BRENNAN, J.
¶ 1 Russell T. Brenner, while working for Hunzinger Construction, fell through a large hole in the floor of a building owned by Milwaukee World Festival, Inc. The accident happened while Brenner was moving a large plywood panel covering the hole. Brenner was severely injured.
¶ 2 Brenner and his wife filed suit, alleging negligence and safe-place statute claims against: (1) Milwaukee World Festival, Inc., as the owner of the building at the time of Brenner's fall, and its insurer National Casualty Company, (collectively "MWF"); (2) Garland Brothers Joint Venture, as the former owner of the building; Garland Brothers, Inc., as an agent of Garland Brothers Joint Venture; and their insurer Amerisure Mutual Insurance Company, (collectively "Garland Brothers"); and (3) Charter Manufacturing Co., as the former long-term tenant of the building, and its insurer Ace American Insurance Co., (collectively "Charter").
¶ 3 Following motions for summary judgment, the circuit court dismissed the Brenners' negligence claim against Charter and Garland Brothers on the grounds that it was barred by the doctrine of caveat emptor, or "buyer beware," in RESTATEMENT (SECOND) OF TORTS § 352. The circuit court reasoned that because Charter had already relinquished possession of the premises before MWF purchased the property and before Brenner was injured, § 352 applied to shift liability from Charter to the buyer, MWF. MWF appeals Charter's dismissal from the lawsuit.
¶ 4 MWF argues that: (1) Charter, as a former long-term tenant, is not a "vendor" under RESTATEMENT (SECOND) OF TORTS § 352; therefore, § 352 does not act to shield Charter from liability; and (2) even if Charter qualifies as a vendor under § 352, RESTATEMENT (SECOND) OF TORTS § 353 sets forth an exception reinstating Charter's exposure to liability. We disagree.
¶ 5 In sum, we conclude, as did the circuit court, that Charter, the former tenant, is entitled to protection as a "vendor" under RESTATEMENT (SECOND) OF TORTS § 352 because the rationale behind § 352, as well as the caselaw, extends the protection from liability to the one who has relinquished possession of the property to the buyer. Here, Charter relinquished possession of the building to Garland Brothers in November 2009, one and one-half years before MWF bought it "As-Is" in May 2011. Charter neither had possession nor the right to possession of the building at the time it was sold to MWF or when Brenner was injured. Furthermore, we conclude that RESTATEMENT (SECOND) OF TORTS § 353 does not apply in this instance to impose liability on Charter because the undisputed facts do not show that MWF did not know or have reason to know of the danger the plywood panels posed. As such, we affirm.
¶ 6 This case comes to us on motion for summary judgment; the facts necessary for resolution of the issues raised by MWF are not materially disputed and are set forth herein.
¶ 7 For approximately twenty-one and a half years, Garland Brothers owned the building at the heart of this lawsuit, located in the City of Milwaukee. For over twenty of those years, Charter leased the building under a triple-net lease, pursuant to which Charter had the exclusive right to possession and the obligation to maintain and repair the building. Charter used the property as a factory to manufacture wire, installing a row of machinery on the metal grate floor, and as office space. During 2009, Charter notified Garland Brothers of its intent to terminate its tenancy.
¶ 8 Pursuant to its lease with Garland Brothers, Charter was obligated to remove its machinery when it vacated the premises; the machinery included large heat treat furnaces that extended through the metal grate floor into a pit below. Charter retained Pieper Electric to perform certain work required by vacation of the property; Pieper subcontracted the removal of the heat treat furnaces and the covering of the resultant holes to Harrison Metals.
¶ 9 Harrison Metals created plywood boxes or panels consisting of a flat cover with sides. Harrison made several panels to cover several holes. The panels covering the holes in the floor were not marked or tethered to indicate that they covered large holes in the floor. Although the holes were not visible to persons on the main floor when the covers were in place, the wood panels were in plain view and there was a stairway to a clearly visible lower level immediately next to the holes. The undersides of the covered holes were in plain view from the stairs.
