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COURT OF APPEALS DECISION DATED AND RELEASED October 1, 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. 95-2818
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
ALLAN ARNOLD,
Plaintiff-Appellant,
v.
PVH, INC.,
a Wisconsin
Corporation,
Defendant,
FOOD SERVICES, INC.,
a Wisconsin
Corporation and
FIRSTAR BANK
MILWAUKEE, N.A.,
a national banking
association,
Defendants-Respondents.
APPEAL from a judgment
of the circuit court for Milwaukee County:
THOMAS P. DOHERTY, Judge. Affirmed.
Before Wedemeyer, P.J.,
Schudson and Curley, JJ.
PER
CURIAM. Allan Arnold appeals from a summary judgment dismissal of
his suit against Food Services, Inc., and Firstar Bank Milwaukee, N.A.[1] Arnold's complaint alleged causes of action
for unjust enrichment against Food Services and Firstar, and causes of action
for civil conspiracy, promissory estoppel, and a violation of § 180.1202, Stats., against Firstar. The trial court concluded that there were no
genuine issues of material fact and that Food Services and Firstar were
entitled to summary judgment dismissal as a matter of law. We agree with the trial court and affirm.
I. Background.
Arnold was a minority
shareholder of PVH, Inc., a Wisconsin corporation involved in the food-vending
business. Arnold and Pamela Von Haden
were the corporation's two shareholders; Arnold invested $100,000 in PVH and
owned 24.5% of its stock, Von Haden owned the rest.
PVH was also funded by
loans and two revolving credit agreements from Firstar that totalled over
$150,000. These debts were secured by a
1991 general security interest agreement in all of PVH's equipment, fixtures,
and inventory.
In May 1993, Firstar
notified PVH that it was delinquent on two loans and in default on a
third. In June 1993, PVH entered into a
contract with Food Services, whereby Food Services assumed the management of
PVH's existing vending operations for a fee of eight percent of PVH's net
profits. Any other profits up to
$15,000 per month were to go to PVH, with excess profits being retained by Food
Services. In June 1993, PVH was again
delinquent on its Firstar Loans; PVH and Firstar entered into a Collateral
Surrender Agreement where PVH irrevocably and unconditionally surrendered its
collateral; that is, all fixtures, equipment, etc.
Further, during the
course of his involvement with PVH, Arnold guaranteed the leases of several
vending machines leased by PVH. By the
spring of 1993, Arnold was obligated to make lease payments on four of those leases—totalling
over $5,500 per month. PVH used this
equipment but did not reimburse Arnold for its use. Once Arnold became aware of PVH's contract with Food Services and
the collateral surrender to Firstar, he voiced his concerns to Firstar as all
cash generated by PVH's operations was paid partially to Firstar and partially
to Food Services, with Arnold receiving no payments from PVH's sales.
Through the early fall
months of 1993, Arnold and Firstar held meetings to rectify the situation. Firstar allegedly represented to Arnold that
if he and PVH were to enter into a lease for the equipment for which he had
financial responsibility, Firstar would
release payments to him to defray the costs of the equipment for which he was
financially responsible. Hence, in
October 1993, Arnold purchased the vending equipment at issue in two of PVH's
vending leases and cured the defaults on the remaining leases. A written lease between Arnold and PVH was
then prepared, but it was never executed for reasons Arnold alleged were beyond
his control. PVH, unable to remain
solvent, was liquidated.
Arnold then filed suit
against PVH, Firstar, and Food Services for unjust enrichment, conspiracy,
promissory estoppel, and violating § 180.1202, Stats. The essence of
his claims was that the agreements entered into by PVH, Food Services, and
Firstar “resulted in a situation where [he] was bearing the burden of paying
the capital costs of certain vending machine equipment, the revenue of which
was being shared by [Firstar and Food Services].” Further, he alleged in affidavits that he was not aware of the
agreement between PVH and Food Services and the Collateral Surrender Agreement
with Firstar until July 1993, and that he never received notice of the
surrender of PVH's assets to Firstar.
