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COURT OF APPEALS
DECISION
NOTICE
DATED AND FILED
This opinion is subject to further editing. If
published, the official version will appear in the
bound volume of the Official Reports.
August 25, 1998
A party may file with the Supreme Court a
                                                                                         Marilyn L. Graves         petition  to  review  an  adverse  decision  by  the
                                                                                         Clerk, Court of Appeals   Court of Appeals.  See § 808.10 and RULE 809.62,
                                                                                         of Wisconsin              STATS.
No.                                                                                      97-0723
STATE OF WISCONSIN                                                                       IN COURT OF APPEALS
                                                                                         DISTRICT I
MICHAEL J. MCCULLOUGH,
PLAINTIFF-RESPONDENT,
V.
LEONARD J. LEWENSOHN, D/B/A BUSINESS RESOURCE
ASSOCIATES AND FLEISCHMANN SUPPLY CO., INC.,
DEFENDANTS-APPELLANTS.
APPEAL  from  a  judgment  of  the  circuit  court  for  Milwaukee
County:     VICTOR  MANIAN,  Judge.     Affirmed  and  cause  remanded  with
instructions.
Before Fine, Schudson and Curley, JJ.
PER CURIAM.    Leonard J. Lewensohn, d/b/a Business Resource
Associates, and Fleischmann Supply Co., Inc.  (Lewensohn collectively), appeal
from the trial court’s judgment that they are liable for the attorney fees incurred by




No. 97-0723
Michael J. McCullough in his action to recover the earnest money he paid towards
the purchase of Fleischmann Supply.   Lewensohn argues that the trial court erred
in granting attorney fees because:  (1) the evidence is allegedly insufficient to
support  the  trial  court’s  findings  that  Lewensohn  made  misrepresentations  to
McCullough and that those misrepresentations induced McCullough to tender his
earnest money;  (2) the trial court allegedly erred in finding that McCullough’s
reliance on Lewensohn’s misrepresentations was reasonable; and (3) a disclaimer
on the business profile Lewensohn supplied to McCullough allegedly relieves
Lewensohn  of  responsibility  for  any  inaccurate  representations.    McCullough
refutes Lewensohn’s claims and requests that we award him appellate attorney
fees.   We affirm and remand to the trial court for a determination of the amount of
appellate attorney fees to be awarded to McCullough.
I.   BACKGROUND
Lewensohn is a licensed business broker who, in February of 1995,
was attempting to sell Fleischmann Supply to McCullough.   During negotiations,
Lewensohn provided McCullough with a business profile for Fleischmann Supply.
Lewensohn made the following representations to McCullough, both through the
business  profile  and  orally:                                                            (1)  that  the  owner  and  general  manager  of
Fleischmann  Supply received  a  total  cash  flow  in  1994  of  $40,000  from the
business, consisting of a salary of $15,500, the owner’s wife’s salary of $8,000 for
bookkeeping services, $5,000 in automobile use value, $4,500 in insurance and
$7,000  in                                                                                 “other”  cash  flow;                               (2)  that  Fleischmann  had  over   200  wholesale
customers, and that the majority of its customers were wholesale customers rather
than  retail  customers;  and  (3)  that  the  average  dollar  amount  of  a  wholesale
customer purchase was between $300 and $1,500.
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No. 97-0723
On  February                                                                           22,                              1995,  after  reviewing  the  business  profile,
McCullough  gave  Lewensohn  a  non-binding  letter  of  intent  to  purchase
Fleischmann Supply.   Pursuant to the letter of intent, McCullough paid $5,000 in
earnest money to Lewensohn.   After McCullough tendered his letter of intent and
earnest money, Lewensohn provided him with Fleischmann Supply’s financial
statements  and  tax  returns.     McCullough  then  performed  a  due-diligence
investigation and discovered that several of Lewensohn’s previous representations
were false.   McCullough learned that the owner’s 1994 salary was $6,500; that the
owner did not receive any cash flow from automobile use because he had claimed
it as an  ordinary and necessary business expense on his tax returns; that the
“other” $7,000 did not appear on the tax returns; that Fleischmann Supply had less
than 100 wholesale customers; and that the average dollar amount of a wholesale
customer purchase was significantly less than the $300 minimum reflected on the
business profile.
McCullough then withdrew his letter of intent and demanded the
return of his earnest money.   Lewensohn, however, refused to return the earnest
money.     McCullough,  therefore,  filed  an  action  to  recover  his  money.
