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COURT OF APPEALS
DECISION
DATED AND FILED
September 23, 2009
David
R. Schanker
Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT II
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I.E.A., Inc.,
Plaintiff-Counter
Defendant-Appellant,
v.
Niagara Cooler, Inc. and Michael Sanders,
Defendants-Counter
Plaintiffs-Respondents.
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APPEAL
from a judgment of the circuit court for Kenosha County: barbara
a. kluka, Judge. Affirmed.
Before
Brown, C.J., Anderson and Snyder, JJ.
¶1 PER CURIAM. I.E.A., Inc. (IEA) has appealed
from a judgment entered after a jury trial, awarding Niagara Cooler, Inc.,
damages of $1,004,845, plus costs and interest.
We affirm.
¶2 The action arises from a Purchase and Manufacturing Agreement
and an amendment to that agreement entered into by IEA and Niagara
in April and May 2003 (the Agreement).
The Agreement was executed on behalf of IEA by its president, Susan
Newell, and on behalf of Niagara by its
president, Joseph M. Loiacano. At the
time the parties entered into the Agreement, Niagara
was in the business of selling radiators, oil coolers, and aftermarket products
to the railroad locomotive industry. IEA
was a radiator manufacturer. Under the
terms of their Agreement, Niagara agreed to
purchase its original equipment manufacture (OEM) and aftermarket radiator
products exclusively from IEA for marketing to the locomotive OEM and railroad
industry worldwide. IEA agreed to be the
exclusive manufacturer of OEM and aftermarket locomotive radiators for Niagara,
and agreed that all IEA products would be manufactured under Niagara’s
name brand label. Niagara was to provide
all drawings and specifications necessary for the products to be manufactured,
and IEA agreed not to use Niagara-owned drawings and specifications for any
purpose other than to manufacture products for Niagara. The Agreement provided that either party could
cancel it upon written 120-day notice of termination.
¶3 The Agreement also contained a noncompete provision. The noncompete clause (NCC) originally
provided: “IEA agrees not to compete
with Niagara Cooler in the locomotive aftermarket and upon termination of this
agreement IEA agrees not to compete with Niagara Cooler in the locomotive
aftermarket for a period of 3 years from the date of the termination of the
agreement.”
¶4 After execution of the Agreement, Susan Newell was concerned
about the length of the noncompete period and Loiacano was concerned that the
NCC did not refer to the OEM market. The
NCC was therefore redrafted by Susan Newell and amended on May 6, 2003, to
provide: “IEA agrees not to compete with
Niagara Cooler in the locomotive aftermarket or the OEM locomotive market upon
termination of this agreement for a period of two (2) years from the date of
the termination of the agreement.”
¶5 IEA began supplying Niagara
with radiators in late 2003 and early 2004.
Over the course of the next two years, Niagara
ordered 413 units from IEA.
¶6 In late 2004, IEA received an inquiry from Cummins-N-Power
about making two prototype radiators.
IEA initially did not know that the customer for these products was
National Railway Equipment Co. (NREC), a past customer of Niagara’s
in its cooler sales. In September 2005,
after the testing of the prototypes, NREC also approached Niagara,
who forwarded NREC’s package of specifications and drawings to IEA and asked
for a price quote for the manufacture of the radiators, an OEM product. On January 9, 2006, IEA gave Niagara a quote of $9250 per unit. Niagara
added its own profit margin and, on January 27, 2006, submitted a quote of
$11,250 per unit to NREC. In the
meantime, IEA also gave a quote to Cummins.
Subsequently, IEA gave a direct quote of $10,882 per unit to NREC, which
included the cost of paying commissions to Cummins, the IEA sales
representative for the Cummins account, and the Newell Company. The latter business was owned by George
Newell, Susan’s husband.
