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COURT OF APPEALS DECISION DATED AND RELEASED July 2, 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. 95-1779
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
ROBERT POTRATZ and
JAMES POTRATZ,
Plaintiffs-Respondents,
v.
STOKELY USA, INC.,
Defendant-Appellant.
APPEAL from a judgment
of the circuit court for Winnebago County:
ROBERT HAWLEY, Judge. Affirmed.
Before Anderson, P.J.,
Brown and Snyder, JJ.
PER
CURIAM. Stokely USA, Inc. appeals from a judgment in favor of
Robert and James Potratz after a jury found that Stokely breached its contract
with the Potratzes and that they suffered loss of expectation and consequential
damages. On appeal, Stokely contends
that the trial court erred in denying its motion for summary judgment, refusing
to change answers in the special verdict and denying it a new trial. We disagree and affirm.
Stokely processes sweet
corn from raw product at its plant in Pickett, Wisconsin. In the course of doing so, Stokely generates
organic waste in the form of stalks, husks, cobs and kernels, which is commonly
referred to as "corn silage" or "silage." Stokely entered into a contract in 1991 with
the Potratzes for management of the corn silage stack at the plant.[1] The term of the agreement was from July 1,
1991, to June 30, 1995, unless terminated pursuant to the early termination
provision of the contract, which states:
Stokely
may terminate this Agreement on any annual anniversary date by giving written
notice to Potratz not less than 60 days in advance of its intention to
terminate based upon either of the following conditions: (a) that it has elected to close the silage
stack located at the Plant, or (b) that the silage stack at the Plant is out of
compliance with any applicable law or administrative code.
After electing to close
the corn silage stack site at the plant and making other arrangements for
managing silage, Stokely availed itself of the early termination provision in
an April 29, 1993 letter to the Potratzes terminating the contract as of June
30, 1993. The letter stated that the
contract was terminated "for the reason that [Stokely] has elected to
close its plant site silage stack. This
date it has entered into an agreement with J & B Silage, Inc. for the
development and construction of an off-site corn waste facility." The Potratzes filed a breach of contract
claim in August 1993.
Stokely sought summary
judgment on the grounds that it terminated the contract consistent with the
early termination provision contained therein because it gave the Potratzes
proper notice of its election to close the silage stack and acted consistent
with this intention. The Potratzes opposed
Stokely's summary judgment motion on the grounds that the contract was
ambiguous and there were material facts in dispute as to the parties' intention
regarding the early termination provision.
The trial court agreed with the Potratzes that the contract's early
termination provision was ambiguous and denied summary judgment. Stokely challenges this ruling on
appeal.
On appeal, we apply the
same methodology used by the trial court and decide de novo whether summary
judgment is appropriate. Coopman
v. State Farm Fire & Casualty Co., 179 Wis.2d 548, 555, 508 N.W.2d
610, 612 (Ct. App. 1993). We review the
parties' submissions on summary judgment to determine whether there are any
material facts in dispute which would entitle the opposing party to a
trial. See Benjamin v.
Dohm, 189 Wis.2d 352, 358, 525 N.W.2d 371, 373 (Ct. App. 1994).
Summary judgment is
inappropriate when the contract is ambiguous and the intent of the parties to
the contract is in dispute. Leitzke
v. Magazine Marketplace, Inc., 168 Wis.2d 668, 673, 484 N.W.2d 364, 366
(Ct. App. 1992). While construction of
a contract to ascertain the intent of the parties is normally a matter of
law for this court, Eden Stone Co. v. Oakfield Stone Co., 166
Wis.2d 105, 115-16, 479 N.W.2d 557, 562 (Ct. App. 1991), where a contract is
ambiguous, the question of intent is for the trier of fact. Armstrong v. Colletti, 88
Wis.2d 148, 153, 276 N.W.2d 364, 366 (Ct. App. 1979). Whether a contract is ambiguous in the first instance is a
question of law which we decide independently of the trial court. Wausau Underwriters Ins. Co. v. Dane
County, 142 Wis.2d 315, 322, 417 N.W.2d 914, 916 (Ct. App. 1987). Ambiguity exists in a contract if it is
reasonably susceptible to more than one meaning. Id.
