COURT OF APPEALS DECISION DATED AND FILED May 10, 2011 A. John Voelker Acting Clerk of Court of Appeals |
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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 KESSLER, J. Tri-Corp Housing, Inc. appeals the summary judgment dismissing all of Tri-Corp’s claims against Alderman Robert Bauman. Tri-Corp argues that the trial court erred when it: (1) granted summary judgment in Alderman Bauman’s favor with regard to Tri-Corp’s conspiracy and tortious interference with a contract or prospective contract claim because disputed issues of material fact existed as to both claims; and (2) concluded that Tri-Corp’s damages were speculative. We have affirmed the trial court with regard to Tri-Corp’s conspiracy claims against the Wisconsin Housing and Economic Development Authority (WHEDA) in a separate appeal and now affirm the trial court with regard to the conspiracy claims against Alderman Bauman. However, we conclude that issues of material fact exist regarding Tri-Corp’s tortious interference with a contract or prospective contract claim against Alderman Bauman. Accordingly, we affirm in part and reverse in part and remand.
BACKGROUND
¶2 This appeal arises out of a third-party complaint by Tri-Corp
alleging claims of conspiracy and tortious interference with a contract or
prospective contract against Alderman Bauman.
In its complaint, Tri-Corp, a non-profit organization that provides
housing to cognitively impaired individuals not in need of confinement, alleges
that Alderman Bauman interfered with Tri-Corp’s operation of
¶3 Tri-Corp
previously appealed dismissal of all of its counterclaims against WHEDA, the
entity that financed Tri-Corp’s business activity through a mortgage secured in
part by
¶4 Tri-Corp
does not allege in its third-party complaint that Alderman Bauman caused it to
default on its mortgage; however, its allegation that Alderman Bauman and WHEDA
conspired against Tri-Corp by, among other things, WHEDA foreclosing on the
mortgage, was dismissed on summary judgment and sustained by us with regard to
WHEDA in Tri-Corp I. See id., No. 2010AP418, ¶27. Tri-Corp argues here that a number of
facts other than the WHEDA foreclosure collectively demonstrate that Alderman
Bauman interfered with Tri-Corp’s business relationship with
Facts relevant to this appeal.
¶5 It is undisputed for purposes of this appeal that:
·
·
In 1997, Alderman Bauman bought a home
approximately two blocks from
·
In 2003, WHEDA gave Tri-Corp a multi-family mortgage for approximately $1.6 million which was secured by two buildings: (1) West Samaria, and (2) New
· Both facilities were operated by Tri-Corp to provide housing and meals for cognitively disabled persons.
·
Approximately two-thirds of the residents at
these facilities were referred to Tri-Corp by
·
Rent was paid by each resident from funds
provided to the resident by
·
In the spring 2004 election Bauman was elected Alderman
of the Aldermanic District in which
·
Alderman Bauman was a vocal opponent of the West
Samaria facility since at least 2005 and publically opposed Tri-Corp’s special
use permit to operate
· Antonio Riley was the Executive Director of WHEDA at times material to this appeal.
· Alderman Bauman and Riley knew each other and were friends.
· In June 2006, the Board of Zoning Appeals (BOZA) granted Tri-Corp the special use permit that Alderman Bauman opposed.
· Tri-Corp failed to make its June 2007 mortgage payment. On July 2, 2007, WHEDA notified Tri-Corp of the missed payment.
·
In August 2007, Alderman Bauman and Riley met
and discussed
· On August 10, 2007, WHEDA recovered the amount of the missed June payment plus late fees from a Tri-Corp account. This is the last mortgage payment WHEDA received from Tri-Corp.
·
On October 19, 2007, WHEDA held a meeting with
representatives from
· On November 8, 2007, WHEDA told Tri-Corp it was going to foreclose.
· On November 19, 2007, WHEDA filed the foreclosure action.
Additional facts will be provided as relevant to the discussion.
DISCUSSION
Standard of Review.
¶6 We
review the grant or denial of a summary judgment motion de novo, applying the same methodology as the trial court. Cole v. Hubanks, 2004 WI 74, ¶5, 272
¶7 We, like
the trial court, may not decide issues of fact but must determine only whether
a disputed issue of material fact exists. Fischer v. Doylestown Fire Dep’t, 199
A. Alderman
Bauman’s Opposition to
¶8 It is
undisputed that Alderman Bauman vocally opposed West Samaria, particularly
following the deaths of two
The cavalier comment was made, well, it’s not the applicant’s responsibility to watch over Mr. Rutledge 50 feet from the door of the establishment, but that’s not all that happened in this case. While it’s true that Mr. Rutledge was beaten on the public right-of-way, he also stumbled into the premises after he was beaten. He stumbled in. No one was there to ask him what happened, are you hurt, do you need attention, no one called the police, no one even knew what happened to the poor man….
