2008 WI 126
|
Supreme Court of |
|
|
|
|
Case No.: |
2007AP46 |
|
|
|
|
Complete Title: |
|
|
|
D.L. Anderson's Lakeside Leisure Co., Inc., M. Scott Statz and Steven Statz, Plaintiffs-Respondents-Petitioners, v. Donald Anderson and Defendants-Appellants-Cross Petitioners. |
|
|
|
|
|
REVIEW OF A DECISION OF THE COURT OF APPEALS 2007 WI App 269 Reported at: 306 (Ct. App. 2007-Published) |
|
|
|
|
Opinion Filed: |
December 2, 2008 |
|
Submitted on Briefs: |
||
Oral Argument: |
September 10, 2008
|
|
|
|
|
Source of Appeal: |
|
|
|
Court: |
Circuit |
|
County: |
Dane |
|
Judge: |
Shelley J. Gaylord
|
|
|
|
Justices: |
|
|
|
Concurred: |
|
|
Dissented: |
|
|
Not Participating: |
|
|
|
|
Attorneys: |
|
For the plaintiffs-respondents-petitioners there were briefs by Kevin J. Palmersheim, Teresa K. Kobelt, and Haley Palmersheim, S.C., Middleton, and oral argument by Kevin J. Palmersheim.
For the defendants-appellants-cross petitioners there
were briefs by Michael B. Van Sicklen,
Bree Grossi Wilde, and Foley &
Lardner LLP,
2008 WI 126
notice
This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports.
REVIEW of a decision of the Court of Appeals. Affirmed in part, reversed in part, and remanded.
¶1 N. PATRICK CROOKS, J. This is a review of a published court of appeals decision[1] concerning breach of contract and tradename infringement claims related to a business purchase agreement. The court of appeals affirmed the jury verdict finding breach and infringement but reversed the award of compensatory and punitive damages for tradename infringement, and remanded to the circuit court with an order that the attorney fee award be reduced.
¶2 Petitioners Scott and Steven Statz (the Statzes)[2] sought review of the court of appeals' decision on damages and attorney fees. Cross-petitioners Donald Anderson (Anderson) and Anderson Marine, LLC, sought review of those portions of the court of appeals' decision that affirmed the jury's finding of tradename infringement, breach, and damages from the breach, as well as the circuit court's award of attorney fees related to the breach.
¶3 For the reasons set forth below, we affirm in part and reverse in
part the decision of the court of appeals.
We agree with the court of appeals that there was sufficient evidence
for the verdict that
¶4 However, we disagree with the decision of the court of appeals holding that there was insufficient evidence to support compensatory and punitive damages on the tradename infringement claim. We are satisfied that the evidence is sufficient to support the compensatory and punitive damage awards, and we reverse the decision of the court of appeals in regard to those matters. We also reverse the court of appeals' decision to limit the attorney fees award to those attributable only to the contract claim. Our decision has the effect of reversing the court of appeals' actions on compensatory and punitive damages for tradename infringement and its reasons for remand, and approving the circuit court's original rulings.
¶5 On remand, the circuit court is to determine whether, under the purchase agreement, the Statzes are entitled to attorney fees incurred in connection with the appeal, and if entitled, then in what amount.
I. BACKGROUND
¶6 In the late 1970s,
¶7 In 2000
¶8 The Statzes formed a corporation called D.L. Anderson Lakeside Leisure Co., Inc., but operated the business under the name D.L. Anderson Co. They advertised the business as D.L. Anderson and D.L. Anderson Co. Marine Contractors.
¶9
¶10 In August 2002,
¶11 Sometime in late 2002 or early 2003,
¶12 In 2003,
¶13 On at least one occasion in 2003,
¶14 In September 2004, the Statzes filed suit against Anderson and
Anderson Marine, LLC, alleging breach of the noncompetition provisions of the
purchase agreement, infringement of tradename, unfair competition, and breach
of contract. The Statzes requested
permanent injunctive relief prohibiting
¶15 Following a jury trial in
¶16 The Statzes then filed motions after verdict, requesting injunctive relief and also requesting extension of the restrictive covenants by 591 days, from the date on which the complaint was filed to the date the motion was filed, pursuant to the Agreement.[9] A motion requesting attorney fees and costs in the amount of $95,515.91 was also filed.