Food Services and
Firstar separately moved for summary judgment, arguing that there were no
genuine issues of material fact and hence, that they were entitled to dismissal
of the claims as a matter of law. The
trial court granted their motions in a memorandum decision and later filed a
judgment dismissing Arnold's complaint against them.
II.
Analysis.
Arnold's complaint
alleged causes of action against Food Services and Firstar for unjust
enrichment, and causes of action for civil conspiracy, promissory estoppel, and
a violation of § 180.1202, Stats.,
against Firstar. We review each cause
of action separately.
“Summary judgment is
appropriate to determine whether there are any disputed factual issues for
trial and `to avoid trials where there is nothing to try.'” Caulfield v. Caulfield, 183
Wis.2d 83, 91, 515 N.W.2d 278, 282 (Ct. App. 1994) (citation omitted). When we review a motion for summary
judgment, we apply the same methodology as the trial court, but we do not
accord the trial court's conclusion any deference. Kotecki & Radtke, S.C. v. Johnson, 192 Wis.2d
429, 436, 531 N.W.2d 606, 609 (Ct. App. 1995).
The methodology is oft repeated:
[W]e first examine the pleadings to
determine whether they state a claim for relief. If the pleadings state a claim and the responsive pleadings join
the issue, we then must examine the evidentiary record to analyze whether a
genuine issue of material fact exists or whether the moving party is entitled
to judgment as a matter of law.
Further, “[o]n summary judgment, we must draw all justifiable inferences
in favor of the non-moving party, including questions of credibility and of the
weight to accorded particular evidence.”
Bay
View Packing Co. v. Taff, 198 Wis.2d 654, 674, 543
N.W.2d 522, 529 (Ct. App. 1995) (citations omitted).
A. Unjust enrichment
claim.
Arnold's complaint first
alleges that the agreements between PVH, Food Services, and Firstar “confers a
financial benefit upon them, the acceptance and retention of which is
inequitable to Arnold without paying him the Value thereof, to wit, the lease
expenses for which he is liable.” The
elements of a cause of action in equity for unjust enrichment are:
(1) a benefit conferred upon the
defendant by the plaintiff; (2) an appreciation or knowledge by the defendant
of the benefit; and (3) acceptance or retention by the defendant of the benefit
under circumstances making it inequitable for the defendant to retain the
benefit without payment of its value.“
Puttkammer
v. Minth, 83 Wis.2d 686, 689, 266 N.W.2d 361, 363 (1978).
The trial court
concluded at summary judgment that Food Services and Firstar did not receive a
benefit because they received that which they were entitled to as creditors of
PVH under the agreements and credit arrangements. The trial court noted that Arnold's position “contravenes basic
precepts of corporate law which favors creditor's rights to corporate profits
over shareholders' rights.” The trial
court was correct. PVH's profits from
the use of the vending machines were paid to PVH's creditors, that is, Firstar
and Food Services. Arnold was merely a
shareholder of PVH who allowed PVH to use the equipment without negotiating a
formal lease for its use. Arnold's
complaint did not state a cause of action for unjust enrichment because there
was no benefit conferred upon either Firstar or Food Services. Thus, the trial court properly dismissed
this cause of action at summary judgment.
B. Conspiracy.
Arnold's complaint next
alleges that:
PVH and Firstar did conspire to deprive
Arnold of his statutory rights as a shareholder and director of PVH, and they
did conspire to create a scheme whereby they would unlawfully profit from the
receipts of vending machines the costs of which they were intentionally
avoiding and shielding themselves from, all to the great damage of Arnold.
The
trial court concluded that the summary judgment materials presented “no
evidence of [an] agreement between Firstar, Food Services and Von Haden to
profit from the receipts of the vending machines.” We agree that the summary judgment materials do not state a cause
of action for civil conspiracy.
“To state a cause of
action for civil conspiracy, the complaint must allege: (1) The formation and
operation of the conspiracy; (2) the wrongful act or acts done pursuant
thereto; and (3) the damage resulting from such act or acts.” Onderdonk v. Lamb, 79 Wis.2d
241, 247, 255 N.W.2d 507, 510 (1977).
