|
COURT OF
APPEALS DECISION DATED AND
RELEASED February
13, 1997 |
NOTICE |
|
A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
No. 96-0753
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT IV
VanSlett Craftsmen, Inc., a Wisconsin
Corporation,
Plaintiff-Appellant,
v.
The C.W. Carlson Company, Inc., a Wisconsin
Corporation,
Defendant-Respondent.
APPEAL
from a judgment of the circuit court for Dane County: PAUL B. HIGGINBOTHAM, Judge.
Reversed and cause remanded.
Before
Dykman, P.J., Vergeront and Deininger, JJ.
VERGERONT,
J. VanSlett Craftsmen, Inc. appeals
the trial court's judgment dismissing its action against The C.W. Carlson
Company, Inc. at the close of VanSlett's presentation of its case to the jury. We conclude that the trial court correctly
determined that there was no evidence to support the proposition, under either
a contract or promissory estoppel claim, that a certain condition to Carlson's
performance had occurred. However, we
also conclude that there was sufficient evidence to support a verdict that
Carlson's conduct contributed to the nonoccurrence of that condition. Because we reject Carlson's alternative
theories for sustaining the trial court's decision, we reverse and remand.
VanSlett,
a cabinetry subcontracting firm, entered into a contract during July 1992 with
a general contractor, Pepper Construction Company, to furnish approximately
$458,000 in cabinetry and millwork for the South Chicago Community Hospital
project (Pepper/VanSlett contract).
VanSlett had manufactured and installed a substantial portion of the
cabinetry and millwork on the project by early October 1992. During mid-September of 1992, VanSlett's
chief executive, Peter VanSlett,[1]
informed Pepper's superintendent on the project, Ted Commons, that, due to cost
overruns on an unrelated project, VanSlett's cash flow would not allow it to
timely complete the South Chicago project without using another cabinetry shop
for much of the unfinished work.
VanSlett
solicited bids from several cabinetry shops, including Carlson. There were various discussions and
negotiations between VanSlett and Carlson, which will be described in more
detail later in the opinion. However,
it is undisputed that Mr. VanSlett and representatives of Carlson met at
Carlson's office on September 28, 1992,[2]
at which time Carlson presented to VanSlett a written proposal with respect to
the South Chicago project.[3] It is also undisputed that on October 1,
1992,[4]
representatives of VanSlett, Carlson and Pepper met on the job site in Chicago
and had discussions concerning the completion of the work under the
Pepper/VanSlett contract and Carlson's role in that.
VanSlett
claims that it accepted Carlson's written proposal of September 28, 1992,
entering into an agreement with Carlson on that date for Carlson to do the work
necessary to complete VanSlett's work on the project for $247,500 beginning on
October 4, 1992. VanSlett contends that
Carlson breached this agreement by failing to take over the work, causing
Pepper to declare VanSlett in default and causing damages to VanSlett. Carlson, among other defenses, contends that
the contract negotiations were never completed and there was no contract. Carlson also contends that Pepper's approval
of a contract between VanSlett and Carlson was an essential condition of the
contract, or of any promise made by Carlson, and that approval was never given.
Claims
for breach of contract and promissory estoppel were tried to a jury. At the close of VanSlett's case-in-chief,
Carlson moved to dismiss, arguing that VanSlett lacked the capacity to contract
with Carlson because the Pepper/VanSlett contract required Pepper's approval
for any subcontract between VanSlett and a third party,[5]
and Pepper never gave its consent.
Therefore, according to Carlson, any contract between Carlson and
VanSlett was "void."
The
court granted Carlson's motion. The
court concluded that the Pepper/VanSlett subcontract provided that a
subcontractor could not sub-subcontract its obligations without Pepper's
written approval. The court found that
it was undisputed, based on the evidence presented by VanSlett, that Pepper did
not give its written approval. For that
reason, the court concluded, any contract between VanSlett was "void as a
matter of law." The court also
concluded that any promise made by Carlson was conditioned on Pepper's
approval, which was never given. The
court determined that Carlson's conduct did not in any way affect Pepper's
decision not to give its approval.