¶17
¶18 The circuit court denied
¶19
¶20 The Statzes petitioned this court for review;
II. STANDARD OF REVIEW
¶21 The jury found that
¶22 When reviewing a jury verdict, we affirm if the record contains
"any credible evidence" to support the verdict; this is "even
more true when the trial court gives its explicit approval to the verdict by
considering and denying postverdict motions." Radford v. J.J.B. Enter., Ltd., 163
III. THE AGREEMENT’S NONCOMPETITION CLAUSE:
BREACH, DAMAGES AND EXTENSION
¶23
A. Breach
¶24 On this issue, we briefly address the underlying breach. The Statzes ask us to affirm the court of
appeals' holding that the evidence was sufficient to support the jury's verdict
that
¶25 The court of appeals cited evidence the jury heard about
B. Compensatory damages
¶26 The standard for reviewing a jury award of damages is similar to
the standard for other types of jury verdicts.
"If there is any credible evidence which under any reasonable view
supports the jury finding as to (the amount of) damages, especially when the
verdict has the approval of the trial court, this court will not disturb the
finding." Wis. Natural Gas Co.
v. Ford, Bacon & Davis Constr. Corp., 96
¶27 Even though breach may have been proved,
¶28 The Statzes say the damages from the violation of the
noncompetition clause included not only lost profits, but also their loss of
the benefit of the bargain they made, i.e., the difference between the value of
the noncompetition clause that Anderson violated and the amount they paid for
it. They describe their position as
analogous to that of a buyer of a defective car, who had, this court
recognized, "ordinary loss of bargain damages: the difference between the
actual value of the goods accepted and the value they would have had if they
had been as warranted." Mayberry
v. Volkswagen of Am., Inc., 2005 WI 13, ¶23, 278
¶29 The jury was given the standard instruction on damages in general,[11] and a slight variation of the standard instruction on contract damages.[12]
¶30 In its ruling denying Anderson's motions after the verdict, the
circuit court noted, "[T]he bottom line in this case is that some of this
amounted to credibility determinations, but a lot of it was an accumulation of
defendant's own testimony and some of the exhibits that bore on what he was
doing with various items." The
circuit court also observed, in a post-trial hearing on injunctive relief,
"This is a jury that did not believe [
¶31 The court of appeals reviewed evidence presented to the jury,
including the difference in the Statzes' gross receipts for new pier
installation in 2002 and 2003, and Scott Statz's testimony attributing the
decline to the new pier dealers established by
C. Extension of the noncompetition clause
¶32 This issue involves construction of a contract, which presents a question of law and is therefore subject to independent appellate review. Johnson Controls, Inc. v. Employers Ins. of Wausau, 2003 WI 108, ¶30, 264 Wis. 2d 60, 665 N.W.2d 257.
¶33 As noted previously, the Agreement contained a provision in the section on “Noncompetition” that stated,
The term of the covenants contained in Section 6.5 shall be tolled for the period commencing on the date any successful action is filed for injunctive relief or damages arising out of a breach by Seller or Anderson of Section 6.5 and ending upon final adjudication (including appeals) of such action.
¶34 The analysis of the court of appeals on this point is concise and complete:
Based on the jury's findings of a breach of the
noncompete clause and damages, the court extended the noncompete clause by 678
days. The defendants object to this
order on the ground that
D.L. Anderson's Lakeside
Leisure, 306
¶35 We agree with the court of appeals that the noncompetition clause was properly extended.
IV. THE TRADENAME INFRINGEMENT CLAIM
¶36 The jury unanimously found that
¶37 There is a preliminary question on this issue as to whether we
review this question de novo or with deference to the jury's verdict.
¶38
¶39 A few principles guide us when a challenge is made to jury
instructions. Whether a jury instruction
is appropriate is a legal issue subject to independent review. Root v. Saul, 2006 WI App 106, ¶13, 293
¶40 It is clear that, in the circuit court,
Ordinarily a party has a right to do business under his or her own name. The right may, however, be voluntarily limited by contract. When a family name is part of a trade name, the family name may be transferred to the purchaser the same as any other asset of the business. . . . Infringement actions, even against a noncompetitor, protect the reputation and goodwill exclusively appropriated to the trademark holder.
¶41 While the court of appeals was correct that the issue was waived since explicit objection was not made at the instructions conference as required by Wis. Stat. § 805.13(3),[14] we will nevertheless address the question. In this case, we exercise our discretion to review the waived challenge to the jury instructions because that challenge involves important issues that we wish to address.
