS Reported at: 365 Wis.2d 476, 872 N.W.2d 124');">872 N.W.2d 124 (2015 WI.App. 85 - Published)

         Source of Appeal: County Court Circuit Milwaukee Richard J. Sankovitz Judge.

          For the defendants-appellants-petitioners, there were briefs by Pamela M. Schmidt and Scopelitis, Garvin, Light, Hanson & Feary, P.C., Milwaukee, and oral argument by Pamela M. Schmidt.

          For the plaintiffs-respondents, there was a brief by Susan R. Tyndall, Timothy S. Trecek and Habush Habush & Rottier, S.C., Milwaukee, and oral argument by Susan R. Tyndall.

          BRADLEY, R.G., J. did not participate.

          DANIEL KELLY, J.

         ¶1 The question before the court is whether Charter Manufacturing Company ("Charter"), the former long-term tenant of property owned by Garland Brothers Joint Venture ("Garland Brothers"), could be liable for injuries to Russell T. Brenner, a construction worker who labored at the former Garland Brothers building after it had been sold to Milwaukee World Festival, Inc. ("MWF").

         I. FACTUAL BACKGROUND

         ¶2 For 211/2 years, Garland Brothers owned the property located at 607 Polk Street in the city of Milwaukee (the "Property"). For 20 of those years, Charter housed its wire manufacturing business at the Property under a triple net lease.[1]One of Charter's tasks in making the facilities operational was the installation of heat treatment furnaces in a below-grade "pit" in one of the buildings. The furnaces extended up from the pit and through a hole cut into the metal grate floor above it.

         ¶3 Fast forwarding 20 years, Charter notified Garland Brothers that it would terminate its lease at the end of 2009. The lease obligated Charter to remove its machinery (including the heat treatment furnaces) from the Property before surrendering possession. Additionally, Garland Brothers asked Charter to perform several maintenance and repair tasks. One such request was to fill in the pit where the heat treatment furnaces had been located. Garland Brothers later revoked this request in exchange for Charter's commitment to leave the pit in a "clean and safe condition."

         ¶4 Charter hired Pieper Electric to help it remediate the Property before the end of the lease. Pieper Electric, in turn, subcontracted with Harrison Metals to remove the heat treatment furnaces. Completion of that task left holes in the metal grate floor through which the furnaces had once protruded. Because the holes could pose a danger, Harrison Metals created short plywood boxes to cover them. Harrison Metals did not mark the boxes to indicate their function or tether them in place. In late December 2009, Garland Brothers performed a final walkthrough of the Property with its experts and Charter representatives. Because Garland Brothers had performed numerous inspections throughout the life of the lease, the heat treatment furnaces would have been conspicuous by their absence during this final walkthrough. Garland Brothers did not raise any concerns about the pit, the holes in the floor above it, or the method of covering them.

         ¶5 Charter released possession of the Property to Garland Brothers on December 31, 2009. Garland Brothers thereafter maintained sole possession of the Property until MWF purchased it in "as-is, where-is" condition "with all faults" and took possession on May 3, 2011. MWF had originally slated for demolition the building Charter had occupied but subsequently changed its plans.

         ¶6 MWF was on the Property multiple times before purchasing it. Its general counsel, for example, personally conducted walkthroughs of the Property while Charter was still occupying it and observed the heat treatment furnaces extending through the metal grate floor. MWF also had a designer inspect the building several times and had the designer specifically consider the feasibility of creating an entryway where the heat treatment furnaces stood. MWF's construction director was also on the Property prior to the purchase to plan for future work. Environmental tests performed as part of due diligence in the sale of the Property also identified the existence of the pit.

         ¶7 After completing the purchase of the Property, MWF hired Hunzinger Construction ("Hunzinger") to perform demolition and renovation work on the Property. As part of their work, Hunzinger employees, including Mr. Brenner, removed the plywood boxes present in the building. Mr. Brenner did not know that some of these boxes covered holes once occupied by the heat treatment furnaces. Consequently, while removing one of these boxes, he fell through a hole and sustained severe injuries.