That is the level of care that this fine establishment likes to maintain. A man can get beaten nearly to death 50 feet in front of the door, and while it is the public’s responsibility in the public right-of-way, he goes back into his home, and no one gives a damn.
¶9 In
February 2007, three years after Rutledge’s death, the Milwaukee Journal
Sentinel reported that Joseph Droese, a resident of
Please take immediate action regarding
Please issue the appropriate orders revoking their special use permit so this matter can be brought back before BOZA at the earliest possible time.
The DNS subsequently issued an order revoking Tri-Corp’s special use permit.
¶10 Tri-Corp
appealed the DNS order to BOZA. On April
19, 2007, shortly before Tri-Corp’s issue came up on the agenda at a BOZA
hearing, Alderman Bauman presented a letter he wrote to BOZA in which he claimed
to have learned of “additional complaints about patient care” at West Samaria. In the letter, Alderman Bauman claimed to
have received a report from the sister of a West Samaria resident, claiming
that the resident was a victim of “mistreatment and possible sexual assault by
B. The mortgage default and subsequent meetings.
¶11 It is undisputed that Tri-Corp failed to make its June 2007 mortgage payment and that WHEDA later recovered the June payment plus late fees from Tri-Corp’s bank account. After recovery of the June payment, WHEDA received no additional mortgage payments from Tri-Corp.
¶12 On August 8, 2007, Alderman Bauman met with Riley. Alderman Bauman’s handwritten notes about the meeting say that Alderman Bauman’s “[g]oal” regarding West Samaria was to “Relocate residents and RAZE” and that Heartland Housing may “wind down” operations. (Emphasis in original.)
¶13 WHEDA
arranged a meeting on October 19, 2007, with Milwaukee County representatives
responsible for referring residents to West Samaria, representatives of the
Milwaukee Department of City Development, Alderman Bauman and representatives
of Heartland Housing. Tri-Corp was not
invited to attend. According to various
summaries of the meeting, WHEDA indicated it would be foreclosing
¶14 After the
October 19, 2007 meeting,
¶15 Ultimately, summary judgment dismissing Tri-Corp’s third-party claims against Alderman Bauman was granted. Tri-Corp appeals the dismissal of two of those claims. We discuss them separately.
C. The Conspiracy Claim.
¶16 Tri-Corp
alleged that Alderman Bauman conspired with WHEDA to close
[T]here is no evidence beyond mere speculation and conjecture that Alderman Bauman and Riley conspired to ruin Tri-Corp’s business at West Samaria … That Riley and Alderman Bauman knew each other and were friends was undisputed; that [Alderman] Bauman was a vocal opponent of the West Samaria facility was undisputed; that WHEDA as Tri‑Corp’s lender had meetings that involved Alderman Bauman was undisputed. But these facts, even when taken together, do not allow even an inference that Alderman Bauman and Riley acted with malice, with the common purpose to injure Tri-Corp’s business.
Tri-Corp I, No. 2010AP418, ¶27.
¶17 In City of Milwaukee v. NL Industries, Inc.,
2005 WI App 7, ¶25, 278 Wis. 2d 313, 691 N.W.2d 888 (Ct. App. 2004), we held
that “[a] civil conspiracy in Wisconsin is a ‘combination of two or more
persons by some concerted action to accomplish some unlawful purpose or to
accomplish by unlawful means some purpose not in itself unlawful.’”
D. Intentional Interference with a Contract or Prospective
Contract.
¶18 Tri-Corp alleged that Alderman Bauman interfered with its contractual or prospective contractual relationships by “causing Milwaukee County and people in need of services to discontinue their use of West Samaria” and that the interference was “malicious and intentional, and neither justified nor privileged.” There are no allegations in the Third-Party Complaint that Alderman Bauman interfered with Tri-Corp’s mortgage contract with WHEDA.