¶ 10 An agent of Garland Brothers, Garland Brothers, Inc. ("GBI"), assumed responsibility for negotiating the termination of Charter's lease. As part of the negotiations, GBI retained a consultant to inspect the building before Charter vacated it. Before surrendering the premises, Charter was asked to "[f]ill in the pit on the north[west] corner of the building," that is, the pit immediately below the holes in the floor where the heat treat furnaces had been removed. Charter refused and in November 2009 was permitted to surrender the property, without filling the pit, so long as it was left in a "clean and safe condition."
¶ 11 On December 31, 2009, GBI did a final walkthrough of the property with its experts and Charter representatives. GBI had an opportunity to inspect the premises with experts it retained and on whom it relied to determine whether Charter had met its obligations with respect to putting the pits in a "clean and safe condition." GBI did not raise any more concerns about the pit.
¶ 12 After Charter vacated the building, Garland Brothers sold it to MWF in "`as-is, where-is' condition" and "`with all faults.'" MWF took possession of the property in May 2011. When MWF bought the property, it intended to demolish the building and create additional parking. The condition of the building was, therefore, largely immaterial to MWF at the time of purchase. Later, after the sale was completed, MWF decided to retain part of the property for storage and auxiliary office space.
¶ 13 MWF's General Counsel Frank Nicotera testified that MWF understood that the contract has "as is, where is" language, "similar to the known statement of buyer beware." Nicotera agreed that MWF had time to inspect and familiarize itself with the property prior to purchase. Nicotera
¶ 14 MWF performed numerous inspections and walk throughs of the premises prior to purchase. For example:
¶ 15 After the purchase of the building, MWF hired Hunzinger to perform renovations. While working on the renovation project, Hunzinger workers moved other plywood panels in the building; however, those plywood panels were not covering large floor openings. On the day of the accident, Brenner along with two of his co-workers moved one of the plywood panels covering a hole left by Charter's removal of the heat treat furnaces. While moving the panel, Brenner fell through the hole into the pit and sustained injuries.
¶ 16 The Brenners filed suit against Charter, Garland Brothers, MWF, and their respective insurers, asserting negligence and safe-place statute claims. Garland Brothers and Charter filed motions for summary judgment on the grounds that they could not be liable for Brenner's injuries due to their relinquishment of the premises well before he was injured. Despite the Brenners and MWF opposing the motions, the circuit court granted the motions for summary judgment. As relevant here, the court found that RESTATEMENT (SECOND) OF TORTS § 352 acted to bar the Brenners' negligence claim against Charter. MWF appeals the dismissal of Charter and its insurer.
¶ 17 This case comes to us following the circuit court's decision granting Charter summary judgment. We review a grant of summary judgment independently of the circuit court, but benefitting from its analysis. See Blasing v. Zurich Am. Ins. Co., 2014 WI 73, ¶ 89, 356 Wis.2d 63, 850 N.W.2d 138. We apply the same standards used by the circuit court, as set forth in WIS. STAT. § 802.08 (2013-14). Krier v. Vilione, 2009 WI 45, ¶ 14,
¶ 18 MWF challenges the circuit court's decision to dismiss the Brenners' negligence claim against Charter on the grounds that: (1) RESTATEMENT (SECOND) OF TORTS § 352 does not apply; and (2) even if § 352 does apply, the circuit court erred in concluding that RESTATEMENT (SECOND) OF TORTS § 353 does not supersede § 352 to hold open the possibility of Charter's liability on negligence grounds. For the reasons which follow, we affirm.
¶ 19 There are four elements to any negligence claim: (1) a duty of care on the part of the defendant; (2) a breach of that duty; (3) a causal connection between the breach and the plaintiff's injury; and (4) actual loss or damage resulting from the injury. Gritzner v. Michael R., 2000 WI 68, ¶¶ 19-20, 235 Wis.2d 781, 611 N.W.2d 906. For purposes of summary judgment, the parties only addressed whether Charter owed Brenner a duty of care.