         II. PROCEDURAL BACKGROUND

         ¶8 Mr. Brenner and his wife sued MWF, Garland Brothers, and Charter (as well as their insurers) alleging negligence and violation of Wisconsin's safe-place statutes. As particularly relevant here, the Brenners said Charter was negligent because it concealed or failed to disclose to MWF the holes in the metal grate flooring under the plywood boxes.

         ¶9 Charter and Garland Brothers moved for summary judgment, relying primarily on the doctrine of caveat emptor as described in the Restatement (Second) of Torts § 352 (Am. Law Inst. 1965) (hereinafter "§ 352"). The circuit court dismissed both parties, concluding that the caveat emptor principle precluded judgment against them.[2] The Brenners subsequently settled with Charter and Garland Brothers, which they documented with a settlement agreement that included a Pierringer release.[3]

         ¶10 MWF appealed Charter's dismissal.[4] MWF's interest in this question is in ensuring it is exposed to no more than the correct quantum of liability. Notwithstanding Charter's dismissal from the case, if the matter proceeds to trial, a jury would need to apportion liability amongst all eligible defendants--even those who have been dismissed through settlements. If the law of negligence makes Charter eligible for liability, MWF's exposure potentially decreases, resulting in a smaller judgment against it. If Charter is not eligible for liability, the potential judgment against MWF could increase.

         ¶11 On appeal, MWF argued that Charter was not a "vendor" under § 352, and even if it was, it would still be liable pursuant to the exception from exemption described in Restatement (Second) of Torts § 353 (Am. Law. Inst. 1965) (hereinafter "§ 353"). In a published decision, the court of appeals affirmed the circuit court's summary judgment in favor of Charter.[5] The court of appeals based its opinion on the caveat emptor doctrine as described in § 352, concluding that Charter was a "vendor" within the meaning of the Restatement test. It further found that, because MWF had reason to know of the danger posed by the wooden boxes that covered the holes, § 353 did not negate the immunity supplied by the caveat emptor doctrine. We granted MWF's timely petition for review and now affirm the court of appeals.

         III. STANDARD OF REVIEW

         ¶12 This matter is before us on review of a grant of summary judgment dismissing the Brenners' negligence claim against Charter. Summary judgment is appropriate where there are no material facts in dispute and the moving party is entitled to judgment as a matter of law. See Wis.Stat. § 802.08(2) (2015-16).[6] We review a grant of summary judgment de novo, applying the same methodology as the circuit court. Belding v. Demoulin, 2014 WI 8, ¶13, 352 Wis.2d 359, 843 N.W.2d 373. While our review is independent from the circuit court and court of appeals, we benefit from their analyses. Preisler v. Gen. Cas. Ins. Co., 2014 WI 135, ¶16, 360 Wis.2d 129, 857 N.W.2d 136. Whether a duty exists under the circumstances, and the scope of any such duty, are questions of law we decide de novo. Hocking v. City of Dodgeville, 2009 WI 70, ¶7, 318 Wis.2d 681, 768 N.W.2d 552.

         IV. DISCUSSION

         ¶13 We must determine whether the law of negligence could make Charter liable to the Brenners. Success in that endeavor requires establishing the following: (1) a duty of care owed by Charter; (2) a breach of that duty; (3) a causal connection between the breach and the Brenners' injury; and (4) actual loss or damage resulting from the injury. Gritzner v. Michael R., 2000 WI 68, ¶19, 235 Wis.2d 781, 611 N.W.2d 906. On summary judgment, only the first issue--whether Charter owed the Brenners a duty of care--was at issue. It is also the only element we address in our analysis here.

         ¶14 MWF asks us to find that the tort-based duty of a real estate tenant continues even after the tenant vacates the property. The Brenners say, and the circuit court and court of appeals agreed, that the caveat emptor doctrine terminated Charter's duty after it surrendered possession of the Property to Garland Brothers. MWF tells us that caveat emptor is an archaic proposition and that we would do well to join the twenty-first century by abandoning this concept in favor of principles described in the Restatement (Third) of Torts: Physical and Emotional Harm § 51 (Am. Law Inst. 2012) (hereinafter "§ 51"). MWF says the old ways, memorialized in §§ 352 and 353, create dangerous dynamics, the effects of which caused Mr. Brenner's injury. Alternatively, if we should decide not to adopt the Restatement (Third) of Torts on this question, MWF says caveat emptor (as described in the Restatement (Second) of Torts) does not apply to long-term former tenants like Charter. And if it does, MWF says, there are exceptions to this immunity from liability that operate against Charter under the facts of this case.

