## Facts

- Gerald and Joliene Grams raised calves commercially and used a milk replacer as part of a feeding/nutrition program.
- The milk replacer was manufactured by Milk Products, Inc. and sold to the Grams through Cargill, Inc.
- The Grams alleged the milk replacer was defective because it failed to provide adequate nutrition.
- They claimed the product caused calves to become malnourished, resulting in deaths, impaired health of surviving calves, and related economic losses to their operation.
- The Grams alleged the manufacturer and seller knew or should have known the formula would not properly nourish calves.
- The circuit court granted summary judgment dismissing the tort claims against Milk Products and Cargill under the economic loss doctrine and dismissed contract claims against Milk Products for lack of privity, leaving only contract-based claims against Cargill.
- The court of appeals affirmed, and the Wisconsin Supreme Court granted review limited to whether the economic loss doctrine barred the tort claims, including whether the “other property” exception applied.

## Issues

1. Whether the economic loss doctrine bars tort claims when a purchased product’s alleged defect causes loss to property connected to its commercial use (calves), or whether that loss qualifies as damage to “other property.”
2. Whether damages framed as physical harm to livestock are, in this transaction, properly characterized as disappointed commercial expectations requiring contract/UCC remedies rather than tort recovery.

## Decision

- The Wisconsin Supreme Court held the economic loss doctrine barred the Grams’ tort claims against Milk Products and Cargill.
- The court concluded the claimed losses arose from disappointed expectations of the bargained-for product’s performance within a commercial feeding program.
- The court treated the milk replacer as part of an integrated feeding/nutrition system for economic loss purposes, so the calves’ losses did not fall within the “other property” exception on these facts.
- The court affirmed the court of appeals’ decision upholding summary judgment on the tort claims.

## Legal Principles

- The economic loss doctrine preserves the contract–tort boundary by preventing recovery in tort for purely economic losses arising from a commercial transaction.
- Tort remedies generally address safety-based harms (personal injury and qualifying property damage), while contract and UCC warranty law address expectation-based losses from product performance and quality.
- The “other property” exception does not apply when the alleged property damage is inseparable from disappointed expectations in an integrated commercial transaction or system.
- When claimed damages result from a product’s failure to perform its contractual function, the plaintiff must rely on contractual remedies rather than negligence or strict liability.

## Conclusion

Because the Grams’ damages were attributed to the milk replacer’s failure to deliver expected nutritional performance in a commercial feeding program, the losses were treated as economic loss governed by contract/UCC remedies, and tort claims were barred even though the harm manifested as loss and diminished condition of calves.


Grams v. Milk Prods., Inc., 699 N.W.2d 167 (Wis. 2005)