¶7 Before giving the direct quote to NREC, IEA’s sales manager,
Todd Sorensen, sent an e-mail to George Newell, who was also a shareholder in
IEA. In it, Sorensen asked “how to quote NREC
directly without getting into issues with Niagara.” Sorensen indicated that his initial thought
was to have the Newell Company quote the package. George Newell responded with an e-mail
seeking input from Susan Newell and Jim Kettinger, a consultant for IEA. Sorensen subsequently consulted with
Kettinger, after which Kettinger informed George and Susan Newell that the relationship
between IEA and Niagara had not been
profitable for IEA. Kettinger also
informed the Newells that after reviewing the Agreement, he and Sorensen agreed
that IEA could provide a direct quote to NREC.
¶8 Niagara became aware of
IEA’s dealings with NREC after IEA gave NREC its quote. When Niagara protested to IEA, IEA rescinded
the quote it had given Niagara, confirming
rescission on March 8, 2006. On March
10, 2006, IEA entered into a two-year Supply Agreement with NREC. Under the terms of the contract, NREC was
required to place an initial order for 182 units and could place subsequent orders
based on its needs as reflected in periodically updated forecasts.
¶9 On April 21, 2006, IEA commenced this action, seeking a
declaratory judgment that it was free to sell to NREC during the pendency of
the Agreement. In an answer and counterclaims filed in June
2006, Niagara alleged that IEA had breached
the parties’ Agreement by entering into a contract with and accepting a
purchase order from NREC. It also
alleged that IEA had tortiously interfered with Niagara’s
prospective contract with NREC.
¶10 On July 24, 2006, Niagara gave
notice of termination of the Agreement with IEA, effective 120 days later on
November 21, 2006. In October 2006,
IEA amended its complaint. Niagara, in turn, amended its pleadings,
adding a counterclaim for breach of contract based on IEA’s competition with Niagara after termination of the Agreement. IEA never replied to Niagara’s
amended counterclaim and did not move for leave to file a belated responsive
pleading until shortly before trial. The
trial court denied that motion, concluding that nothing in the record
demonstrated excusable neglect.
¶11 The jury ultimately returned a special verdict finding that
both IEA and Niagara intended to enter into an
agreement prohibiting IEA from selling radiators to the locomotive OEM market
during the term of the Agreement.
Although the jury found that IEA did not materially breach the contract
with Niagara by selling OEM radiators before
the termination of the Agreement, it found that IEA materially breached the Agreement
by selling locomotive OEM radiators to NREC after the termination of the
Agreement. It awarded Niagara
damages of $383,520 for the breach of contract.
¶12 The jury also found that Niagara had a prospective contractual
relationship with NREC, that IEA intentionally interfered with Niagara’s prospective contractual relationship with NREC,
and that its interference was not justified.
The jury found that IEA’s interference caused damages to Niagara and awarded $254,592 for future damages. The jury further found that IEA acted in
intentional disregard of Niagara’s rights and
awarded punitive damages of $366,733.
¶13 In motions after verdict, the trial court denied IEA’s motion
to change answers in the verdict or for judgment notwithstanding the
verdict. It also denied IEA’s motion for
a new trial based on the alleged erroneous admission at trial of an offer of
settlement (Exhibit 71), and its motion for a new trial on punitive damages.
¶14 IEA’s first argument on appeal is that the trial court erred in
determining that the NCC was ambiguous, and submitting the issue of the
parties’ intent to the jury. IEA contends
that by prohibiting posttermination competition but making no reference to
competition during the term of the Agreement, the NCC was unambiguously limited
to posttermination transactions, and permitted IEA to sell in the OEM market
during the term of the Agreement. IEA
contends that the trial court therefore erred in allowing testimony at trial as
to the parties’ intent in entering the NCC.
¶15 Determining whether a contract is ambiguous presents a question
of law. Borchardt v. Wilk, 156 Wis.
2d 420, 427, 456 N.W.2d 653 (Ct. App. 1990).
A provision in a contract is ambiguous if it is fairly susceptible of
more than one construction. Management
Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158, 177,
557 N.W.2d 67 (1996). When a contract
provision is ambiguous and therefore must be construed by the use of extrinsic
evidence, the question is one of contract interpretation for the jury. Id. Moreover, because IEA, by Susan Newell,
drafted the NCC, any ambiguities in it had to be construed against IEA. See Hunzinger
Const. Co. v. Granite Resources Corp., 196 Wis. 2d 327, 339, 538 N.W.2d 804 (Ct.