In support of its
summary judgment motion, Stokely submitted the affidavit of the plant manager,
Russell Grubb. In his affidavit, Grubb
stated that Stokely formed the intent in the fall of 1992 to close the silage
stack site at the plant prior to the 1993 sweet corn pack. Stokely expected to contract with a third
party to construct a silage stack pad and facility at a site away from the
plant. It began negotiating in December
1992 with Robert Waldvogel and J & B Silage, Inc., and in April 1993
executed an agreement with Waldvogel which was consistent with Stokely's
election to close the silage stack site at the plant prior to the 1993 sweet
corn pack. The agreement required J
& B Silage to select and develop a property as a corn waste disposal
facility to serve the plant during the contract term. Because J & B was unable to construct a corn waste
storage and disposal site in time for Stokely's 1993 sweet corn pack (which
began on August 6, 1993), the stack site at the plant was used for the 1993
corn pack.
Stokely contended on
summary judgment that once it gave notice of its intention or election to close
the silage stack, the fact that the stack was used during the 1993 corn pack
was irrelevant under the clear language of the parties' contract, which, Stokely
contended, unambiguously allowed it to terminate the agreement based upon its
election to close the stack but did not require actual closure of the stack.
In response, the
Potratzes argued that the term "elect" was ambiguous. They construed it to mean that silage
stacking had ceased at the plant site—not that Stokely had merely elected to
close the stack at some future date. In
his affidavit opposing summary judgment, James Potratz stated that he and his
brother relied upon representations made by Grubb that during the five-year
term of the contract, the Potratzes had the exclusive right to manage the
silage stack at Stokely as long as the stack was in use.
The trial court denied
Stokely's motion for summary judgment on the grounds that the term "elect"
was ambiguous and there were factual disputes regarding the parties' intent
vis-a-vis the early termination provision.
We agree with the trial court's legal conclusion that the provision
("[Stokely] has elected to close the silage stack located at the
Plant") is reasonably susceptible to either meaning attributed by the
parties and is ambiguous. See Wausau
Underwriters, 142 Wis.2d at 322, 417 N.W.2d at 916. In light of this ambiguity, the question of
intent was for the trier of fact. See
Armstrong, 88 Wis.2d at 153, 276 N.W.2d at 366. Summary judgment was inappropriate because
there were material facts in dispute regarding the parties' intent.
The remainder of
Stokely's issues on appeal concern the jury's breach of contract verdict and
the damages awarded to the Potratzes.
The jury awarded the Potratzes $63,283 in loss of expectation damages
and $10,000 in consequential damages.
Stokely argues that there was insufficient evidence in the record that
it breached the contract and that the Potratzes suffered loss of expectation
and consequential damages in the amounts awarded by the jury.
Stokely's various
challenges to the jury verdict and the trial court's refusal to overturn it
hinge upon the facts found by the jury, see Logterman v. Dawson,
190 Wis.2d 90, 101, 526 N.W.2d 768, 771 (Ct. App. 1994), and whether the jury's
verdict, including the damages award, is supported by any credible
evidence. We examine the record for any
credible evidence which under any rational view fairly admits of an inference
that will support the jury's finding. Peissig
v. Wisconsin Gas Co., 155 Wis.2d 686, 702-03, 456 N.W.2d 348, 355
(1990).
The jury found that
Stokely breached the July 1991 contract with the Potratzes. Stokely argues that there was no credible evidence
which under any reasonable view supports this finding. In support of this claim, Stokely argues
that the contract was unambiguous and not subject to construction using
extrinsic or parol evidence. We have
already held that at the summary judgment stage, the trial court properly
concluded that the contract was ambiguous and that the parties' intent
regarding early termination and Stokely's conduct in light of that intent was a
question for the jury. We need not
discuss this issue further except to say that it was for the jury to assess the
credibility of the witnesses and the weight to be afforded their individual
testimony. See Radford v.
J.J.B. Enters., 163 Wis.2d 534, 543, 472 N.W.2d 790, 794 (Ct. App.
1991). Where more than one reasonable
inference may be drawn from the evidence adduced at trial, we must accept the
inference drawn by the jury. Id. We search for credible evidence to sustain
the jury's verdict, not for evidence to sustain a verdict which the jury could
have reached but did not. Id. Because the contract was ambiguous on the
question of whether Stokely actually had to close the silage stack in order to
avail itself of the early termination provision, the jury's breach of contract
finding need only be supported by credible evidence of the parties' intentions
and conduct. The record contains such
evidence.
We turn to Stokely's
challenge to the damages awarded by the jury.
The amount of damages awarded is primarily within the jury's
discretion. White v. General
Casualty Co., 118 Wis.2d 433, 440, 348 N.W.2d 614, 618 (Ct. App.