         A. Charter's Duty

         1. General principles governing "duty"

         ¶15 Before analyzing the caveat emptor doctrine, we must first describe the duty it is supposed to affect. MWF says it is "unquestionable" that Charter would owe a duty to the Brenners absent the doctrine of caveat emptor "because everyone owes a duty to everyone else." (Citing Behrendt v. Gulf Underwriters Ins. Co., 2009 WI 71, 318 Wis.2d 622, 768 N.W.2d 568.)

         ¶16 This characterization of Behrendt suggests we have concluded that every negligence claim arrives at court with the first element already proven as a matter of law, or that we have eliminated the first line from the negligence quatrain. We have not. See, e.g., A.E. Inv. Corp. v. Link Builders, Inc., 62 Wis.2d 479, 484, 214 N.W.2d 764 (1974) ("Duty is still an important factor in determining whether an act is negligent.").

         ¶17 What we said in Behrendt is that "everyone owes to the world at large the duty of refraining from those acts that may unreasonably threaten the safety of others." Behrendt, 318 Wis.2d 622, ¶17 (bracket and internal marks omitted) (quoting Alvarado v. Sersch, 2003 WI 55, ¶13, 262 Wis.2d 74, 662 N.W.2d 350).[7] Immediately following this statement, however, we explained that "[w]hat is within the duty of ordinary care depends on the circumstances under which the claimed duty arises. For example, what is comprised within ordinary care may depend on the relationship between the parties or on whether the alleged tortfeasor assumed a special role in regard to the injured party." Behrendt, 318 Wis.2d 622, ¶18 (quoting Hoida, Inc. v. M & I Midstate Bank, 2006 WI 69, ¶32, 291 Wis.2d 283, 717 N.W.2d 17).

         ¶18 One of the most significant circumstances relating to the nature of Charter's duty in this case is the relationship between the parties, as evidenced by the sequence in which the defendant parties possessed the Property. As relevant here, Charter was the first to possess. Garland Brothers then took possession upon expiration of Charter's lease. Finally, MWF gained possession of the Property through its purchase from Garland Brothers.

         ¶19 Therefore, whether Charter is potentially liable in negligence to the Brenners depends on whether its duty "to the world at large . . . [to] refrain [] from those acts that may unreasonably threaten the safety of others, " Behrendt, 318 Wis.2d 622, ¶17 (internal marks and citation omitted), extended to telling not just Garland Brothers, but all future strangers who may come into possession of the Property, that there were holes in the floor under the plywood boxes.

         ¶20 The only support MWF identified for this proposition was § 51, in conjunction with its over-simplification of our holding in Behrendt. So we review § 51 to determine whether it provides any insight on the nature of Charter's duty under these circumstances.

         2. Restatement (Third) of Torts: Physical & Emotional Harm § 51

         ¶21 MWF urges us to adopt § 51 because it believes this provision describes a superior view of what the law of premises liability ought to be. This section states:

Subject to [Restatement (Third) of Torts: Physical & Emotional Harm] § 52, a land possessor owes a duty of reasonable care to entrants on the land with regard to:
(a) conduct by the land possessor that creates risks to entrants on the land;
(b) artificial conditions on the land that pose risks to entrants on the land;
(c) natural conditions on the land that pose risks to entrants on the land; and
(d) other risks to entrants on the land when any of the affirmative duties provided in Chapter 7 is applicable.

§ 51. This provision does not define "land possessor, " but we need only flip back to Restatement (Third) of Torts: Physical & Emotional Harm § 49 (Am. Law Inst. 2012) (hereinafter "§ 49") for assistance:

         A possessor of land is

(a) a person who occupies the land and controls it;
(b) a person entitled to immediate occupation and control of the land, if no other person is a possessor of the land under Subsection (a); or
(c) a person who had occupied the land and controlled it, if no other person subsequently became a possessor under ...

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