App. 1995).
¶16 The Agreement prohibited competition for two years after
termination of the Agreement, but was silent as to competition during the term
of the Agreement. Such silence was
inherently ambiguous, particularly when coupled with the provisions indicating
that IEA agreed to be the exclusive manufacturer of OEM and aftermarket locomotive
radiators for Niagara, while Niagara agreed to purchase its OEM and aftermarket
radiator products exclusively from IEA, and to furnish drawings and
specifications that could be used only to manufacture products under Niagara’s name.
Because the NCC was fairly susceptible to conflicting interpretations as
to whether competition during the term of the Agreement was allowed, it was
ambiguous.
¶17 Because the NCC was ambiguous, the meaning of its terms was for
the jury, see Pleasure Time, Inc. v. Kuss,
78 Wis. 2d
373, 379, 254 N.W.2d 463 (1977), and the trial court properly permitted
testimony as to the parties’ intent in entering into it, see Conrad Milwaukee Corp. v.
Wasilewski, 30 Wis. 2d
481, 488, 141 N.W.2d 240 (1966). Based
on the evidence as to the parties’ intent, no basis exists to disturb the
jury’s answer to special verdict question no. 1, finding that both IEA and Niagara intended to enter into an agreement prohibiting
IEA from selling radiators to the locomotive OEM market during the term of the
Agreement.
¶18 Appellate review of a jury’s verdict is limited and
narrow. Hoffmann v. Wisconsin Elec. Power
Co., 2003 WI 64, ¶9, 262 Wis. 2d
264, 664 N.W.2d 55. We must view the
evidence in the light most favorable to the jury’s verdict and sustain the
verdict if there is any credible evidence to support it, regardless of whether
there is evidence to support a different verdict. Id. The credibility of the witnesses and the
weight to be given their testimony is for the jury. Id. Special deference is afforded to a jury
verdict that has been upheld by the trial court. Id. The jury’s verdict will be upheld even if it
is contradicted by evidence that is stronger and more convincing. Id. We will not upset the verdict unless there is
such a complete failure of proof that the verdict must have been based on
speculation. Id.
¶19 Credible evidence supports the jury’s finding that the parties
intended to enter into an agreement that prohibited IEA from selling radiators to
the locomotive OEM market during the term of the Agreement. Although she testified that she believed IEA could
compete with Niagara in the OEM market while the Agreement was in effect, Susan
Newell also acknowledged that at the time IEA entered the Agreement, it had no
intention of competing with Niagara in the
aftermarket or the OEM market. As
originally written, the NCC prohibited IEA from competing with Niagara in the aftermarket during the term of the
Agreement and for a period of three years after termination. Susan testified that, after executing the
initial NCC, she and Loiacano both had concerns. Her concern was with the three-year posttermination
period of limitation, and Loiacano was concerned because he did not want IEA to
compete with Niagara in the OEM market. Susan testified that she understood that Loiacano
was concerned that IEA would develop OEM products and sell direct in
competition with Niagara. She indicated that she agreed to amend the
NCC to accommodate his concern, as well as her concern with the three-year posttermination
prohibition.
¶20 Loiacano similarly testified that, before drafting the amended
NCC and sending it to him for his signature, Susan Newell assured him that IEA
had no interest in competing with Niagara. He testified that she never told him that IEA
wanted to preserve any right to compete with Niagara
in the OEM market. Loiacano also pointed
out that it would have made no sense for Niagara
to have agreed that IEA could compete with it in the OEM market and aftermarket
while the Agreement was in force, while prohibiting such competition after
termination.