DISCUSSION
When
ruling on a motion to dismiss for insufficient evidence at the close of a
plaintiff's case, the trial court may not grant the motion unless, considering
all credible evidence in the light most favorable to the plaintiff, there is no
credible evidence to support a verdict for the plaintiff. Section 805.14(1), Stats.; Weiss v. United Fire Casualty Co., 197
Wis.2d 365, 388, 541 N.W.2d 753, 761 (1995).
Put another way, the trial court may not grant a motion unless it finds,
as a matter of law, that no jury could disagree on the proper facts or the
inferences therefrom and there is no credible evidence to support a verdict for
the plaintiff. Id. This standard also applies to our review of
the trial court's decision. Id. However, in reviewing the trial court's
decision, we must give substantial deference to the trial court's better
ability to assess the evidence. Id.
at 389, 541 N.W.2d at 761.
On
appeal VanSlett argues, as it did before the trial court, that there was
sufficient evidence of Pepper's written consent and also that there was
sufficient evidence that Carlson caused Pepper not to consent. VanSlett does not dispute that Pepper's
written approval was necessary before Carlson had an obligation to
perform. VanSlett also acknowledges
that Pepper's written approval was a condition of both the contract and the
promise supporting the promissory estoppel claim.
Carlson
does not pursue on appeal its theory of incapacity to contract. Instead it argues that there is no evidence
that Pepper gave its consent and no evidence that Carlson's conduct contributed
to Pepper's decision not to consent.[6]
A
contract is not void because it is subject to a condition; rather there is a
binding contract but no duty to perform until the condition is satisfied. Kocinski v. Home Ins. Co., 147
Wis.2d 728, 738, 433 N.W.2d 654, 658 (Ct. App. 1988), modified on other
grounds, 154 Wis.2d 56, 452 N.W.2d 360 (1990). However, where the condition is the consent of a thirty party,
the parties must make reasonable efforts to bring about the consent; failure to
do so would itself be a breach. Corbin on Contracts, Vol. 2, § 5.31 at
165-66 (1950). See also, Vol.
3A, § 770 at 557 (because of implied promise not to hinder or prevent
condition, hindrance or prevention of condition itself may be breach). Where there is a binding promise by a party
to perform if a condition is met, if that party has unjustifiably prevented the
occurrence of the condition, it may not take advantage of the
nonoccurrence. See Variance
Inc. v. Losinske, 71 Wis.2d 31, 40, 237 N.W.2d 22, 26 (1976). That party is not excused from performance,
and a judgment for damages may be obtained for failure to perform. Corbin
on Contracts, Vol. 3A, § 767 at 543-46 and § 770 at 557.
We
first consider whether, viewing the evidence in the light most favorable to
VanSlett, there is any credible evidence that Pepper gave its written approval
to a contract between VanSlett and Carlson under which Carlson would complete
VanSlett's obligations to Pepper. We
agree with the trial court that there was not.
Mr.
VanSlett testified that he and Carlson representatives met with Commons at the
job site on October 1 to obtain Pepper's consent for VanSlett to enter
into a subcontract with Carlson.
Commons did not give his consent on that date but he testified that at
the end of the meeting he understood that VanSlett would finish the job through
Carlson. According to Mr. VanSlett,
sometime between that meeting and October 6, a Carlson representative called
Mr. VanSlett to say that Carlson had concerns about working with VanSlett on a
subcontract basis and wanted to contract directly with Pepper. When discussions between VanSlett and
Carlson did not resolve this, Mr. VanSlett called Commons to tell him that
Carlson was no longer willing to work as a subcontractor of VanSlett. Commons testified that he had telephone
calls from both Mr. VanSlett and a Carlson representative about the same time,
after the October 1 meeting, in which both indicated that there was a problem
and they would not be able to have a "joint contract
arrangement." In the phone call
from the Carlson representative, the representative asked Commons whether
Pepper was receptive to a direct contract with Carlson. Commons testified that he did not approve
the terms of any contract between VanSlett and Carlson at any time.
On
October 6, 1992, Commons sent two letters, one to VanSlett, copied to
Carlson, and one to Carlson, copied to VanSlett. The letter to VanSlett stated:
Confirming our previous conversations and
meeting of October 1, 1992, it is your intent to have "The Carlson
Company" complete the balance of work currently under your respective
sub-contracts.
