Gene Frederickson Trucking and Excavating, Inc. v. Wagner (Prima Facie Tort)

In Gene Frederickson Trucking and Excavating, Inc. v. Wagner (2018AP436), the Court of Appeals District III declined to adopt a new “prima facie tort” under Wisconsin law.

Frederickson contracted with an LLC to perform trucking and excavation work. The LLC failed to fully pay Frederickson. The LLC later defaulted on two separate loans from a bank and faced a foreclosure action. Frederickson was unable to collect the unpaid fees from the contract because of the foreclosure. Owners of the LLC then formed a new entity which purchased the bank’s rights to the foreclosed property and purchased the property back from a sheriff’s sale. The sale extinguished Frederickson’s ability to collect the unpaid fees from its contract with the original LLC.

In the instant lawsuit, Frederickson alleged the owners’ deliberate default on the loans, formation of a new entity, and buyback of the property was a civil conspiracy. Furthermore, Frederickson asked the court to adopt a new civil cause of action for “liability for intended consequences.” What Frederickson refers to as a “prima facie tort” would provide a cause of action for harmful conduct that does not fall within an existing category of tort liability.

The appeals court declined to adopt the “prima facie tort,” which the opinion notes has been adopted in other states, because it does not currently exist under Wisconsin law. Instead, the appeals court leaves the development of a new form of tort liability up to the state Supreme Court. The appeals court also dismissed Frederickson’s civil conspiracy argument for failure to state a claim.