McCullough moved for summary judgment requesting his earnest money, and
attorney fees based on Lewensohn’s misrepresentations.   The trial court granted
partial summary judgment for the return of the earnest money, and set the issue of
attorney fees for trial.   Based on the evidence presented at trial, the trial court
found that Lewensohn either knowingly or recklessly made misrepresentations to
McCullough, and that McCullough relied on those misrepresentations in tendering
his  earnest  money.    The  trial  court,  pursuant  to                               § 100.18,  STATS.,  therefore,
awarded McCullough attorney fees incurred in the action to recover the earnest
money.
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No. 97-0723
II.   DISCUSSION
Section 100.18, STATS., provides:
Fraudulent representations.                                                           (1)   No person, firm,
corporation  or  association,  or  agent  or  employe  thereof,
with intent to sell, distribute, increase the consumption of
or  in  any wise  dispose  of  any real  estate,  merchandise,
securities,  employment,  service,  or  anything  offered  by
such person, firm, corporation or association, or agent or
employe thereof, directly or indirectly, to the public for
sale, hire, use or other distribution, or with the intent to
induce the public in any manner to enter into any contract
or  obligation  relating to  the  purchase,  sale,  hire,  use  or
lease   of   any   real   estate,   merchandise,   securities,
employment or service, shall make, publish, disseminate,
circulate, or place before the public, or cause, directly or
indirectly, to be made, published, disseminated, circulated,
or placed before the public, in this state, in a newspaper,
magazine or other publication, or in the form of a book,
notice, handbill, poster, bill, circular, pamphlet, letter, sign,
placard, card, label, or over any radio or television station,
or in any other way similar or dissimilar to the foregoing,
an     advertisement,                                                                 announcement,     statement   or
representation of any kind to the public relating to such
purchase,  sale,  hire,  use  or  lease  of  such  real  estate,
merchandise, securities, service or employment or to the
terms   or   conditions   thereof,   which   advertisement,
announcement,  statement  or  representation  contains  any
assertion,  representation  or  statement  of  fact  which  is
untrue, deceptive or misleading.
….
[(11)]  (b) 2.   Any person suffering pecuniary loss
because of a violation of this section by any other person
may sue in any court of competent jurisdiction and shall
recover such pecuniary loss, together with costs, including
reasonable attorney fees ….”
The trial court applied § 100.18 because Lewensohn had made oral and written
misrepresentations  during  the  negotiations  with  McCullough  for  the  sale  of
Fleischmann Supply.
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No. 97-0723
Lewensohn argues that the evidence is insufficient to sustain the trial
court’s finding of fact that he made misrepresentations to McCullough.   He argues
that the representations on the business profile were substantially correct, and that
the trial court erred in finding that they were false representations.
A trial court’s findings of fact will be upheld on appeal unless they
are  clearly  erroneous.    See                                                                     §  805.17(2),  STATS.    Further,  we  must  accept
reasonable inferences that the trial court draws from the evidence.   See Cogswell v.
Robertshaw Controls Co., 87 Wis.2d 243, 250, 274 N.W.2d 647, 650 (1979).   The
trial court found that Lewensohn misrepresented the 1994 cash flow to the owner
of  Fleischmann  Supply,  the  number  of  wholesale  customers,  and the  average
dollar amount of a wholesale purchase.    These findings are supported by the
evidence and are not clearly erroneous.1
At trial, the owner of Fleischmann Supply testified that his  1994
salary was  $6,500, rather than the  $15,500 that was reflected on the business
profile.   Fleischmann Supply’s 1994 tax return also reflects that the owner’s salary
was $6,500.   This evidence clearly supports the finding that Lewensohn overstated
the owner’s 1994 salary by $9,000.   The tax return further reflects that Fleishmann
Supply  deducted  the  owner’s  automobile  expenses  as  ordinary  and  necessary
business expenses and that the automobile was used for business related purposes
more than eighty-five percent of the time that it was used.    Based upon this
evidence, the trial court could reasonably conclude that the use of the automobile
1  Lewensohn also argues that, if he did make misrepresentations, he is not liable because
they were not material misrepresentations that would have effected a reasonable person’s decision
regarding  the  purchase  of  Fleischmann  Supply.    We  disagree.    Lewensohn’s  substantial
overstatement of the cash flow to the owner, the number of wholesale customers, and the average
purchase amount greatly effects   the analysis of the profitability of Fleischmann Supply, and
would be taken into account by a reasonable person considering purchasing the business.
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No. 97-0723
did not contribute cash flow to the owner, and that the contrary statement on the
business profile was a misrepresentation.   The misrepresentations regarding the
owner’s salary and the value of the use of the automobile resulted in a $14,000
overstatement of the 1994 cash flow to the owner.   The foregoing evidence amply
supports the trial court’s finding that Lewensohn misrepresented the  1994 cash
flow to the owner of the business.