As it is now apparent that a separate
sub-contract will have to be issued for this work, and until a final definitive
scope has been prepared, Pepper will issue a letter of intent to Carlson
Company in order to expedite the priority 3 millwork fabrication.
Until the final scope of work has been defined,
the letter of intent will be issued under the "Right To Carry Out The
Work" provisions per paragraph 19 of the subcontract agreements. When the final scope is completed a deduct
change order and separate sub-contract for same will be issued....
If there are any
questions in this regard please contact me immediately.
The letter to Carlson stated:
Confirming our previous conversation and the
October 2, 1992 meeting with Ms. Linda Dryer and Mr. James Tomich of your firm,
it is the intent of Pepper Construction Company to enter into a sub-contract
agreement with The Carlson Co., for the incompleted millwork under contract
with Van Slett Craftsmen. Until such
time that a definitive scope document has been prepared and agreed to, we are
authorizing the following work to proceed on a "T & M" basis:
1)Pick-up, inventory and store all raw millwork material purchased for
this project and presently stored at Van Slett Craftsmen warehouse.
2)Pick-up, inventory and store
all fabricated stock cabinets for this project and presently stored at Van
Slett Craftsmen warehouse as follows:
a)Project
2, Phase 2 stock cabinets
b)Project
2, Phase 3 stock cabinets
c)All
remaining Project 1 cabinets with the exception of the new addition
cabinets. They will be delivered to the
job by Van Slett.
3)Release for and fabricate all
remaining custom millwork for Priority 3 shop drawings.
4)Release for and fabricate all
custom millwork for Priority 4 shop drawings.
The above "T & M" work will be
covered by the final scope agreement and sub-contract.
In view of this authorization, kindly review
and advise when we could expect the balance of Priority 3 millwork to be delivered
to the site.
Thank you for your prompt attention to this
matter.
If there are any
questions please feel free to call.
It
is these two letters that VanSlett claims are evidence of Pepper's
consent. We do not agree. Viewing these letters most favorably to
VanSlett, we agree with the trial court that these letters do not constitute
evidence of Pepper's approval of a contract between VanSlett and Carlson, or
raise any reasonable inference of approval.
Indeed, we conclude, as did the trial court, that based on these
letters, it is undisputed that Pepper declined to approve a contract between
VanSlett and Carlson. The second
paragraph of Commons' letter to VanSlett states Pepper's intent to enter into a
subcontract with Carlson, issuing a letter of intent during preparation of that
subcontract with Carlson so that Carlson could immediately perform certain
work. The third paragraph states that
the letter of intent to Carlson will be issued under Paragraph 19 of the
Pepper/VanSlett subcontract. Paragraph
19 of that subcontract provides that if the subcontractor--VanSlett--becomes
insolvent and in certain other situations, Pepper may terminate the
subcontract. We see no ambiguity in
this letter. It is a clear statement of
Pepper's rejection of a contract between VanSlett and Carlson and of Pepper's
adoption of an alternative course of action:
terminating its subcontract with VanSlett and entering into a
subcontract with Carlson.
Commons'
letter to Carlson also clearly states Pepper's intent to enter into a
subcontract with Carlson to complete VanSlett's work under the Pepper\VanSlett
subcontract. Consistent with Pepper's
letter to VanSlett, Commons' letter to Carlson is a "letter of
intent" until the subcontract between Carlson and Pepper is
finalized.
VanSlett's
argument seems to be that Pepper's letter to Carlson is evidence that Pepper is
approving Carlson as a subcontractor.
The letters are evidence that Pepper is approving Carlson as a subcontractor--but
a subcontractor of Pepper, not of VanSlett.
The condition that VanSlett and Carlson agreed to was that Pepper would
approve a subcontract between Carlson and VanSlett.
We
now consider the evidence concerning the reason Pepper did not approve a subcontract
between VanSlett and Carlson. The trial
court determined that it was undisputed
that Carlson's conduct had nothing to do with Pepper's decision not to
approve a subcontract between Carlson and VanSlett but instead to subcontract
directly with Carlson. In explaining
its decision, the court referred to Commons' testimony about his concerns with
VanSlett's inability to complete the project, VanSlett's financial problems,
and Commons' statement that Carlson did nothing to encourage Pepper to
"declare VanSlett in default."
