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COURT OF APPEALS DECISION DATED AND RELEASED June 18, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 94-2990
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
FREDERICK SPIVEY, JR.
and SUE E. SPIVEY,
Plaintiffs-Appellants,
v.
WILLIAM G. OTTO,
Defendant-Respondent,
WELCOME HENRY SCHALMO,
KATHLEEN R. SCHALMO
and
ROTH & TAPLIN,
INC.,
a Wisconsin
Corporation,
Defendants.
APPEAL from a judgment
of the circuit court for Milwaukee County: GEORGE A. BURNS, JR., Judge. Reversed and cause remanded.
Before Sullivan, Fine
and Schudson, JJ.
SULLIVAN,
J. Frederick Spivey, Jr. and Sue E. Spivey appeal from a summary
judgment dismissal of the third claim for relief in their amended complaint for
conspiracy to defraud in the sale of a home on the part of William G. Otto.
Because we conclude from the pleadings and materials submitted on summary
judgment that material issues of fact exist, we reverse and remand for a new
trial.
I. Background.
The Spiveys purchased a
single-family home in the City of West Allis from Welcome Henry Schalmo and
Kathleen R. Schalmo. Their complaint
alleges that the Schalmos intentionally misrepresented the condition of the
house, and that it was beset with structural and rot-related defects affecting
its structural integrity and rendering it uninhabitable. As to William G. Otto, Ms. Schalmo's father,
the third claim for relief alleges that he conspired with the Schalmos to
facilitate their fraud upon the Spiveys.
Evidentiary facts
presented on the motion for summary judgment show that the Spiveys and Schalmos
entered into a residential offer to purchase and acceptance, and that one of
its provisions required the Schalmos to provide a property condition report to
the Spiveys. The Schalmos submitted the
report on May 13, 1989. It expressly
represented that no mildew or rot damage to the property existed. In reliance upon the report, the Spiveys
closed the purchase on September 29, 1989.
On April 8, 1991, the Spiveys and their building contractor applied to
the City of West Allis for a permit to construct two additional rooms to the
home. On May 30, while the improvement
was under construction, the City building inspector noted on the building
application the existence of rotting floor joists that had been repaired by
nailing two-by-fours next to the rotting joists.[1] The inspector stopped work on the additions
because of the degree of rotting and the ineffectiveness of the repair. Another private contractor examined the
house and concluded that the rot to the joists was so extensive that the house
was in danger of collapse.
Ultimately, the Spiveys
abandoned the property; it was foreclosed and the house razed. The Spiveys later instituted this action.
II. Analysis.
“Summary judgment is
appropriate to determine whether there are any disputed factual issues for
trial and `to avoid trials where there is nothing to try.'” Caulfield v. Caulfield, 183
Wis.2d 83, 91, 515 N.W.2d 278, 282 (Ct. App. 1994) (citation omitted). When we review a motion for summary
judgment, we apply the same methodology as the trial court, but we do not
accord the trial court's conclusion any deference. Kotecki & Radtke, S.C. v. Johnson, 192 Wis.2d
429, 436, 531 N.W.2d 606, 609 (Ct. App. 1995).
The methodology is oft repeated:
[W]e first examine the pleadings to
determine whether they state a claim for relief. If the pleadings state a claim and the responsive pleadings join
the issue, we then must examine the evidentiary record to analyze whether a
genuine issue of material fact exists or whether the moving party is entitled
to judgment as a matter of law.
Further, “[o]n summary judgment, we must draw all justifiable inferences
in favor of the non-moving party, including questions of credibility and of the
weight to accorded particular evidence.”
Bay
View Packing Co. v. Taff, 198 Wis.2d 654, 674, 543
N.W.2d 522, 529 (Ct. App. 1995) (citation omitted).
The
third claim for relief found in the amended complaint alleges that Otto
intentionally and voluntarily acted with the Schalmos to misrepresent the
extent of defects in the house and acted to conceal them. It alleges that Otto acted with the Schalmos
maliciously or in wanton, wilful or reckless disregard of the Spiveys' rights
to make the misrepresentations. We
conclude that the complaint states a cause of action for conspiracy to
intentionally misrepresent. Otto's
answer to the third claim for relief of the amended complaint denied the
allegations and put the Spiveys to their proof of their allegations, thereby
joining issue.
In Onderdonk v.