¶21 Based on this evidence, the jury was entitled to find that the
parties intended to enter into an agreement that prohibited IEA from selling
radiators to the locomotive OEM market during the term of the Agreement, in
addition to prohibiting such sales for two years after termination of the
Agreement. IEA’s contention that the
trial court erred in submitting the issue of the parties’ intent to the jury,
and its contention that the parties intended to prohibit only posttermination
competition, therefore fail.
¶22 IEA’s next argument is that its contract with NREC was a
requirements contract and that deliveries made after termination of the
Agreement on November 21, 2006, were lawfully made pursuant to its pretermination
contract with NREC. IEA’s contract with
NREC provided for deliveries by IEA to NREC pursuant to purchase orders based
on periodically updated forecasts of NREC’s needs. IEA contends that each post-November 21, 2006
purchase order and delivery to NREC constituted the performance of the contract
entered into with NREC prior to November 21, 2006. Based on this contention and because the jury
found that it did not breach the Agreement by selling locomotive OEM radiators
before the Agreement was terminated, IEA asserts that the trial court should
have set aside the jury’s answer awarding $383,520 in damages arising from
orders and deliveries under the NREC contract that occurred after the
termination of the parties’ Agreement.
¶23 This argument fails for multiple reasons. Initially, we note that IEA never answered
Niagara’s amended counterclaim which added the claim for breach of contract
based on IEA’s competition with Niagara after
termination of the Agreement. Because
IEA did not timely answer Niagara’s amended
counterclaim and the trial court denied its motion to file a belated answer,
IEA must be deemed to have admitted the allegations of the amended
counterclaim. See Wis. Stat. § 802.02(4) (2007-08). No basis therefore exists to disturb the
judgment permitting Niagara to recover on this
claim.
¶24 Even ignoring IEA’s failure to answer Niagara’s amended
counterclaim, as noted by the trial court in motions after verdict, IEA agreed
“not to compete” with Niagara in the locomotive OEM market for two years after
termination of the Agreement. Regardless
of whether IEA first signed the contract with NREC and began filling orders
before termination of the Agreement, it competed with Niagara
in violation of the NCC when it accepted and filled orders from NREC after the
termination of the Agreement.
¶25 IEA also contends that the trial court should have granted a
directed verdict or judgment notwithstanding the verdict on Niagara’s
tortious interference with prospective contract claim. IEA contends that the tortious interference
claim fails as a matter of law because all of its sales to NREC constituted
permissible and privileged competition, an argument we have already
rejected. IEA also contends that the
tort claim is barred by the economic loss doctrine.
¶26 The issue of whether Niagara’s
tort claim is barred by the economic loss doctrine is raised for the first time
on appeal. Generally, we do not consider
issues that are raised for the first time on appeal. Schonscheck v. Paccar, Inc.,
2003 WI App 79, ¶10, 261 Wis.
2d 769, 661 N.W.2d 476. “A
fundamental appellate precept is that we ‘will not … blindside trial courts
with reversals based on theories which did not originate in their forum.’” Id., ¶11
(quoting State v. Rogers, 196 Wis. 2d
817, 827, 539 N.W.2d 897 (Ct. App. 1995)).
Because IEA failed to raise the economic loss issue in a timely manner
in the trial court, it cannot be raised as a matter of right on appeal. Although we may exercise discretion to
address a waived issue when it presents a question of law that has been fully
briefed and when the question is of sufficient public interest to merit a
decision, Apex Elecs. Corp. v. Gee, 217 Wis. 2d 378, 384, 577 N.W.2d 23 (1998),
we are not persuaded that the public interest necessitates review of IEA’s
argument.
¶27 IEA also argues that Niagara
failed to prove tortious interference.
Tortious interference requires:
(1) a prospective contractual relationship on behalf of the party making
the claim, (2) knowledge by the defending party of the existence of the
relationship, (3) intentional acts on the part of the defending party to
disrupt the relationship, (4) actual disruption of the relationship, and
(5) damages to the claimant caused by those acts. Anderson v. Regents of Univ.
of Cal., 203 Wis. 2d 469, 490, 554 N.W.2d 509 (Ct.