We conclude that the court erred because it did not take into account
testimony favorable to Van Slett's position.
First,
we note that portions of Commons' testimony can be interpreted favorably to
VanSlett's position. Commons testified
that he did not consider VanSlett in default until the date on which VanSlett
failed to pay its workmen on the project, either October 9 or October 12,
1992. He testified that he decided not
to approve a subcontract between Carlson and VanSlett on or before October
6. A reasonable jury could interpret
Commons' testimony--that Carlson did not influence Pepper's decision to declare
VanSlett in default--as referring to a decision Pepper made after
deciding not to approve a subcontract between VanSlett and Carlson. Commons' testimony about telephone calls he
received from Mr. VanSlett and Carlson's representative after the October 1
meeting and before October 6 is evidence that Pepper decided to contract directly
with Carlson because Commons learned that Carlson did not want to enter into a
subcontract with VanSlett.
Mr.
VanSlett's testimony as described previously is further evidence of this. In addition, Mr. VanSlett testified that
Commons told him that Pepper had to make a separate subcontract with Carlson
because Carlson would not subcontract with VanSlett.
Further
testimony supporting VanSlett's position comes from Carlson employees. One employee representing Carlson in the
negotiations testified that she was assuming that Carlson was going to contract
with VanSlett until Mr. Carlson informed her that he wanted a direct contract
with Pepper rather than a subcontract with VanSlett; she believed this occurred
after the October 1 meeting but she was not sure of the date. Another employee representing Carlson gave
similar testimony, at one point testifying that Mr. Carlson made this decision
because of VanSlett's financial condition before Commons told him (the Carlson
employee) that Pepper was going to contract directly with Carlson, and at another
point stating he was not sure of the time frame.
It
is true, as the trial court pointed out, that the timing of the phone calls in
relation to each other after the October 1 meeting were not provided
"absolutely," but that is not the test at this stage of the
proceeding. And, while the trial
court's assessment of Commons' motives is a reasonable one based on the
evidence, that is not the test either.
Although we give substantial deference to the trial court in reviewing
its decision, we must nevertheless conclude there is credible evidence to
support a jury determination that Carlson changed its mind about subcontracting
with VanSlett, that this was conveyed to Pepper, and that this either
influenced or caused Pepper's decision to contract with Carlson directly rather
than approving a subcontract between VanSlett and Carlson.
Carlson
raises alternative theories to support dismissal, three relating to the
contract claim and one relating to the promissory estoppel claim.[7] First, Carlson contends that there is no
credible evidence to support a jury determination that Carlson and VanSlett
entered into a binding contract on September 28, 1992. We disagree and conclude there is credible
evidence to support such a determination.
According
to the testimony of Carlson employees, before the September 28 meeting,
Mr. VanSlett provided Carlson with blueprints, specifications and other
documentation of the work remaining to be done by VanSlett under the
Pepper/VanSlett project, including times and dates for all the phases, and
there were a number of discussions between the two parties. At the meeting, a Carlson representative
presented a proposal for completing all phases of VanSlett's work on the
project and identifying the scope of the work, and scheduling was agreed
upon. The proposal contained a price,
which a Carlson representative identified as $247,000.
Mr.
VanSlett testified that he accepted the proposal[8]
at the September 28 meeting, telling the Carlson representatives that he
accepted, and the two parties then made plans to meet with Commons to get
approval so Carlson could begin.
According to Mr. VanSlett, he understood that an agreement was reached
at the September 28 meeting and there was no question in his mind that Mr.
Carlson understood that. A handwritten
document reflecting everything that was discussed was to be typed up, but that
never occurred. Because Mr. VanSlett
never received the typed document he expected, he sent a handwritten memo to
Carlson on October 9, 1992, confirming what he thought the agreement was
and adjusting some details because Carlson had not yet started on the job as it
had agreed to do.
