1325 North Van Buren, LLC v. T-3 Group, Ltd.
2006 WI 94 | Wisconsin Supreme Court | 2006
What This Case Means for Subcontractors
A building owner hired a construction manager to renovate a warehouse into condos. After problems arose, the owner sued for negligence. Wisconsin's Supreme Court ruled that the economic loss doctrine bars negligence claims in construction contracts focused on delivering a finished building product. This means subcontractors and contractors can only sue for breach of contract, not negligence, even if work is done poorly.
Key Takeaways
- •You cannot sue for negligence in construction contracts—only for breach of contract. This limits your damages and remedies significantly.
- •The economic loss doctrine applies when the main purpose of the contract is delivering a completed building or product, not just providing services.
- •Insurance coverage disputes matter: professional liability and general liability policies may not cover contract breach claims, leaving you without protection.
- •Protect yourself by clearly defining contract terms, performance standards, and remedies upfront since tort claims are off the table.
Economic loss doctrine applies to mixed contract predominantly for product delivery.
Frequently Asked Question
Can I sue my contractor or subcontractor for negligence if they do poor work?
In Wisconsin, probably not. If the contract is primarily for delivering a finished building or product, the economic loss doctrine bars negligence claims. You're limited to suing for breach of contract instead. This means you need strong contract language defining performance standards and remedies before work begins.
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