App. 1996). Furthermore, the defending
party must not have been justified or privileged to interfere. Burbank
Grease Servs., LLC v. Sokolowski, 2006 WI 103, ¶44, 294 Wis. 2d 274, 717
N.W.2d 781.
¶28 IEA contends that Niagara did
not have a prospective contractual relationship with NREC. It contends that the reasonableness of its
understanding of the NCC precludes a conclusion that any interference on its
part was intentional. In addition, it
contends that Niagara failed to produce
evidence of a legally sufficient expectation of future sales to NREC.
¶29 As noted above, the jury found that Niagara
had a prospective contractual relationship with NREC, that IEA intentionally
interfered with that prospective relationship, and that IEA’s interference was
not justified. The jury found that IEA’s
interference caused $254,592 in future damages to Niagara. IEA’s arguments are thus challenges to the
sufficiency of the evidence to support the jury’s verdict.
¶30 As already discussed, a motion challenging the sufficiency of
the evidence to support a verdict may not be granted unless, considering all
credible evidence and the reasonable inferences therefrom in the light most
favorable to the party against whom the motion is made, there is no credible
evidence to support a finding in favor of such party. Richards v. Mendivil¸ 200 Wis. 2d 665, 670, 548
N.W.2d 85 (Ct. App. 1996). This standard
also applied to IEA’s motion to change the jury’s answers. See
id.
at 670-71.
¶31 Credible evidence supports the jury’s findings. Loiacano testified that NREC was a prior
customer of Niagara’s and that NREC approached Niagara
with the drawings and specifications for the locomotive OEM radiators in the
fall of 2005. Loiacano testified that
before the dispute with IEA, he had been speaking with a NREC representative once
every week or two. Sorensen acknowledged
that Niagara had been in negotiations with NREC since September 2005, that NREC
was a rail customer with whom Niagara had done business in the past, and that,
until IEA submitted its quote, the only companies in the running for NREC’s OEM
radiator business were Cummins and Niagara.
Sorensen also admitted that shortly before IEA decided to submit the
direct quote, he had learned that NREC did not want to contract with
Cummins. Since this still left Niagara
as a potential supplier for NREC, the jury’s finding that Niagara
had a prospective contractual relationship with NREC is supported by credible
evidence.
¶32 The jury’s finding that IEA intentionally interfered with Niagara’s prospective contractual relationship is also
supported by the record. Contrary to
IEA’s argument, the jury’s finding may not be set aside based on IEA’s argument
that it reasonably believed competition was permitted under the NCC. As discussed above, the evidence at trial
indicated that Susan Newell negotiated the Agreement, was aware that Niagara
was concerned about competition from IEA, assured Loiacano that IEA would not
compete with Niagara in the OEM market, and
drafted an amended NCC in part to address Loiacano’s concerns. IEA, as revealed in Sorensen’s e-mail to
George Newell, knew that giving a direct quote to NREC could lead to issues
with Niagara.
It then chose to give a direct quote to NREC and to rescind its quote to
Niagara, knowing that after rescission of its quote to Niagara, Niagara would no longer be able to compete for NREC’s OEM
radiator business. Under these circumstances, the jury was
entitled to find that IEA intentionally interfered with Niagara’s
prospective contractual relationship with NREC.
Based on the evidence indicating that IEA and Niagara intended to
prohibit competition between them, the jury was also entitled to reject IEA’s
contention that it was justified in competing with Niagara and foreclosing
Niagara’s ability to compete for the NREC business.
¶33 The jury’s finding that IEA’s conduct caused Niagara
$254,592 in future damages is also adequately supported by the record. Damages must be proven with reasonable
certainty. Management Comp. Serv., 206
Wis. 2d
at 189. This includes future profits. Reiman Assoc., Inc. v. R/A Adver., Inc.,
102 Wis. 2d
305, 323, 306 N.W.2d 292 (Ct. App. 1981).
However, damages need not be proven with mathematical precision. Management Comp. Serv., 206
Wis. 2d
at 189. Evidence of damages is
sufficient if it enables the jury to make a fair and reasonable
approximation. Id.
