Loula v. Snap-On Tools Corp.

498 N.W.2d 866, 175 Wis. 2d 50, 1993 Wisc. App. LEXIS 209

• Court: Court of Appeals of Wisconsin
• Decided: March 2, 1993
• Docket: 92-1518
• Status: Published

Opinions

LaRQCQUE, J.

Snap-On Tools Corporation appeals a judgment awarding Arnold Loula damages in an intentional misrepresentation action. The jury found that Snap-On intentionally made four misrepresentations during Loula's recruitment process: (1) Loula would make as much money as doctors or lawyers; (2) Loula did not have to be a salesperson because the tools would sell themselves; (3) a Snap-On dealership is a no-risk proposition; and (4) Snap-On territories are all the same. We conclude that the four representations are merely expressions of puffery and are inactionable as a matter of law. Therefore, we reverse.

Before becoming a Snap-On dealer, Loula worked as a self-employed trucker. Loula became interested in the Snap-On business because he wanted to plan for his retirement and spend more time with his family. Loula and his wife, Rita, met a few times with Luther Scott, a Snap-On field manager, to discuss the possibility of a dealership with the company.

During these discussions, the Loulas expressed concern about Arnold's ability as a salesperson, and were told that "the tools sell themselves" and that a Snap-On dealership was a no-risk proposition. In addition, Arnold stated that he was told that successful dealers "make as much money as doctors and lawyers." However, Rita also testified that they were never told what the average net profits were for a dealership in either northern Wisconsin or anywhere in the state. The Loulas further claim that they were told that "all the territories were the same."¹ Apparently, Rita understood this to mean that the territories were approximately equal in terms of potential for sales.

As part of the recruitment process, Loula watched three dealers sell Snap-On products and then signed a dealership agreement and took over the Park Falls territory. As a Snap-On dealer, Loula became increasingly dissatisfied with the business and quit after about two years.

Loula then brought suit, alleging intentional misrepresentation. The jury found in his favor, awarding approximately $55,000 in compensatory and consequential damages and $56,000 in punitive damages. The trial court upheld the compensatory and consequential damages awards but eliminated punitive damages. Loula cross-appeals the denial of punitive damages. Because we conclude that the four representations are inactionable, we reverse and need not reach Loula's cross-appeal or the other issues raised by Snap-On.

The jury found that Snap-On intentionally made four representations: Loula would make as much money as doctors or lawyers, he did not have to be a salesperson because the tools sell themselves, a Snap-On dealership is a no-risk proposition and Snap-On territories are all the same. The elements of fraud require a false representation of fact made with intent to defraud and reliance by the injured party on the misrepresentation. Ritchie v. Clappier, 109 Wis. 2d 399, 404, 326 N.W.2d 131, 134 (Ct. App. 1982). The reliance must be justifiable. Id. Whether the facts mandate the legal conclusion presents a question of law that we review de novo. Ballenger v. Door County, 131 Wis. 2d 422, 427, 388 N.W.2d 624, 628 (Ct. App. 1986).

"Puffing" is an expression referring to an exaggeration made by a seller, the truth or falsity of which cannot be precisely determined, and is not actionable as a misrepresentation of fact. State v. American TV & Appliance of Madison, Inc., 146 Wis. 2d 292, 301-02, 430 N.W.2d 709, 712 (1988). Puffery is considered an expression of the seller's opinion, and, as such, the buyer has no right to rely upon such statements. Prosser and Kee-ton on The Law of Torts § 109 at 755 (5th ed. 1984). Statements of value, in general, as well as predictions as to profits to be made from the thing sold, fall into the same class of statements not to be relied on. Id.

The representation that Loula would make as much money as a doctor or a lawyer is so vague and indefinite that it amounts to nothing more than mere puffery, upon which Loula had no right to rely. Consolidated Papers, Inc. v. Dorr-Oliver, Inc., 153 Wis. 2d 589, 594, 451 N.W.2d 456, 459 (Ct. App. 1989), held that the statement that a liquid clarifier would have a "long equipment life" was an example of puffing because there was no representation that the clarifier would last a minimum length of time. In Vaughn v. General Foods Corp., 797 F.2d 1403, 1411 (7th Cir. 1986), the court reasoned that General Foods' statements concerning the viability of the Burger Chef system to a potential franchisee was puffing because General Foods did not guarantee a particular degree of success and, in fact, "success" was a relative term.²

Here, Loula acknowledged that he was given no guarantees that he would make any particular or ascertainable income, and was never told what the average net profits were for a dealership in northern Wisconsin. Further, how much a doctor or lawyer makes varies enormously depending upon the location and nature of the practice.

In addition, Loula could not reasonably rely on the statements that the tools sell themselves or that Snap-On was a no-risk proposition. These statements are mere figures of speech expressing an opinion and, as such, are not statements of fact. In Kelly Tire Service, Inc. v. Kelly-Springfield Tire Co., 338 F.2d 248, 253 (8th Cir. 1964), the plaintiff argued that the defendant's projections of anticipated sales, expenses and profits, coupled with the experience of defendant's organization, convinced him that the business venture was risk free. The court, in rejecting the argument, held:

At best, these projections, however persuasive in shaping plaintiffs plans, were opinions subject to the uncontrollable economic influences of free enterprise and not fraudulent misrepresentations of past or existing facts on which plaintiff justifiably relied to its detriment. Id.

Here, Loula even admitted that he did not entirely believe that the tools sell themselves and that there were risks associated in any kind of independent business.

Finally, the statement that all territories are the same is also inactionable. Rita testified that she knew that some areas were larger than others; that some territories were urban while others were rural.³ Knowing that the territories differed in so many aspects, the Loulas could not reasonably rely on such a vague and imprecise representation. In summary, because all of the representations allegedly made by Snap-On amounted to nothing more than puffery and Loula could not, therefore, justifiably rely on them, we conclude that they are inactionable and reverse the judgment.

By the Court. — Judgment reversed.

1 Snap-on apparently divides a state into territories, and a dealer is then assigned to a particular territory.

2 General Foods made such statements as n[o]ur plans call for aggressive but controlled growth," id., at 1406, that Burger Chef would overtake McDonalds and "opening a Burger Chef franchise is starting another outlet of a successfully established enterprise complete with the knowledge, research, and backing of the corporation and franchisees who have already made Burger Chef successful." Id. at 1407.

3 Rita testified that she understood the representation to mean that all territories were more or less equal in terms of sales potential. However, under these circumstances, where there are numerous potential buyers in each territory, this statement is also unverifiable. Further, the record reveals that Loula's successor in his first year achieved a net economic benefit of approximately $89,000. Loula's successor testified that he "pocketed" $40,000, he increased his inventory by $35,000, and his increase in accounts receivable was $14,000.