Lamb, 79 Wis.2d 241, 247, 255 N.W.2d 507, 510 (1977), the supreme court
determined that a claim for civil conspiracy damages must allege: (1) the
formation and operation of the conspiracy; (2) the wrongful act or acts in
furtherance of it; and (3) the resultant damage. The trial court relied upon Maleki v. Fine-Lando Clinic
Chartered S.C., 162 Wis.2d 73, 469 N.W.2d 629 (1991), where the supreme
court stated that proof of a conspiracy must consist of more than suspicion or
conjecture that the elements of a conspiracy existed. Id. at 84‑85, 469 N.W.2d at 633-34. The Court stated that if circumstantial
evidence supports equal inferences of lawful and unlawful action, then a claim
of conspiracy damages under § 134.01 is not proven. Id. at 85, 469 N.W.2d at
634. The trial court erred in applying Maleki.
A next-door neighbor,
Craig Aschenbach, who later purchased the property, testified in his deposition
that prior to the date of the contract, he observed Otto and the Schalmos take
sheets of plywood and two-by-fours into the house. He testified that after purchasing the property, he took videotapes
of the premises while tearing it down.
Aschenbach testified:
Q.I see.
So you think that the Schalmos repaired the flooring in the front
section of the floor?
A.No question about it.
Aschenbach testified
further that a gap of four inches existed between the floor of the front
bedroom and the main support wall and that the new two-by-fours were placed in
the bedroom “to mask a real bad problem.”
The complaint and Aschenbach's deposition testimony support a factual
scenario that Otto helped the Schalmos to conceal rot in the joists by a hidden
repair, proving circumstantial damages arising from a conspiracy. We conclude that this testimony evidences
the formation of a conspiracy and of wrongful acts in its furtherance.
Accordingly, the trial
court erred in its application of Maleki to this matter. In Maleki, the supreme court
evaluated a jury verdict and determined that the element of maliciousness in
the context of civil conspiracy must be proven by something more than equal
inferences drawn from circumstantial evidence.
In this case, however, we must determine whether the summary judgment
documents present a genuine issue as to a material fact and, if not, whether
the movant is entitled to judgment. Section 802.08(2), Stats. We are not
concerned with the sufficiency of evidence to support a verdict, but whether a
trial should be held because of conflicting evidence. In the summary judgment materials a genuine issue of material
fact was raised respecting Otto's role in the alleged conspiracy. Otto's conduct raises competing
inferences: (1) whether he
innocently helped his daughter and son-in-law repair their home; or
(2) whether he knowingly participated in the formation and furtherance of
a conspiracy. The Spiveys are entitled
to have these competing inferences resolved by a trier of fact. See Lecus v. American Mut. Ins.
Co. of Boston, 81 Wis.2d 183, 189‑90, 260 N.W.2d 241, 244 (1977)
(competing inferences of whether owner and driver of a car were members of the
same household under an auto liability policy raised fact issue on summary
judgment requiring trial). We must
reverse and remand for a trial.
By the Court.—Judgment
reversed and cause remanded.
Not recommended for
publication in the official reports.
No. 94-2990 (D)
SCHUDSON, J. (dissenting). Although the issue may be a relatively close
one, I conclude that the trial court correctly granted summary judgment to
Otto.
The first element of
civil conspiracy is “[t]he formation and operation of the
conspiracy.” Onderdonk v. Lamb,
79 Wis.2d 241, 247, 255 N.W.2d 507, 510 (1977) (emphasis added). Further, the conspiracy must be “knowingly
formed.” Wis J I—Civil 2802.
“‘To act or participate knowingly’ means to act or participate
voluntarily and intentionally and not because of mistake, accident, or other
innocent reason.” Id. Nothing in the summary judgment submissions
offers any evidence that Otto said or did anything to knowingly participate in
any conspiracy.
If a man carries lumber
into his daughter's house and assists his son-in-law in re-enforcing joists or
repairing a floor, on what basis would anyone surmise that he is knowingly
forming a conspiracy with his daughter and son-in-law to later misrepresent the
condition of the house to a potential buyer?
“To prove a conspiracy, a plaintiff must show more than a mere
suspicion or conjecture that there was a conspiracy or that there was
evidence of the elements of a conspiracy.”
Maleki v. Fine-Lando Clinic Chartered, S.C., 162 Wis.2d
73, 84, 469 N.W.2d 629, 633 (1991) (emphasis added). Even at summary judgment, “mere suspicion or conjecture” does not
convert Otto's carpentry into an act that allegedly forms any conspiracy.
Accordingly, I respectfully
dissent.