If there is any credible evidence which under any reasonable view
supports the jury finding as to the amount of damages, especially where the
verdict has the approval of the trial court, the finding will not be disturbed
by this court unless the award shocks the judicial conscience. Ford Motor Co. v. Lyons,
137 Wis. 2d
397, 446, 405 N.W.2d 354 (Ct. App. 1987).
¶34 Evidence indicated that, at the time of trial, six months
remained on the contract between IEA and NREC.
Evidence also indicated that over the course of the contract, on
average, NREC had purchased six radiators a week from IEA, which would have
amounted to the purchase of 156 additional units over the remaining contract
period. This historical trend was
acknowledged by counsel for IEA in his closing argument, when he disputed Niagara’s argument that a higher number should be
considered. Because the evidence also indicated that the
difference between IEA’s quote to Niagara and its subsequent quote to NREC was
$1632 per unit, the jury’s finding that Niagara suffered $254,592 in future
losses was reasonable.
¶35 IEA’s next argument is that the trial court erroneously
exercised its discretion by admitting Exhibit 71, an e-mail in which Susan
Newell offered Niagara a five percent commission on NREC orders for settlement
purposes. IEA contends that admitting
Exhibit 71 violated Wis. Stat. § 904.08.
¶36 At trial, IEA objected to the admission of Exhibit 71. A sidebar conference was held on IEA’s
objection, at the conclusion of which the trial court admitted Exhibit 71. The sidebar was not recorded and neither the
basis for IEA’s objection, nor the basis for the trial court’s ruling admitting
the evidence was summarized on the record.
¶37 To preserve an objection for appeal, a party must timely object
to the admission of evidence, stating the specific ground of the objection if
it is not apparent from the context. Wis. Stat. § 901.03(1)(a). In this case, IEA’s reasons for objecting and
the trial court’s reasons for admitting the exhibit were apparently stated
during the sidebar conference, but are not in the record.
¶38 Appellate courts have frequently cautioned against the use of
sidebar conferences. State
v. Mainiero, 189 Wis. 2d
80, 95 n.3, 525 N.W.2d 304 (Ct. App. 1994).
As occurred here, using sidebar conferences often deprives this court of
the basis for the objection and the reasons for the trial court’s ruling. See State
v. Wedgeworth, 100 Wis. 2d 514,
528, 302 N.W.2d 810 (1981); Maniero, 189 Wis. 2d at 95. A party that relies on an unrecorded sidebar
conference therefore does so at its own peril.
Wedgeworth, 100 Wis. 2d
at 528.
¶39 Because IEA’s objection to the admission of Exhibit 71 and the
trial court’s reasons for overruling it are not established in the record, the
record does not permit this court to determine whether the trial court properly
overruled IEA’s objection and admitted Exhibit 71 at the time the objection was
made. Because we are unable to assess
IEA’s claim that the trial court erroneously exercised its discretion when it
admitted the evidence, its request for a new trial on this ground is
denied. See Fiumefreddo v. McLean,
174 Wis. 2d
10, 27, 496 N.W.2d 226 (Ct. App. 1993) (when an appellate record is incomplete
in connection with an issue raised by the appellant, we assume that the missing
material supports the trial court’s ruling).
¶40 IEA’s final challenge is to the jury’s award of punitive
damages. It contends that the evidence
was insufficient to permit the submission of punitive damages to the jury under
Wis. Stat. § 895.043 and
that, even if submission was warranted, the award was excessive.
¶41 Whether punitive damages are recoverable presents a question of
law. State Bank of Independence
v. Equity Livestock Auction Mkt., 141 Wis. 2d 776, 785, 417 N.W.2d 32 (Ct. App.
1987). Punitive damages may be awarded
when the evidence shows that “the defendant acted maliciously toward the
plaintiff or in an intentional disregard of the rights of the plaintiff.” Wis.