¶ 20 In Wisconsin, the general rule is that everyone owes a duty to everyone else. Behrendt v. Gulf Underwriters Ins. Co., 2009 WI 71, ¶ 17, 318 Wis.2d 622, 768 N.W.2d 568. However, Wisconsin applies an exception to that general rule—caveat emptor or "buyer beware"—as embodied in RESTATEMENT (SECOND) OF TORTS § 352, which states:
Id.; see also Bagnowski v. Preway, Inc., 138 Wis.2d 241, 405 N.W.2d 746 (Ct.App. 1987); McCarty v. Covelli, 182 Wis.2d 342, 514 N.W.2d 45 (Ct.App.1994). MWF argues that § 352 does not apply here because Charter, as the former tenant, is not a vendor.
¶ 21 MWF goes on to argue that even if Charter is a vendor pursuant to RESTATEMENT (SECOND) OF TORTS § 352, the circuit court erred in concluding that RESTATEMENT (SECOND) OF TORTS § 353 does not apply to impose liability on Charter. Section 353 provides an exception to § 352, eliminating immunity from liability for:
See § 353. MWF argues that § 353 applies because the undisputed material facts show: (1) that Charter knew or should have known that the unmarked and untethered plywood panels covering the holes created a dangerous condition; (2) that MWF did not know and had no reason to know of the dangerous condition; and (3) that Charter knew or should have known that MWF did not know of the dangerous condition.
¶ 22 We address each of MWF's concerns in turn.
¶ 23 MWF first contends that the circuit court erred in applying RESTATEMENT (SECOND) OF TORTS § 352 because MWF does not believe that Charter qualifies as a "vendor." MWF argues that when the circuit court found that Charter qualified as a vendor under § 352, it erroneously relied on Great Atlantic & Pacific Tea Co. v. Wilson, 408 N.E.2d 144 (Ind.Ct. App.1980), and Brock v. Rogers & Babler, Inc., 536 P.2d 778 (Alaska 1975).
¶ 24 Because there are no Wisconsin cases on whether a former tenant qualifies as a vendor under RESTATEMENT (SECOND) OF TORTS § 352, the circuit court properly turned to other jurisdictions. Both Brock and Great Atlantic, advise that Charter qualifies as a vendor.
¶ 25 In Brock, three years after the lessee vacated the property, the plaintiff nearly drowned in an artificial lake on the property. Id., 536 P.2d at 780-81. Considering whether RESTATEMENT (SECOND) OF TORTS § 352 protected the former lessee from liability, the Alaska Supreme Court concluded that the former lessee was protected because the rationale behind the doctrine was "to limit liability to persons in possession and control of the land." The court said:
Id. at 782 (footnotes omitted; emphasis added).
¶ 26 In Great Atlantic, the Indiana Court of Appeals considered a fact pattern similar to the one before us. The property owner constructed a building for Great Atlantic to lease, with a hole in the floor for a conveyor system. Id., 408 N.E.2d at 146. When the lease ended, Great Atlantic removed its equipment, leaving the hole open, and returned control of the property to the owner. Id. The plaintiff fell into the hole and sued. Id. Relying in part on RESTATEMENT (SECOND) OF TORTS § 352, as interpreted by Brock, see id. at 147, the court dismissed the claims against Great Atlantic, explaining: "liability for injury ordinarily depends upon the power to prevent injury and, therefore, rests upon the person who has control and possession
¶ 27 These principles accord with Wisconsin's application of RESTATEMENT (SECOND) OF TORTS § 352. Although not directly on point, McCarty is instructive. In McCarty, we held that the vendee's right to possession of the property was sufficient to impose liability on the vendee—even if the vendee was not yet in actual possession and in the process of moving in when the injury occurred. Id., 182 Wis.2d at 346, 514 N.W.2d 45. Thus, we acknowledged, as Brock and Great Atlantic did, that the "right of possession" is the touchstone of liability. See McCarty, 182 Wis.2d at 346, 514 N.W.2d 45 (stating that § 352 "requires that the vendee be in possession" and "that the test is not whether the vendee is actually in possession, but rather whether the vendee has the right of possession"). Here, as the former tenant of the property, Charter "lack[ed] possession and control of property" at the time of the accident; MWF, the vendee, was in actual possession, and thus Charter "should not be held liable for injuries which [it was] no longer in a position to prevent." See Brock, 536 P.2d at 782.
