Douglas-Hanson Co., Inc. v. BF Goodrich Co
In Douglas-Hanson Co., Inc. v. BF Goodrich Co., 229 Wis. 2d 132, 598 N.W.2d 262 (Ct. App. 1999), aff'd by an equally divided court, 2000 WI 22, 233 Wis. 2d 276, 607 N.W.2d 621, the Court did permit a claim for damages for intentional misrepresentation that had caused the plaintiff to purchase equipment costing more than $ 1,000,000 in order to be able to enter into a service contract with the defendant. There, Goodrich intentionally misrepresented to Douglas-Hanson that it had a "commercially viable adhesive product" which it needed Douglas-Hanson's services in order to "cure" before Goodrich could sell it.
Goodrich knew that Douglas-Hanson would be required to make a substantial capital investment in equipment in order to enter into the service contract with it.
However, after Douglas-Hanson had purchased and installed the necessary equipment, Goodrich sent only a few rolls of adhesive for curing, then discontinued the product because it concluded it was not commercially viable.
When Douglas-Hanson sued Goodrich, it did so under theories of breach of contract and intentional misrepresentation.
At trial, Douglas-Hanson elected to pursue the intentional misrepresentation claim, wherein it was awarded $ 1,832,134 as compensatory damages and $ 1,000,000 as punitive damages.
On appeal, Goodrich contended that all of the damages arose out of the failed contract to provide adhesive to Douglas-Hanson for processing, and therefore, the tort claim was barred by the economic loss doctrine.
The Court disagreed, concluding that an intentional misrepresentation claim could be maintained, in part because Douglas-Hanson could not assess Goodrich's representation that it had a commercially viable product because of the confidential nature Goodrich ascribed to information relating to the adhesive and in part because the misrepresentation was intentionally made with the knowledge of the extensive capital outlay it would cause Douglas-Hanson.