¶42 The tradename infringement jury instructions given by the circuit
court were based directly on language in
¶43
¶44
¶45 The question of how to analyze tradenames conveyed by contract was
answered by the Spheeris court.
"Although [the tradename purchaser's] right to use 'Spheeris' was
granted in the 1979 agreement, we do not look only to the agreement for
controlling law. Because it is a
corporate name, 'Spheeris Sporting Goods' is a trade name, entitled to protection
against unfair competition." Spheeris,
157
¶46 We believe Spheeris
controls here. There is no indication in
the contract that the sale of the tradename was restricted or limited. It is not reasonable to read the
noncompetition clause language as
¶47 The Spheeris court correctly stated the law. The tradename infringement claim arises under
the contract only in the sense that the contract is the instrument by which the
tradename was purchased. A separate tort
may be perpetrated once the tradename belongs to the purchaser, just as a
separate tort would exist for tortious conversion if
[W]hile a person may sell the right to commercial use of his personal name, a court will not bar the seller from all commercial use of the name unless the intention to convey an exclusive right is clear in the contract of the sale. Unless the contract provides otherwise, a person is not precluded after the sale from taking advantage of his individual personal reputation (vis-ŕ-vis the reputation of the business that bore his name) in advertising a competing product.
3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 18:33 (4th ed. 2008).
¶48 Here,
"the intention to convey an exclusive right is clear in the contract"
in more than one place. In addition,
while Anderson would not ordinarily be "precluded after the sale from
taking advantage of his individual reputation," the noncompetition clause
is the part of the contract that provides otherwise and limits Anderson's other
commercial use of his name under its specific terms.[16]
¶49 We
are satisfied that the tradename infringement instruction was appropriate,
based on the Spheeris case and the language of the Agreement discussed
herein.
A. Secondary meaning and likelihood of confusion
¶50 Next we proceed to the question of whether the evidence was sufficient to support the jury's verdict. The jury was instructed as follows regarding tradename infringement:
When a tradename has acquired a secondary meaning, the name is entitled to protection from unfair competition based on tradename infringement. . . . If you find that Plaintiff’s tradename has acquired secondary meaning, you must then determine whether there is a likelihood of confusion between Plaintiff's tradename, "D.L. Anderson Co." and Defendant's name, "Anderson Marine". . . . It is not necessary to constitute an infringement that every word of the tradename be appropriated. It is sufficient that enough be taken to deceive the public. If one word of the tradename is the salient portion, it may be given greater weight than surrounding words.
¶51 The jury instructions thus lay out the two elements a plaintiff must establish to prevail on a tradename infringement claim: that the name had secondary meaning and that a second party's use created a likelihood of confusion.
¶52 Secondary meaning "describes the function of identifying goods
or services with a particular or single source. . . . Key to establishing
secondary meaning for a trade name is evidence that the relevant target group
mentally identifies the trade name as the single source for the
product." Spheeris, 157
¶53 As the court of appeals pointed out, the evidence shows that the
Statzes paid
¶54 We
next turn to the evidence for the second element, likelihood of confusion. The jury was given a list of factors to
consider when determining likelihood of confusion.[17]
¶55 The court of appeals listed the evidence of
the likelihood of confusion: the
similarity of "D.L. Anderson Co." and "Anderson Marine,
LLC"; essentially the same target market; similar marketing plans; and the
proximity of the two businesses.
¶56 The jury instructions accurately state
B. Compensatory damages
¶57 As noted previously, we evaluate the challenge to the award of compensatory damages in terms of whether there was any credible evidence to support the award and whether the award was within reasonable limits.
¶58 "Under our judicial system, we rely primarily upon the good
sense of jurors to determine the amount of money which will compensate an
individual for whatever loss of well-being he has suffered as a result of
injury." Olson v. Siordia,
25
¶59
No motion challenging the sufficiency of the evidence as a matter of law to support a verdict, or an answer in a verdict, shall be granted unless the court is satisfied that, considering all credible evidence and reasonable inferences therefrom in the light most favorable to the party against whom the motion is made, there is no credible evidence to sustain a verdict in favor of such a party.
This standard is used both by
the circuit court and the appellate court.
