Sunday, December 28, 2014

Wisconsin Court of Appeals: Property Owners May Testify On The Value Of Their Property

Last week, the Wisconsin Court of Appeals filed its decision in Mueller v. Harry Kaufmann Motorcars, Inc. Ms. Mueller contended that the defendant had misrepresented the condition of the car that it sold her and attempted to testify on what the car was really worth to her in light of its true condition. The Milwaukee County Circuit Court barred Ms. Mueller from sharing this testimony with the jury. This resulted in dismissal of Ms. Mueller's claim because she presented no other evidence that she was damaged by the defendant's misrepresentations.

The Court of Appeals reversed the dismissal of Ms. Mueller's claim, holding that the trial court erred in barring her from testifying on the value of her property. The Court of Appeals noted that it had previously held in D'Huyvetter v. A.O. Smith Harvestore Products that testimony from a farmer's wife that a silo was worth "nothing" was credible evidence that the silo's actual value was $0.00. This established "benefit-of-the-bargain" damages measured by the difference between the purchase price (the value of the silo as represented) and $0.00 (the actual value of the silo).

This issue comes up in residential real estate misrepresentation cases all the time. Granted, cost of repairs are usually our clients' best evidence of damages. If my client's basement leaks due to a hampered drain tile system, I usually seek the cost of a new drain tile system. If my client's roof leaks, I usually seek the cost of replacing the shingles. However, diminished value is the best measure of damages in a residential real estate misrepresentation case under some circumstances:

  • When my client insists that numerous conditions were misrepresented and I do not want to bore the judge or jury with twenty different repair proposals;
  • When I am concerned that the wrong judge or jury will reject the proposed repairs as extreme, such as moving the home or raising its foundation.
Under these circumstances, I would argue, as I did here, that my clients' property is worth less than what they paid for it and that this difference is their measure of damages. Contrary to the arguments that I typically hear from defense counsel, one does not need to be qualified as an appraiser to testify on the actual value of his property. See Trible v. Tower Insurance Co.; Swedowski v. Westgor. Furthermore, this testimony need not be based on independent financial data. See D.L. Anderson's Lakeside Leisure Co., Inc. v. Anderson; Mayberry v. Volkeswagen of Am., Inc.; Accuweb, Inc. v. Foley & Lardner.

My only caveat is that residential real estate cases are not lemon law cases; your property is not worth "nothing." Even if your home is permanently plagued with toxic black mold and your doctor has urged you to move out immediately, the land still has value. In most circumstances, a homeowner can convincingly testify that he or she would have paid 10-20% less for their property had the seller fully disclosed the defects affecting it.     


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