While
testimony of the Carlson representatives disputes that Carlson intended to be
bound on September 28, 1992, we conclude that the testimony we have just
recited is sufficient to survive a motion to dismiss. Carlson argues it is insufficient because
even VanSlett acknowledged that a written agreement was contemplated. Carlson cites cases for the proposition
that, if during preliminary negotiations it is understood that one party is to
prepare and present to the other party a formal written agreement to evidence
the contemplated contract, there is no binding contract unless the written
agreement was actually prepared and signed by both parties. See, e.g., Johann v. Milwaukee
Electric Tool Corp., 270 Wis. 573, 589, 72 N.W.2d 401, 410 (1955). However, it is also true that an oral
agreement that is complete in itself is binding even though it is anticipated
that a written agreement embodying its terms would afterwards be signed,
provided the parties so intend. Id. See also Leggett & Co. v. West
Salem Canning Co., 155 Wis. 462, 469, 144 N.W. 969, 972 (1914). The determining factor is the intent of the
parties.
While
portions of Mr. VanSlett's testimony support a finding that he understood there
was no binding contract until a document was prepared and signed, other
portions support a finding that he understood that the oral agreement was
binding notwithstanding the document to be typed and signed, and he believed
Mr. Carlson understood that as well.
The court must consider testimony in the light most favorable to
VanSlett, not to Carlson.
Carlson
also argues that because the parties did not agree on a material term--whether
Carlson would subcontract with VanSlett or directly with Pepper--there was no
binding contract. However, VanSlett's
testimony is sufficient to support a jury determination that Carlson agreed to
subcontract with VanSlett and then changed its mind; and some of the testimony
of Carlson's employees, interpreted most favorably to VanSlett, supports this
view as well.[9]
Carlson
next challenges the sufficiency of the evidence of contract damages. VanSlett's theory of contract damages is
that, if Carlson had completed VanSlett's work on the project for $247,500 as
agreed, VanSlett would have been entitled to $24,500--the difference between
that sum and the $272,000 in available funds remaining on the project.[10] There is evidence to support these
figures. Carlson's arguments are: (1) charge-backs and deductions would
have reduced the $24,500 figure, and (2) the project could not be
completed for $247,500 due to omission in information provided by VanSlett to
Carlson, as evidenced by the fact that Pepper paid Carlson and others
significantly more than $247,500 to finish VanSlett's work.
The
one specific charge-back/deduction Carlson points to--$14,429--was comprised of
$8,320 for administrative time charged by Pepper because of VanSlett's
default. However, a jury could
reasonably conclude that this deduction would not have occurred had Carlson
performed under a subcontract with VanSlett.
We reject Carlson's suggestion that to avoid dismissal at this stage,
VanSlett must present evidence of a negative:
that there would have been no deductions, or no deductions greater than
$24,500, had Carlson performed as VanSlett contends it agreed to do.
Carlson's
evidence that VanSlett would have had to pay Carlson substantially more than
$247,500 to complete the VanSlett work, even if there had been a binding
contract for that amount, is countered by VanSlett's testimony. VanSlett testified that the higher amount
Pepper paid Carlson and others was not due to lack of information provided by
VanSlett and could have been avoided had Pepper and Carlson handled the
installation work differently. This is
sufficient evidence to avoid a dismissal on this ground.
Carlson
next asserts that any contract between VanSlett and Carlson is void under
§ 241.02(1)(b), Stats.,
which provides that, "every special promise to answer for the debt,
default or miscarriage of another person" is void unless it is in writing
and signed by the party charged. We
reject this argument. Carlson devotes
only a short paragraph to the argument and cites no legal authority to support
its position. The Pepper/VanSlett
contract permitted VanSlett to subcontract its obligations, subject to certain
conditions including Pepper's consent.
It is undisputed that Commons did not consider VanSlett in default until
after the date on which VanSlett contends it entered into a contract with
Carlson.
Regarding
the promissory estoppel claim, Carlson contends that VanSlett's reliance on any
promise by Carlson was unreasonable as a matter of law because the
Pepper/VanSlett contract required Pepper's approval. We disagree.