Further, “[t]he gravamen of a civil action for damages resulting from an
alleged conspiracy is ... not the conspiracy itself but rather the civil wrong
which has been committed pursuant to the conspiracy and which results in damage
to the plaintiff.” Id. at
246, 255 N.W.2d at 509.
Here, the summary
judgment materials show neither an unlawful act by the parties, nor an
agreement to unlawfully profit from the receipts of the vending machines. At most, the evidence shows an attempt by
the parties to keep PVH operating and to satisfy its creditors. The trial court was correct to dismiss this
cause of action against Firstar.
C. Promissory estoppel.
Next, Arnold's complaint
alleged that he, “acting in reliance upon the statements made by the Firstar
representatives,” agreed with PVH to purchase the leased vending equipment and
cure the defaults on the others, and that he would then lease or sublease that
equipment to PVH for $5,000 per month.
Arnold further alleged that he did purchase the equipment and cure the
defaults, that a lease was prepared but never signed, and that “Firstar would
no longer honor its commitment to Arnold, and in fact directed PVH not to enter
into a lease with him.” Hence, he
alleged that the statements by Firstar “constituted promises which ... should
have reasonably expected to induce the actions on the part of Arnold taken by
him, and they are therefore binding and enforceable.” The trial court concluded that Firstar's statement was a
conditional promise insufficient to trigger a claim for promissory
estoppel. We agree.
The elements for a cause
of action for promissory estoppel are: “(1) Was the promise one which the
promisor should reasonably expect to induce action or forbearance of a definite
and substantial character on the part of the promisee? (2) Did the promise
induce such action or forbearance? (3) Can injustice be avoided only by
enforcement of the promise?” Schaller
v. Marine Nat. Bank of Neenah, 131 Wis.2d 389, 401, 388 N.W.2d 645, 650
(Ct. App. 1986).
We agree with the trial
court that the summary judgment materials only show, at best, a conditional
promise on the part of Firstar and that this conditional promise was
insufficient as a matter of law to trigger the doctrine of promissory
estoppel. As the trial court noted:
The condition of the promise that
[Arnold] receive[] a payment from PVH for the use of the vending machine was
that [Arnold] negotiate a formal lease with PVH, a third party. [Arnold] was not able to negotiate the said
lease.... [Further, Arnold] provided no evidence tending to prove that the
defendant failed to perform the alleged promise for reasons other than the
failed condition.
For
this reason, the trial court properly dismissed the promissory estoppel cause
of action against Firstar.
D. Section 180.1202, Stats., violation.
Finally, Arnold's
complaint alleged that under § 180.1202, Stats.,
the surrender of PVH's assets to Firstar was “illegal and contrary to law, and
under the circumstances Arnold is entitled to an accounting of the funds
received by Firstar from Food Services, which funds should be paid over to
Arnold on account of the equipment lease liabilities.” Section 180.1202(1), Stats., provides in relevant part:
Except as provided in sub. (5), a
corporation may sell, lease, exchange or otherwise dispose of all, or substantially
all, of its property, with or without good will, otherwise than in the usual
and regular course of business, on the terms and conditions and for the
consideration determined by the corporation's board of directors, upon adoption
of a resolution by the board of directors approving the proposed transaction
and approval by its shareholders of the proposed transaction.
The
trial court correctly concluded that § 180.1202 does not place any
obligation or duties on corporate creditors and, further, that the rights
created under § 180.1202 “could not prevent the Collateral Surrender
Agreement because [Arnold] was a 24.5% shareholder and Von Haden was a 75.5%
shareholder and her approval was sufficient.”
Further, to accept Arnold's reading of the statute would create chaos in
financial circles because every time a corporation performed badly and legally
surrendered its assets to its creditors, the corporation's minority
shareholders would have a cause of action against the creditors. The trial court properly dismissed this
cause of action against Firstar.
III.
Summary.
In short, the trial
court properly granted summary judgment dismissal to Firstar and Food Services
because the summary judgment materials clearly show that there were no genuine
issues of material fact with respect to any of the alleged causes of action,
and that Firstar and Food Services were entitled to summary judgment as a
matter of law. Therefore, the judgment
dismissing the complaint against Firstar and Food services is affirmed.
By the Court.—Judgment
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.