Weiss v. United Fire and Cas. Co., 197
¶60 Anderson argues that: (1) the Statzes failed to present any evidence that there was a diminution of the goodwill attributable to the alleged tradename infringement; (2) confusion as to the tradename is insufficient to establish injury; and (3) the $200,000 purchase price of the goodwill cannot be the basis for any calculation of damages because it is imprecise and because tax considerations affect the price allocated to goodwill in asset sales.
¶61 The Statzes counter that when they paid $200,000 for goodwill, and that goodwill was damaged by infringement, they were entitled to a compensatory damage award up to the full purchase price. That the jury awarded something less than that, they argue, is a rational approach because it recognizes that the value of the goodwill was diminished by the infringement.
¶62 As we noted, the jury was instructed here that the party claiming
damages must "satisfy [the jury] by the greater weight of the credible
evidence, to a reasonable certainty, that the person sustained damages . . . and the amount of the
damages."
¶63 In evaluating the sufficiency of the evidence on a damage award in tort, there is thus a two-step analysis: the fact of damages and the amount.
¶64 "[T]he fact of damage need only be proved with reasonable, not absolute, certainty. And once the fact of damage is established with reasonable certainty, the amount of damages need only be shown with as much certainty as the nature of the tort and the circumstances of the case permit." 4 Rudolf Callmann, Callmann on Unfair Competition, Trademarks and Monopolies § 23:55 (4th ed. 2003).
¶65 This is consistent with
[T]here is no absolute requirement of mathematical precision, and the fact that the full extent of the damages is a matter of uncertainty by reason of the nature of the tort is not a ground for refusing damages. It is generally held that the uncertainty which prevents recovery is uncertainty as to the fact of the damage and not to its amount. This rule is applied where, from the nature of the case, the extent of injury and the amount of damage are not capable of exact and accurate proof.
Eden Stone Co. v. Oakfield
Stone Co., 166
¶66 The court of appeals found the absence of testimony of customers
who had a negative view of the Statzes' company resulting from confusion fatal
to the claim of damages based on diminution of goodwill. D.L. Anderson's Lakeside Leisure, 306
¶67 The value of the goodwill to the Statzes is readily established, as
a preliminary matter, by the $200,000 purchase price negotiated by the
parties. Further, there was testimony
from the Statzes as to the value of the goodwill after the
infringement. Steven Statz testified
that: "We purchased the name
knowing that it was a very valuable asset. . . . If I thought there was
a chance they were going to confuse us with him at another location, I
certainly wouldn’t have paid as much for it." Testifying about the value of the tradename
and the noncompetition clause, Scott Statz said, "The value of the
business was in the name, its reputation . . . . No, I would not have offered any money. The business would have no value." "Wisconsin case law is clear that an
owner of property may testify as to its value and that such testimony may
properly support a jury verdict for damages, even though the opinion is not
corroborated or based on independent factual data." Mayberry, 278
¶68 As the circuit court noted, the jury made credibility determinations, which are within the province of the jury. The jury could reasonably have credited the Statzes' testimony concerning the diminution of value of the goodwill, which was their property.
¶69 Further, there was testimony about customer frustration concerning mixed up invoicing. For example, Sue Statz testified that one customer had confused the two businesses and paid an invoice due to the Statzes by sending a check to Anderson Marine, LLC. She testified about what happened next:
I sent him an invoice and that remained unpaid. Then I sent him another invoice for something else. He paid that one so I sent him a statement saying you still owe for this past invoice[,] and then he called me, and he was not happy, to say that he had paid it. I could not find anything in the computer so I had to get back to him. Then I finally did, and I said I'm sorry, I still don't see your payment and he was not happy. I said couldn't you just send me a copy of the check so that I could get this cleared up and then he did, and I believe that's the copy he sent.
When she received the copy of the check, she saw that it had been made out to and cashed by Anderson Marine.
¶70 Here the jury was given the standard instruction on damages in general, which says in part, "[c]redible evidence means evidence you believe in light of reason and common sense." The jury was instructed concerning the compensatory damages on tradename infringement that "[t]he goodwill of a company is an intangible business value that reflects the basic human tendency to do business with merchants who offer products and services of the type and quality the customer desires and expects."
¶71 Having heard testimony from Sue Statz about uncomfortable interactions with customers and confusion relating to payment of invoices, the jury was entitled to rely on the common experience that people who have had to sort out billing errors, especially when they have rightfully paid the invoice, do not generally feel a sense of goodwill toward the business that has accused them of not paying. The jury could further reasonably have inferred from the testimony about such customer frustration that there was indeed a diminution in the value of the goodwill purchased for $200,000.