Since
a contract subject to a condition is not void for that reason, see Kocinski,
147 Wis.2d at 738, 433 N.W.2d at 658, we see no reason why a promise subject to
a condition may not be the basis for a
promissory estoppel claim, assuming the requirements for promissory estoppel
are met and the same analysis is applied to the fulfillment of the condition as
under a contract analysis. The promise
asserted in this case is that Carlson promised VanSlett that it would perform
its work under the Pepper/VanSlett contract for a specified sum on the
condition that Pepper approve. The
evidence we have already described supports a jury verdict that there was such
a promise.
One
element of a claim for promissory estoppel is that the promise is one which the
promisor should reasonably expect to induce action or forbearance of a definite
and substantial character on the part of the promisee. Barbler v. Roelli, 39 Wis.2d
566, 572, 159 N.W.2d 694, 159 N.W.2d 694, 697 (1968). The evidence we have already described is sufficient to support a
jury finding that Carlson should reasonably have expected VanSlett to rely on
its promise to perform for a specified sum on the condition that Pepper
approve.
Because
the trial court erred in dismissing the contract and promissory estoppel claims
on the ground that there was insufficient evidence from which a jury could find
that Carlson's conduct affected Pepper's decision not to approve a subcontract
between Carlson and VanSlett, and because none of the other theories advanced
by Carlson support dismissal, we reverse.
By
the Court.—Judgment reversed
and cause remanded.
Not recommended for
publication in the official reports.
[1] We will refer to Peter VanSlett as Mr.
VanSlett to distinguish him from the company, VanSlett. We will follow the same practice with
respect to Chris Carlson, CEO of C.W. Carlson Company, Inc., referring to him
as Mr. Carlson.
[2] From the record it is unclear whether this
meeting was September 28 or 29, 1992.
Resolution of this conflict is not pertinent to our decision. We will use September 28 in this opinion.
[3] The parties have stipulated that there was a
written proposal but that it cannot be located. The parties have not stipulated to the contents or the
significance of the proposal.
[4] It is not clear whether this meeting was
October 1 or 2, 1992, but we need not decide this issue. We will use October 1 in this opinion.
[5] The Pepper/VanSlett subcontract contained
these provisions with respect to assignment and sub-subcontracting.
9.
Subcontractor shall not sublet or assign this contract nor sell or
assign the proceeds of this contract without the prior written consent of
PEPPER, and any such subletting or assignment without PEPPER'S written consent
shall be null and void. PEPPER shall
have the right to assign this Subcontract without the consent of
Subcontractor."
...
A57 Subcontractor
agrees not to sub-subcontract more that (sic) 5% of this contract agreement
without the expressed written consent of Pepper Construction Company for all
proposed sub-subcontractors in excess of 5%, subcontractor shall furnish
contractor an AIA Document A-305 or equal Subcontractor's Qualification
Statement, not less than five (5) working days prior to final execution of any
sub-subcontractor Agreement. In
accordance with project General Conditions, subcontractor agrees he shall not
contract with any such proposed person or entity to whom the Owner or the
Architect has reasonable objection in accordance with the provisions of the
contract documents.
[6] Because Carlson is no longer pursuing its
theory of VanSlett's incapacity to contract and because both parties agree that
Pepper's approval was a condition to Carlson's performance, we do not address
VanSlett's argument that Carlson lacks "standing" to enforce the
Pepper/VanSlett contract or its argument that the Pepper/VanSlett contract
requires Pepper's written approval but not prior written approval. We also do not address occasional
suggestions in Carlson's brief that VanSlett could not begin to negotiate with
Carlson without Pepper's approval. That
is inconsistent with Carlson's position as stated elsewhere in its brief and
Carlson cites no authority in favor of this proposition.
[7] Although not all these alternative arguments
were presented to the trial court, we address them because we may affirm a
trial court's decision on a basis different than that presented to the trial
court. State v. Holt, 128
Wis.2d 110, 125, 382 N.W.2d 679, 687 (Ct. App. 1985).
[8] Mr. VanSlett's testimony is that the proposed
price, which he accepted, was $247,500.
Because it appears the Carlson employee did not mean that the proposal
price was $247,000 rather than $247,500, because Mr. VanSlett's testimony never
varied from the $247,500 figure, and because that is the figure VanSlett uses
in its brief on appeal, we will use the $247,500 figure in this opinion.