Stat. § 895.043(3). A
defendant acts in an intentional disregard of the rights of the plaintiff if
the defendant acts with a purpose to disregard the plaintiff’s rights or is
aware that its acts are substantially certain to result in the plaintiff’s
rights being disregarded. Strenke
v. Hogner, 2005 WI 25, ¶38, 279 Wis.
2d 52, 694 N.W.2d 296. The act or course
of conduct must be deliberate and must actually disregard the rights of the
plaintiff, whether it be a property right or some other right. Id. The act or conduct also must be sufficiently
aggravated to warrant punishment by punitive damages. Id.; see also Berner Cheese Corp. v.
Krug, 2008 WI 95, ¶64, 312 Wis.
2d 251, 752 N.W.2d 800. The plaintiff
must prove by clear and convincing evidence that the defendant was aware that
its conduct was substantially certain to result in the plaintiffs’ rights being
disregarded. Wischer v. Mitsubishi Heavy
Indus. Am., Inc., 2005 WI 26, ¶34, 279 Wis. 2d 4, 694 N.W.2d 320.
¶42 The evidence at trial permitted a finding that IEA acted in
intentional disregard of Niagara’s
rights. IEA agreed to provide radiators
to Niagara for sale by Niagara and assured Niagara that it would not compete
with Niagara in the locomotive OEM market
during the term of the Agreement or for two years after termination of the
Agreement. After giving a quote to
Niagara that would have enabled Niagara to sell OEM radiators to NREC, IEA
rescinded its quote to Niagara and submitted a
direct quote to NREC. It took this
action with the knowledge that rescinding its quote to Niagara would prevent Niagara from contracting with NREC. As indicated in Sorensen’s e-mail to George
Newell, IEA was also aware that its conduct would create “issues” with Niagara,
leading Sorensen to consider hiding the deal from Niagara by having George
Newell’s other company submit the quote.
The totality of the evidence thus permitted a finding that IEA’s conduct
was deliberate and aggravated, in actual disregard of Niagara’s
rights. Punitive damages were therefore
properly submitted to the jury and awarded by it.
¶43 We also reject IEA’s contention that the $366,733 award for
punitive damages was excessive. A
punitive damages award is excessive and violates due process if it is more than
necessary to serve the purposes of punitive damages or inflicts a penalty or
burden on the defendant that is disproportionate to the wrongdoing. Trinity Evangelical Lutheran Church v. Tower
Ins. Co., 2003 WI 46, ¶50, 261 Wis. 2d 333, 661 N.W.2d 789. The purpose of punitive damages is to punish
the wrongdoer and to deter the wrongdoer and others from similar conduct, not
to compensate the plaintiff for its loss.
Id. Relevant factors may include the grievousness
of the acts, the degree of malicious intent, whether the award bears a
reasonable relationship to the award of compensatory damages, the potential
damage that might have been caused by the acts, the ratio of the award to civil
or criminal penalties that could be imposed for comparable misconduct, and the
wealth of the wrongdoer. Id.,
¶53. The evidence must be viewed in the
light most favorable to the plaintiff and the jury’s punitive damages award
will not be disturbed unless it is so clearly excessive as to indicate passion
and prejudice. Id., ¶56.
¶44 The
jury was entitled to conclude that IEA’s conduct, as detailed above, was
grievous and malicious, designed to steal Niagara’s deal and increase IEA’s
profits beyond what it would have received under its Agreement with Niagara,
while eliminating Niagara as a competitor for
the NREC contract. The jury was entitled
to disregard IEA’s argument that its after-tax net profit for 2006 was low and
to consider instead IEA’s gross receipts and the fact that its profits were
lowered by the five percent commission paid to the Newell Company for the NREC sales,
and the payment of $366,733 in compensation to the Newells, both of whom were
aware of and heavily involved in the deals with Niagara and NREC. The jury was entitled to conclude that punitive
damages of $366,733 reflected the egregiousness of IEA’s conduct toward Niagara.
By the Court.—Judgment affirmed.
This
opinion will not be published. See Wis.
Stat. Rule 809.23(1)(b)5.