McCullough  further  testified  that,  after  he  tendered  his  earnest
money, Lewensohn gave him a list of Fleischmann Supply’s wholesale customers,
and that the list reflected only about 90 wholesale customers, rather than the 200
reflected on the business profile.   He also testified that, based upon his review of
accounts receivable from the wholesale customers and a review of several sales
receipts, the average purchase amount was much less than the  $300 to  $1,500
represented on the business profile.   The average amount of the sales shown on the
list of accounts receivable is about $180.   This evidence supports the trial court’s
findings that Lewensohn misrepresented the number of wholesale customers and
the average dollar amount of a wholesale purchase.
Lewensohn also argues that the evidence is insufficient to sustain the
trial court’s finding that McCullough relied on the misrepresentations.   Again, the
trial court’s finding is supported by the evidence and is not clearly erroneous.
McCullough testified that he was interested in purchasing a wholesale business,
and  that  he  relied  on  the  representation  that  Fleischmann  Supply  had          200
wholesale customers in tendering his letter of intent and earnest money.   He also
testified that he relied on the cash flow to the owner and the dollar amount of
wholesale  purchases reflected in the business profile to evaluate  the potential
profitability of the business.
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No. 97-0723
Lewensohn further argues that the trial court erred in finding that
McCullough’s reliance on the misrepresentations was reasonable.    McCullough
testified that he relied on the misrepresentations in the business profile when he
tendered his earnest money because Lewensohn required him to submit a letter of
intent and earnest money in order to receive any of Fleischmann Supply’s business
records.    Based on this evidence, the trial court could properly conclude that
McCullough acted reasonably in relying on the representations in the business
profile.
Finally,  Lewensohn  claims  that  his  disclaimer  relieved  him  of
responsibility for any inaccurate representations in the business profile.   Citing
Grube v. Daun, 173 Wis.2d 30, 496 N.W.2d 106 (Ct. App. 1992), McCullough
responds that the disclaimer does not relieve Lewensohn of liability.
Under Grube, in order to be effective, a disclaimer must “make it
apparent that an express bargain was struck to forgo the possibility of tort recovery
in exchange for negotiated alternate economic damages.”   Id., 173 Wis.2d at 60,
496  N.W.2d  at                                                                         117.   McCullough  asserts  that  there  is  no  evidence  that
Lewensohn’s  disclaimer  was  the  result  of  an  express  bargain  from  which
McCullough gained an alternate economic benefit.   The disclaimer was simply
appended to the business profile that Lewensohn provided to McCullough, and
McCullough asserts that it is thus ineffective.
McCullough further cites Grube for the proposition that a disclaimer
does not preclude liability for an affirmative misrepresentation.    According to
Grube, “once the seller or his agent has made an affirmative representation about
some aspect of the property, the buyer is entitled to rely upon that statement and
expect full and fair disclosure of all material facts relating to that aspect of the
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No. 97-0723
property.”   Id., 173 Wis.2d at 61, 496 N.W.2d at 117.   Lewensohn does not refute
McCullough’s arguments that the  disclaimer is ineffective under  Grube.    We
therefore conclude that the disclaimer does not relieve Lewensohn of liability for
his affirmative misrepresentations.   See Charolais Breeding Ranches, Ltd. v. FPC
Sec. Corp., 90 Wis.2d 97, 109, 279 N.W.2d 493, 499 (Ct. App. 1979) (arguments
that are not refuted are deemed admitted).
In his response brief, McCullough argues that, pursuant to § 100.18,
STATS., he is entitled to recover from Lewensohn the attorney fees he incurred in
responding to Lewensohn’s appeal.   Section 100.18 provides that “[a]ny person
suffering pecuniary loss because of a violation of this section by any other person
may sue in any court of competent jurisdiction and shall recover such pecuniary
loss,  together  with  costs,  including  reasonable  attorney  fees.”                Section
100.18(11)                                                                            (b)2, STATS. (emphasis added).   This statutory language is mandatory,
and a party who prevails on appeal in a case brought under § 100.18 is entitled to
reasonable appellate attorney fees.   See Radford v. J.J.B. Enterprises, Ltd., 163
Wis.2d 534, 551, 472 N.W.2d 790, 797 (Ct. App. 1991).   We therefore remand
this cause to the trial court for a determination of the amount of McCullough’s
reasonable appellate attorney fees.
By  the  Court.—Judgment  affirmed  and  cause  remanded  with
instructions.
This opinion will not be published.  See RULE 809.23(1)(b)5, STATS.
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