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COURT OF APPEALS DECISION DATED AND FILED March 8, 2011 A.
John Voelker Acting 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
from a judgment of the circuit court for
Before Curley, P.J., Kessler and Brennan, JJ.
¶1 CURLEY, P.J. Tri-Corp Housing, Inc., appeals the grant of summary judgment to the
Wisconsin Housing and Economic Development Authority (“WHEDA”) on WHEDA’s
foreclosure claim against Tri-Corp. Tri‑Corp
also appeals the grant of summary judgment in favor of WHEDA dismissing all of
Tri-Corp’s counterclaims against WHEDA.
Tri-Corp argues on appeal that because the evidence in the record was
sufficient to establish an issue of fact regarding its numerous counterclaims
against WHEDA, the trial court erred in granting summary judgment against
Tri-Corp. Tri-Corp also argues that the
trial court erred in granting summary judgment in favor of WHEDA on WHEDA’s
foreclosure claim against Tri-Corp because the facts supporting its
counterclaims constitute a defense to WHEDA’s foreclosure claim. We affirm.
I. Background.
A. WHEDA’s
Foreclosure Action
¶2 This
case commenced as a foreclosure action brought by WHEDA against its mortgagor,
Tri-Corp Housing, Inc. The facts
precipitating the foreclosure litigation are as follows:
¶3 On
April 17, 2003, Tri-Corp executed and delivered a multi-family note to WHEDA
for approximately $1.6 million and secured it with a multi-family mortgage. The loan was secured by two parcels of real
estate:
¶4 While
there were no difficulties reported in the first year of the loan, Tri-Corp
lost a community development block grant of $1 million from the City of
¶5 In
2005, a financial statement raised concerns regarding Tri-Corp’s viability as a
going concern. In the statement, an
independent auditor commented:
For the past several years, Tri-Corp has incurred significant losses and negative cash flows from its activities and programs. On December 31, 2005, Tri-Corp is in arrears in paying amounts due vendors, and its current liabilities exceed its current assets by approximately $860,000. The ratio of an organization’s current assets to its current liabilities is an indicator as to whether the company can meet its obligations in a timely manner. These factors raise substantial doubt about Tri-Corp’s ability to continue as a going concern. Management is attempting to mitigate losses through a combination of increased rental fees, a new marketing plan to reduce vacancies, an increase in profitable construction and rehabilitation projects, the selling of rental properties, and implementing more aggressive policies to improve procedures … Tri-Corp’s ability to continue as a going concern is dependent upon management’s ability to implement this plan. However, there can be no assurances that any or all of these items will be accomplished.
(Punctuation added.)
¶6 Tri-Corp eventually
defaulted on its loan by failing to make its monthly payments beginning in June
2007. Discussions between WHEDA and
Brever took place after June 13, 2007, to determine the future of Tri-Corp’s
loan and the properties secured by it.
Brever had also been in contact with an entity that had expressed
interest in purchasing
B. Tri-Corp’s
Counterclaims
¶7 In
response to WHEDA’s foreclosure action, Tri-Corp admitted that it did in fact
default on payment, but also asserted that WHEDA had affirmatively taken steps
to prevent Tri-Corp from bringing itself current with its mortgage. Tri‑Corp asserted numerous
counter-claims against WHEDA, which are also the subject of this appeal: (1) breach of the duty of good faith; (2)
tortious interference with commercial relations; (3) conspiracy in violation of
Wis. Stat. § 134.01
(2009-10);[1] (4)
common law civil conspiracy; (5) violation of the Racketeer Influenced and
Corrupt Organizations (“RICO”) Act and of Wisconsin’s Organized Crime Control
Act (“WOCCA”); (6) violations of the Federal Fair Housing Act; (7) violation of
the Americans with Disabilities Act; and (8) violation of the Rehabilitation
Act. Tri-Corp also made claims against third-party
¶8 Tri-Corp
based its counterclaims on WHEDA’s and Bauman’s actions during the time leading
up to and during the filing of the foreclosure action.