1984). The jury awarded the Potratzes
loss of expectation damages in the amount of $63,283 and consequential damages
of $10,000.[2]
When a party's
expectation interest is harmed by a breach of contract, damages for the breach
should "put the plaintiff in as good a position financially as he would
have been in but for the breach." Thorp
Sales Corp. v. Gyuro Grading Co., 111 Wis.2d 431, 438, 331 N.W.2d 342,
346 (1983) (quoted source omitted). The
damages award should compensate the injured party for losses necessarily
flowing from the breach. Id. "An injured party is entitled to the
benefit of his agreement, which is the net gain he would have realized from the
contract but for the failure of the other party to perform." Id. at 438-39, 331 N.W.2d at
346.
The Potratzes' Exhibit
29 offered evidence of their expectation damages, i.e., lost income or net gain
from what would have been their 1993 contract performance. This exhibit showed that the Potratzes'
gross income per ton of silage for the years 1991 and 1992 (the two years
preceding the termination) and 1994 (the year subsequent to the termination)
ranged from $2.76 to $3.51 and yielded an average gross income per ton of
silage of $3.18. The Potratzes then
applied this average gross income per ton to the number of tons Stokely
processed in 1993, yielding a gross expected income in 1993 of $106,473. The jury awarded the Potratzes $43,190 less
than this amount.[3]
Stokely argues that the
Potratzes' 1993 compensation should have been calculated under the provisions
of the contract,[4] not on
average gross income per ton of silage.
We disagree for two reasons.
First, in proving their
expectation damages, the Potratzes were not limited to calculating their
damages under the contract formula. Net
gain under the contract is the benchmark when determining the benefit of an
agreement which has been breached. Id.
at 438-39, 331 N.W.2d at 346. While an
injured party's damages may coincide with the agreed compensation, "if an
injured party foreseeably would have realized profits from performing the
contract, then lost profits should be considered in determining damages." Id. at 439-40, 331 N.W.2d at
347.
Stokely argues that the
Potratzes' evidence of their lost gross income is incredible and
speculative. However, the Potratzes
were only required to provide "any reasonable approximation of the amount
of that injury" as the measure of their damages. Id. at 441, 331 N.W.2d at 348. That the damages are approximate due to the
Potratzes' inability to perform under the breached contract does not require
overturning the jury's award. See
id.
Stokely complains that
Exhibit 29 shows only the gross gain the Potratzes stood to realize from
performing the contract in 1993 and the Potratzes did not present evidence of
their costs of performing the contract had they been able to do so. However, Stokely concedes that the costs
would have been $28,595 and the jury may have reduced the Potratzes' gross
income calculation by more than this amount.
Second, the calculation
of damages advocated by Stokely was based upon the actual amount of silage
stacked, hours of plant operation and number of gallons of leachate removed
from the stack in 1993. While these compensation
factors are specified in the contract, the jury could have determined that the
actual 1993 production figures were inconsistent with the manner in which the
Potratzes had performed the contract in previous years.
When the Potratzes were
managing the silage stack at the plant, they stacked the silage and disposed of
leachate and Stokely sold the silage in the winter months. When Waldvogel managed the stack in 1993, he
sold the silage on an ongoing basis, resulting in the development of less
leachate at the stack site. The actual
leachate figures for July to December 1993 indicate that 1,065,880 gallons were
handled by Waldvogel. For the same
months in 1991, almost 6,000,000 gallons of leachate were handled by the
Potratzes. The jury may have relied
upon this evidence to determine that the manner in which Waldvogel managed the
stack was not the same manner in which the Potratzes managed the stack. Therefore, the jury may have determined that
calculating the Potratzes' damages using Stokely's contract-based analysis
would not have compensated the Potratzes for their lost net gain on the 1993
contract. In its discretion, the jury
may have concluded that the average gross income per ton calculation offered by
the Potratzes was the most reasonable approximation of their damages.
We conclude that the
jury's damages award is supported by credible evidence in the record and
inferences therefrom. Therefore, the
trial court did not err in declining to change the jury's damages award or to
order a new trial.
By the Court.—Judgment
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[1] Management involved stacking corn silage from the plant on a concrete pad located adjacent to the plant, disposing of leachate produced by the corn silage and leasing a loader to Stokely to be used to remove silage from the premises as it was sold by Stokely for animal feed or as green manure.
[2] On appeal, Stokely does not protest the $10,000 in consequential damages awarded by the jury. Accordingly, we do not review this award.