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COURT OF APPEALS DECISION DATED AND RELEASED June 26, 1996 |
NOTICE |
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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. 95-1039
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
FLOOD MOBILE HOMES,
INC.,
Plaintiff-Respondent,
v.
LIBERTY HOMES, INC.,
Defendant-Appellant.
APPEAL from a judgment of
the circuit court for Fond du Lac County:
STEVEN W. WEINKE, Judge. Affirmed
in part; reversed in part and cause remanded.
Before Anderson, P.J.,
Nettesheim and Snyder, JJ.
PER
CURIAM. Liberty Homes, Inc. appeals from a judgment holding
that its relationship with Flood Mobile Homes, Inc. was a dealership under the
Wisconsin Fair Dealership Law (WFDL), ch. 135, Stats., and that Flood lost profits totaling $211,750 when
Liberty terminated the dealership.
While we affirm the trial court in these respects, we reverse the
court's award of actual and reasonable attorney's fees to Flood because the
court did not give Liberty a hearing on its objection to the attorney's fees.
Liberty challenges the
sufficiency of the evidence regarding a Flood-Liberty dealership under WFDL and
argues that termination of the Liberty-Flood relationship did not have a
significant adverse economic impact upon Flood. We disagree with both arguments.
The elements of a
dealership under WFDL are: (1) an
agreement between two or more persons; (2) by which one has granted
certain rights to the other; and (3) in which a community of interest
exists in the business of offering, selling or distributing goods or services
at wholesale or retail. Guderjohn
v. Loewen-America, Inc., 179 Wis.2d 201, 204, 507 N.W.2d 115, 117 (Ct.
App. 1993).[1]
Liberty claims that
there was insufficient evidence of a community of interest in this case. In order for there to be a community of
interest, there must be: (1) a continuing financial interest and (2) "interdependence"
or "shared goals and a cooperative effort more significant than that in
the typical vendor-vendee relationship."
Id. at 205, 507 N.W.2d at 117. Whether the parties have a continuing financial interest in their
business relationship and whether the relationship is interdependent requires consideration
of ten "facets" of the relationship as evidenced by the actual
dealing of the parties and their agreement.
Id. at 205-06, 507 N.W.2d at 117-18. Those facets were set forth in Ziegler
Co. v. Rexnord, Inc., 139 Wis.2d 593, 605-06, 407 N.W.2d 873, 879-80
(1987).
The trier of fact is
responsible for determining the weight of the evidence and the credibility of
the witnesses, and we will not overturn those findings unless they are clearly
erroneous. Micro-Managers, Inc.
v. Gregory, 147 Wis.2d 500, 512, 434 N.W.2d 97, 102 (Ct. App.
1988). Here, the trial court was the
trier of fact. If more than one
reasonable inference can be drawn from the evidence, we must accept the
inference drawn by the trial court. Cogswell
v. Robertshaw Controls Co., 87 Wis.2d 243, 250, 274 N.W.2d 647, 650
(1979).
The trial court made the
following findings of fact. Flood
Mobile Homes, which sells, transports and services new and used mobile homes,
was founded in 1951 and operated as a sole proprietorship until January
1975. Through the years, it sold
several Liberty mobile home products, including Peerless mobile homes. Mark Flood, the founder's son, purchased the
business in 1975 after his father died.
Flood continued to sell Liberty homes.
In May 1992, Liberty began delaying deliveries of homes to Flood and in
January 1993 terminated its business relationship with Flood. Flood brought this WFDL action in March
1993.
Testifying at trial
regarding Liberty's termination of Flood, Robert Anderson, Liberty's district
sales manager,[2] and Mark
Flood acknowledged that Flood had been a dealer for Liberty in Peerless mobile
homes for the past twenty-eight years.
Flood testified that it was important that he be able to continue
selling Peerless homes because Liberty was dominant in the entry level mobile
home market and a seller of mobile homes needed to have high-end homes and
low-end homes (such as Peerless) to display and sell. Anderson testified that in February 1975, he promised Mark Flood
that Flood would be Liberty's exclusive dealer within a radius of thirty to
thirty-five miles from the City of Fond du Lac. Anderson stated that he had authority to procure dealers in his
sales area and that he was required to assist them. The trial court found that there were corresponding benefits to
Liberty in being associated with Flood because Flood had been a dominant name
in mobile home sales and Liberty was in the process of establishing sales
centers for its products rather than letting any seller offer Liberty mobile
homes. Anderson understood that Mark
Flood was concerned that Flood be the exclusive dealer for Liberty's products
within his area.
The trial court
considered the following facets of the Liberty-Flood relationship in reaching
its conclusion that a community of interest existed. Liberty provides financial packages to assist in sales and
purchases by dealers and buyers, and if a Liberty dealer sells a certain volume,
the dealer receives a bonus consistent with that sales volume. Liberty provided brochures and advice on
sales and marketing and any other subject necessary to promote Liberty homes. Flood met with Anderson once every four to
five weeks to discuss display and sale of Liberty products. Anderson met with Flood's sales staff on
these occasions to provide sales information.
Flood's sales staff was experienced in selling Liberty homes and staff
expertise was a high priority given the numerous models and options available
to a consumer. Flood testified that he
placed Liberty-specific advertising and was able to document his expense in
this regard and that Liberty homes represented a substantial portion of his
sales in the six years preceding Liberty's termination of their
relationship. Anderson frequently
indicated to Flood that he should have an average of five to eight mobile homes
in inventory at all times to facilitate Liberty sales, and that he was expected
to have a trained staff who could service the homes and a parts and accessories
inventory. Flood stated that he stocked
his sales lot based upon his discussions with Anderson. The court found that Flood handled warranty
work for Liberty and that for major repairs authorization from Liberty was required.