¶ 28 In so holding, we reject MWF's reliance on Ollerman v. O'Rourke Co., 94 Wis.2d 17, 288 N.W.2d 95 (1980). To be sure, Ollerman states that Wisconsin "has moved away from the rule of caveat emptor in real estate transactions." See id. at 38, 288 N.W.2d 95. However, it does so in a completely different context from the case here. The narrow issue in Ollerman was whether the complaint sufficiently stated an intentional misrepresentation claim in a real estate transaction between a subdivider-vendor of a residential lot and a non-commercial purchaser. It involved a far different set of facts. Most significantly, it did not involve RESTATEMENT (SECOND) OF TORTS §§ 352 or 353. Furthermore, Ollerman was decided in 1980, and we have endorsed application of § 352 in real estate transactions since then. See Bagnowski, 138 Wis.2d 241, 405 N.W.2d 746 (decided in 1987); McCarty, 182 Wis.2d 342, 514 N.W.2d 45 (decided in 1994). Thus, caveat emptor is still alive in Wisconsin.
¶ 29 Consequently, we conclude as a matter of law that Charter, as a former tenant, qualifies as a vendor under § 352, and that the circuit court did not err in concluding the same.
¶ 30 In the alternative, MWF argues that even if Charter is a vendor under RESTATEMENT (SECOND) OF TORTS § 352, the circuit court erred in concluding that RESTATEMENT (SECOND) OF TORTS § 353 does not apply to expose Charter to liability. We disagree.
¶ 31 RESTATEMENT (SECOND) OF TORTS § 353 creates an exception to RESTATEMENT (SECOND) OF TORTS § 352, and holds a vendor liable, even after a change in possession, when: (1) the vendor knows or has reason to know of a hazard; (2) the vendee does not know or have reason to know of the hazard; and (3) the vendor has reason to believe that the vendee will not discover the hazard. See § 353. The circuit court, in a thoughtful and well-articulated decision, ruled as follows:
We absolutely agree.
¶ 32 MWF argues that the circuit court's finding is in error because "[w]hile there is evidence that MWF knew of the pit, there is no evidence MWF knew that holes had been cut in the floor above the pit and concealed with plywood." However, even if we accept that statement as true, that does not end our inquiry. In order for RESTATEMENT (SECOND) OF TORTS § 353 to apply, MWF must also show that it did not have reason to know of the holes that had been cut in the floor above the pit or that the plywood coverings hid the hazard. Based on the record, MWF cannot make that showing.
¶ 33 To begin, it is undisputed that removal of the heat treat furnaces left several large holes in the metal grate floor and that there was a stairway immediately adjacent to the holes indicating that there was empty space underneath the floor. It
¶ 34 At the time MWF purchased the building, it knew it was obtaining the building "as-is, where-is" and there is overwhelming evidence in the record that MWF thoroughly inspected the building prior to and after purchase:
¶ 35 It is simply illogical to conclude, given the numerous MWF representatives who toured and inspected the building, that MWF did not know that the plywood panels on the floor, which were obviously unmarked and untethered, covered large holes in the floor that led to a pit below. While MWF claims there is no evidence that it actually did know of the holes cut in the floor above the pit, the record shows that, at the very least, it had reason to know. As such, the circuit court properly concluded that RESTATEMENT (SECOND) OF TORTS § 353 does not apply.
¶ 36 In sum, the undisputed material facts show that both MWF and Charter had reason to know that: (1) there were large holes in the metal grate floor that led to a pit; (2) the holes were covered by large plywood panels; and (3) the panels were unmarked and untethered and did not otherwise indicate that they hid the large holes. To the extent that those facts should have notified Charter of a dangerous condition, they also should have notified MWF of the same. Unfortunately for MWF, Wisconsin law holds only the entity in possession and control of the property liable, as the entity in possession and control is the only entity in a position to prevent the accident.
Order affirmed.