¶9 For
example, Alderman Bauman—a vocal opponent of West Samaria—communicated to the
head of WHEDA, Antonio Riley, that he wanted West Samaria closed. Alderman Bauman and Riley had a meeting in
August 2007 at which they discussed the fact that Tri-Corp had defaulted on its
mortgage, and also that the “goal,” should Tri-Corp be foreclosed upon, was to
relocate the residents of
¶10 Additionally,
WHEDA representatives and Milwaukee County representatives had a meeting on
about October 19, 2007, to discuss the future of West Samaria—a meeting to
which Tri-Corp representatives were not invited. Shortly after this meeting,
¶11 Later,
on about November 8, 2007, WHEDA staff called Tri-Corp’s executive director and
told him that WHEDA intended to foreclose its mortgage. Tri-Corp’s director was surprised because Tri-Corp
was aware of the default and had been working to bring the loan current
throughout the summer. Indeed, Tri‑Corp
made proposals to WHEDA to apply the proceeds from the sale of other properties
toward the
¶12 Finally,
on November 12, 2007, WHEDA also sent a press release to a Milwaukee Journal
Sentinel reporter that misrepresented Tri-Corp as agreeing that the closure of
West Samaria was in the residents’ best interests. Tri-Corp objected to the press release, but
WHEDA’s executive director distributed it anyway.
C. Procedural
History
¶13 WHEDA
moved for summary judgment on its foreclosure claim and also moved for summary
judgment on all of Tri-Corp’s counterclaims. The trial court granted both of WHEDA’s
motions, and also entered judgment in favor of Alderman Bauman, which is the
subject of a separate appeal. Tri-Corp
now appeals.
II. Analysis.
¶14 We
review de novo the grant or denial of
summary judgment, employing the same methodology as the circuit court. See Smaxwell v. Bayard, 2004 WI 101,
¶12, 274
A. The trial court correctly granted WHEDA summary judgment
on Tri-Corp’s
counterclaims.
¶15 Tri-Corp claims
that the trial court erred in granting summary judgment against each of its
counterclaims against WHEDA. We address
Tri‑Corp’s arguments regarding each claim in turn.
1. Breach of Contractual Duty
of Good Faith
¶16 Tri-Corp
argues that that “WHEDA violated its duty of good faith to Tri-Corp by engaging
in conduct which both undermined the value of
¶17 According to
Tri-Corp, WHEDA breached its duty of good faith in three ways. First, WHEDA arranged the October 19, 2007,
meeting with
¶18 Every
Wisconsin contract includes an implicit obligation of good faith and fair
dealing. LDC-728 Milwaukee, LLC v. Raettig,
2006 WI App 258, ¶11, 297 Wis. 2d 794, 727 N.W.2d 82. The duty of good faith represents a
guarantee by each party that he or she “will not
intentionally and purposefully do anything to prevent the other party from
carrying out his or her part of the agreement, or do anything which will have
the effect of destroying or injuring the right of the other party to receive
the fruits of the contract.”
Tang v. C.A.R.S. Prot. Plus, Inc., 2007 WI App 134, ¶41, 301
¶19 Whether
WHEDA has breached its implied duty of good faith is a question of fact. See Tang, 301
¶20 We
conclude that, viewed in the light most favorable to Tri-Corp, the facts upon
which Tri-Corp bases its claim would not allow a reasonable jury to find that
WHEDA breached its duty of good faith. See Lambrecht, 241
¶21 Second,
WHEDA’s decision to foreclose on the mortgage instead of pursuing Tri-Corp’s
proposed alternatives cannot be evidence of breach of the duty of good faith in
this matter because WHEDA had the right to foreclose on Tri-Corp’s loan once
Tri-Corp defaulted. See id.
¶22 Third,
WHEDA’s distribution of the misleading press release does not constitute
sufficient evidence of the breach of duty of good faith. There is no evidence that this press
release—generated several months after Tri-Corp initially defaulted on its
loan—prevented Tri-Corp from carrying out its part of the agreement, or did
anything that had “‘the effect of destroying or injuring the right of’”
Tri-Corp “to receive the fruits of the contract.” See Tang, 301
2. Tortious
interference with the commercial relationship between
Tri-Corp
and
¶23 Tri-Corp
next argues that WHEDA’s holding of the October 19, 2007, meeting with
Interference with a present or prospective contractual relationship requires proof of the following five elements: (1) the plaintiff had a contract or prospective contractual relationship with a third party; (2) the defendant interfered with the relationship; (3) the interference was intentional; (4) a causal connection exists between the interference and the damages; and (5) the defendant was not justified or privileged to interfere.
Burbank Grease Servs., LLC v. Sokolowski, 2006 WI 103, ¶44, 294
¶24 We
conclude that summary judgment was appropriate on Tri-Corp’s tortious
interference claim because there is no evidence that the October 19, 2007,
meeting was undertaken with the intent to interfere with Tri-Corp’s
relationship with
3.