¶19 Tri-Corp
argues that Alderman Bauman’s adamant expression of his undisputed dislike for
West Samaria before Tri-Corp
defaulted on its mortgage, his conduct during his meetings with WHEDA
representatives after Tri-Corp’s
default, and his conduct at the October 2007 meeting organized by WHEDA
announcing its eventual plan to foreclose, intentionally interfered with
Tri-Corp’s business relationship with Milwaukee County. Although Alderman Bauman correctly notes the
absence of a formal contract between Tri-Corp and
¶20 To succeed on a claim for tortious interference with a contract or a prospective contract, a party must demonstrate the following 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
(1) Did Tri-Corp have a commercial
relationship with
¶21 It is not
disputed that
¶22 The law
relating to interference with a business relationship has been described in
terms of an existing or prospective contractual relationship.
[I]ncluded [in relationships protected against intentional interference of prospective contracts] [are] interference with a continuing business or other customary relationship not amounting to a formal contract….
It is not necessary that the prospective relation be expected to be reduced to a formal, binding contract. It may include … voluntary conferring of commercial benefits in recognition of a moral obligation.
¶23 Although
Tri-Corp and the County did not have a formal contract, as discussed, it is not
disputed that the County had a history of referring residents to
(2) Did Alderman Bauman interfere with Tri-Corp’s commercial
relationship with
¶24 At the
October 19, 2007 meeting, in the context of whether Heartland, rather than
Tri-Corp, should run West Samaria after foreclosure, Alderman Bauman is
reported as stating that “the property is a combination of three things—bad
design, bad location and bad operator.
Even if you changed the operator, you can’t overcome the other two.” This statement of opinion is consistent with
his long expressed opposition to
¶25 Tri-Corp also
contends that a jury might properly infer that Alderman Bauman interfered with
Tri-Corp’s commercial relationship with Milwaukee County by persuading the
County to remove residents from West Samaria. Alderman Bauman responds that there were other
reasons the County had for moving residents, namely, the WHEDA
foreclosure. The trial court found that
it would be irresponsible for the County not to plan for the residents’ relocation
once it was apparent the facility would be closed. Because the County did not move residents
from New Samaria, despite New Samaria being under the same mortgage as West
Samaria, we conclude that the competing inference that Alderman Bauman did interfere
with Tri-Corp’s relationship with
(3) Was Alderman Bauman’s interference intentional?
¶26 Interference
with a business relationship is actionable only if the interference is
intentional and improper. See Crownhart, 122
(4) Was Alderman Bauman a cause of damages to Tri-Corp?
¶27 Tri-Corp
alleged in its Third-Party Complaint that Alderman Bauman interfered with its
contract and prospective contract by “causing
¶28 There is
evidence in the record of an email by a
(5) Were Alderman Bauman’s statements privileged?
¶29 Alderman
Bauman argues that all of his statements were privileged and thus Tri-Corp could
not sustain a claim of tortious interference with its business. However, the question of privilege does not
appear to have been mentioned by either party during any of the summary
judgment hearings and the trial court did not make findings on this issue. Alderman Bauman’s briefing on the issue, as
well as Tri-Corp’s reply, put forth very brief arguments. We do not consider this adequate briefing of
the extremely complex issue of the extent and application of legislative or
other privilege in the context of an intentional tort,[5] particularly
as the issue was not raised before the trial court. We decline to consider this issue.
CONCLUSION
¶30 We conclude that the facts in the record could support the inference that the closing of West Samaria was not a necessary consequence of the WHEDA mortgage foreclosure, and that Alderman Bauman’s efforts were a cause of Milwaukee County’s decision to remove residents it had referred to West Samaria and not to refer others. On remand, the question of what damages related to Milwaukee County’s decisions and whether all or any part of Alderman Bauman’s statements were privileged can be addressed by the trial court and, if appropriate, the fact finder at trial.
By the Court.—Judgment affirmed in part, reversed in part and cause remanded.
Not recommended for publication in the official reports.
[1] All references to the Wisconsin Statutes are to the 2009-10 version unless otherwise noted.
[2] Claims by Rutledge’s Estate against Tri-Corp were dismissed on summary judgment in Milwaukee County Case 07-CV-7485.
[3] As
a result of his death, Droese’s parents sued both
[4] The
record does not indicate how long this pattern of referrals existed, nor the
reasons
[5] For
example, our supreme court noted that “a defendant, who otherwise would stand
in a position of privilege in causing a termination of contract, enjoys no
privilege if his object is to put pressure upon the plaintiff and coerce him
into complying with the defendant’s wishes in some collateral matter.” Mendelson v. Blatz Brewing Co., 9