The trial court found
that Flood had an exclusive right to display Liberty models within its sales
area and concluded that the Flood-Liberty relationship was interdependent
because Liberty and Flood shared goals and engaged in cooperative efforts in
order to sell Liberty homes. The court
further concluded that there was a significant economic relationship between
Liberty and Flood over a significant period of time.
On appeal, Liberty
argues that certain other aspects of the Flood-Liberty relationship do not
suggest a community of interest. A
court assessing the existence of a community of interest must consider a wide
variety of facets of the business relationship, individually and in
combination. Ziegler, 139
Wis.2d at 605-06, 407 N.W.2d at 879-80.
Liberty argues that Flood did not pay a franchise fee, did not have the
exclusive right to sell and distribute Liberty products in the Fond du Lac
market, was not required to make any capital expenditures in order to sell
Liberty products, was not subject to a sales quota, was not prohibited from
displaying and selling competitors' products, and was not required to maintain
a parts and accessories inventory, pay for advertising material it received
from Liberty, spend a specific amount in advertising Liberty products, provide
Liberty with any financial information or absorb the costs of Liberty warranty
work.
Liberty does not contend
that the trial court's findings of fact are clearly erroneous. Rather, it suggests that other evidence in
the record supported other findings and therefore a different legal
conclusion. As we have stated, the
trial court was charged with evaluating the credibility of the witnesses,
weighing the evidence and drawing reasonable inferences. It did so here, and its findings are not
clearly erroneous based upon the evidence presented at trial. We conclude that its findings are legally
sufficient to meet the standard for a community of interest and therefore a
dealership under ch. 135, Stats.
Liberty argues that even
if Flood was a dealer, termination of the dealership did not have a significant
adverse economic effect on Flood. We
disagree. The trial court found that
Liberty and Flood had "a significant economic relationship that existed
between [them] over a significant period of time." Implicit in this finding is a finding that
termination of the relationship would have a significant economic effect. Liberty argues that Flood's sales revenue
increased subsequent to the termination of the relationship. However, this argument ignores what Flood's
revenues and profits would have been had it been able to continue selling
Liberty homes.
Liberty contests the
trial court's damages award of $211,750 in lost profits. In calculating damages, the trial court
relied upon various exhibits indicating the number of Liberty units Flood sold
in fiscal years 1987 through 1991 and a short period in 1992, the average
percentage of Liberty sales to gross Flood sales during that time, profit and
loss summaries, and the lost profits suffered by Flood. The court found that Flood's exhibits were
reasonable and warranted an award of lost profits in the amount of
$211,750.
Lost profits is an
appropriate measure of damages resulting from a grantor's violation of WFDL if
they are based on adequate data and proven to a reasonable certainty. Bush v. National Sch. Studios, Inc.,
131 Wis.2d 435, 444, 389 N.W.2d 49, 53 (Ct. App. 1986). Liberty complains that Flood's Exhibit 22
demonstrating lost profits is defective because it claims Flood lost fourteen
Liberty sales in 1992 due to the termination.
Liberty argues that the termination did not occur until January
1993. However, the trial court found
that Liberty started changing its relationship with Flood in May 1992 by
delaying inventory deliveries.
Therefore, it was reasonable for the trial court to look to the 1992
lost sales in determining Flood's total lost profits resulting from the
termination which officially occurred in January 1993. The trial court's analysis of damages was
not speculative, was based on the record and properly employed a lost profits
approach.
Finally, Liberty
challenges the trial court's award of attorney's fees to Flood in the amount of
$22,537.50. Pursuant to § 135.06, Stats., a grantor who violates WFDL can
be held liable for the actual costs of the dealer's action, including
reasonable actual attorney's fees.
Flood's request for attorney's fees was supported by the affidavit of
its counsel, Richard J. Carlson.
The appendix to
Liberty's brief includes the trial court's March 21, 1995, letter to the
attorneys rejecting Liberty's objection to Flood's attorney's fees. While this letter does not appear in the
record on appeal, neither party disputes that it was sent. Accordingly, we will consider it. Liberty's objection to Flood's request for
attorney's fees is also not included in the record on appeal. However, we assume that such objection was
made because the trial court referred to it in its March 21 letter. Finally, the record on appeal does not substantiate
that Liberty requested a hearing on the reasonableness of Flood's attorney's
fees. However, Flood's respondent's
brief does not contest that Liberty requested such a hearing. Therefore, we will take this point as
conceded as well. Assuming the foregoing
facts, we conclude that the trial court erred in awarding Flood its attorney's
fees without holding a hearing on Liberty's objection to their reasonableness.
In assessing a request
for attorney's fees, a trial court should consider numerous factors set out in Siegel
v. Leer, Inc., 156 Wis.2d 621, 631, 457 N.W.2d 533, 537 (Ct. App.
1990). Here, the trial court's two-line
letter does not indicate that it considered these factors and does not provide
this court with a sufficient record for reviewing the decision to award
attorney's fees. Accordingly, we
reverse and remand for further proceedings on the question of an award of
actual and reasonable attorney's fees to Flood.[3]
No costs on appeal to
either party.
By the Court.—Judgment
affirmed in part; reversed in part and cause remanded.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[1] A "dealer" is a person who is the grantee of a dealership in this state. Section 135.02(2), Stats. "Community of interest" is "a continuing financial interest between the grantor and grantee in either the operation of the dealership business or the marketing of such goods or services." Section 135.02(1). "Dealership" is an oral or written agreement, either express or implied, by which a person is granted the right to sell goods or use a trade name or other commercial symbol, in which there is a community of interest in the business of offering the goods. Section 135.02(3).