Claims
¶25 Tri-Corp
bases both its statutory and common law civil conspiracy claims on four pieces
of evidence: (1) the fact that Alderman
Bauman, who was a vocal opponent of West Samaria, and Riley, the head of WHEDA,
were friends; (2) the fact that Alderman Bauman and Riley had a meeting in
August 2007 where they discussed the fact that Tri-Corp had defaulted on its
mortgage and the “goal,” should Tri-Corp be foreclosed upon, was to relocate
the residents of West Samaria and raze the structure; (3) the October 19, 2007,
meeting heretofore discussed; and (4) the November 2007 press release that
misrepresented Tri-Corp’s position on West Samaria. Because Tri-Corp bases its statutory and
common law conspiracy claims on the same evidence, and because the conspiracy
claims share the same essential elements, we analyze them together. See Wis. Stat. § 134.01; City
of Milwaukee v. NL Indus., Inc., 2005 WI App 7, ¶25, 278
¶26 Under
Wis. Stat. § 134.01, Tri-Corp had
to prove the following elements to present its conspiracy claim to a jury: that WHEDA and Alderman Bauman acted
together, with malice, with the common purpose to injure Tri‑Corp’s
business, and that they did in fact financially injure Tri-Corp. See id.; see also
¶27 Summary
judgment was appropriate on Tri-Corp’s conspiracy claims because there is no
evidence beyond mere speculation and conjecture that Alderman Bauman and Riley
conspired to ruin Tri-Corp’s business at
4. RICO
and WOCCA Claims
¶28 Regarding
its RICO and WOCCA claims, Tri-Corp argues that there is sufficient evidence
from which a trier of fact could find violations of these acts. However, Tri-Corp does not explain how the
evidence in the record would allow a jury to form this conclusion; it merely
states that its reasons for appealing the trial court’s grant of summary
judgment on these claims “have been set out previously.” Because Tri-Corp has not developed its
arguments regarding these claims, we decline to address them. See
State
v. McMorris, 2007 WI App 231, ¶30, 306
5. Fair
Housing Act Violations
¶29 Tri-Corp
next argues that its Fair Housing Act claims against WHEDA should have been
decided by a jury. According to
Tri-Corp, “there is evidence that WHEDA facilitated Alderman Bauman’s desire to
close West Samaria and not have persons with [cognitive] disabilities reside in
his neighborhood,” and there is also evidence that “WHEDA failed to act
reasonably in respect to its loans to Tri-Corp to the detriment of Tri-Corp’s
residents, who are disabled.”
Specifically, Tri-Corp argues that WHEDA intentionally discriminated
against Tri-Corp by adopting Alderman Bauman’s “plan to get
¶30 The
federal Fair Housing Act makes it unlawful to discriminate against any person
in the term, conditions, or privileges of sale or rental of a dwelling because
of handicap. 42 U.S.C. § 3604(f)(2)
(2010). To withstand summary judgment on
a claim under the Fair Housing Act, Tri-Corp had to provide evidence from which
a jury could determine that WHEDA: (1)
exercised discriminatory intent; (2) took actions that caused a “disparate impact”;
or (3) failed to make reasonable accommodation. See Larkin v. State of
¶31 We
conclude that Tri-Corp failed to submit sufficient evidence to withstand
summary judgment on any of these theories.
The record is completely devoid of any evidence showing that WHEDA’s
decision to foreclose on Tri‑Corp’s loan was based on the disabilities of
6. Americans
with Disabilities Act Violations
¶32 Regarding
its Americans with Disabilities Act (ADA) claim, Tri‑Corp argues:
As is the case under the [Fair Housing Act], there are issues of fact … on the claim that WHEDA violated [the] ADA by failing to extend a “reasonable accommodation” to Tri‑Corp in connection with the loan at issue, which was clearly designed to promote housing for people with disabilities.
Tri-Corp fails to identify what the issues of
fact are, however, and thus has insufficiently developed its argument with
respect to this claim. Therefore, we
will not consider it, see McMorris, 306
7. Rehabilitation
Act Violation
¶33 Regarding
its Rehabilitation Act claim, Tri-Corp argues—without citation to any
supporting evidence—that WHEDA’s decision to foreclose on Tri‑Corp’s loan
while allowing other entities to cure defective loans was motivated by the
disabilities of
B. The trial court correctly granted WHEDA summary judgment on
its
foreclosure claim against Tri-Corp.
¶34 Without
sufficient explanation or citation to the record, Tri-Corp states that the “facts
supporting Tri-Corp’s counterclaims also support its defense to WHEDA’s
foreclosure claim.” It then asks this
court to use its equitable power to reverse the trial court’s grant of summary
judgment on WHEDA’s foreclosure claim.
We decline to consider this argument because it is not adequately developed,
see id.,
and therefore conclude that summary judgment was proper regarding WHEDA’s
foreclosure claim.
By
the Court.—Judgment affirmed.
Not recommended for publication in the official reports.