¶72 But even beyond those real but difficult to quantify losses, there
was evidence of other, more tangible losses as well. Sue Statz’s testimony mentioned repeated
billing mixups caused by customers' and vendors' confusion about the two
companies; as office manager she had to devote time to straightening these
errors out. Scott Statz testified that
on multiple occasions, he incurred labor costs due to mistaken deliveries
intended for
¶73 It is true that there is not a mathematical precision to the determination of the damages here, but in cases like this, we do not hold plaintiffs to that standard.
¶74 The question presented here requires us to apply two standards
together: the acknowledgement that where
the damages are uncertain "by reason of the nature of the tort" they
will not be refused, combined with the deference to the jury award of damages
where there is any credible evidence to sustain such award. That combination requires us to uphold the
jury's compensatory damage award. Given
a "within reasonable limits" standard of review, we find that the
jury could reasonably have awarded $75,000, which was well within the $200,000
the Statzes and
C. Punitive damages
¶75 The court of appeals' ruling on compensatory damages had the effect of reversing the award of punitive damages as well. Because we approve the compensatory damages award, we must consider the jury's award of punitive damages.
¶76 The United States Supreme Court has held that:
Punitive damages may properly be imposed to further a State's legitimate interests in punishing unlawful conduct and deterring its repetition. In our federal system, States necessarily have considerable flexibility in determining the level of punitive damages that they will allow in different classes of cases and in any particular case. Most States that authorize exemplary damages afford the jury similar latitude, requiring only that the damages awarded be reasonably necessary to vindicate the State's legitimate interests in punishment and deterrence.
BMW of N. Am., Inc. v. Gore,
517
¶77
¶78 This court has shown deference to jury awards of punitive
damages. "According to
¶79 However, when the punitive damages are challenged as excessive, this court has said,
[A] de novo standard of review is appropriate when reviewing a circuit court's determination of the constitutionality of punitive damages awards.
Although de novo review is the appropriate standard of review, we nevertheless acknowledge that the Due Process Clause of the Fourteenth Amendment imposes substantive limits on the size of a punitive damages award.
An award is excessive, and therefore violates due process, if it is more than necessary to serve the purposes of punitive damages, or inflicts a penalty or burden on the defendant that is disproportionate to the wrongdoing.
Trinity Evangelical, 261
¶80 The rules we apply in making that determination are "those
factors which are most relevant to the case" from a list of factors
considered by
1. The grievousness of the acts; 2. The degree of malicious intent; 3. Whether the award bears a reasonable relationship to the award of compensatory damages; 4. The potential damage that might have been caused by the acts; 5. The ratio of the award to civil or criminal penalties that could be imposed for comparable misconduct; and 6. The wealth of the wrongdoer.
¶81
¶82 The Statzes argue that credible evidence shows that
¶83 Here the factors most relevant to the case are the intent to disregard the rights of the Statzes and the award's relationship to the compensatory damages.
¶84
¶85 There was evidence from which the jury could have found, as they
did find unanimously, that
¶86 The court in the best position to judge the intent of the
tortfeasor is the circuit court. There
is evidence in the record that, based on the trial testimony, the circuit court
found
[Y]ou've got a world of hurt coming at you, sir. He's going to win on everything he requested with respect to everything else. I don't know what it's going to take to stop, but every time there's a line drawn, you seem to go right up to it and over it. . . . I'm basing it on the trial record. I'm not sure I can put in language [in the injunction] that adequately expresses what needs to stop here.
¶87 In Trinity Evangelical, this court upheld a punitive damage
award that had a 7:1 ratio to the compensatory damages. Trinity Evangelical, 261
¶88 In light of the forceful endorsement of the jury verdict by the circuit court in this case, we cannot say that where a unanimous jury verdict finds intentional disregard of the injured parties' rights, punitive damages that are two times the compensatory damages are excessive.
V. INJUNCTIVE RELIEF
¶89 Two clauses of the Agreement guaranteed the Statzes injunctive
relief if
VI. AWARD OF ATTORNEY FEES
¶90 As we noted earlier, construing the terms of a contract is a "matter[] of law, subject to . . . independent review" by an appellate court. Kasten v. Doral Dental USA, LLC, 2007 WI 76, ¶19, 301 Wis. 2d 598, 733 N.W.2d 300.
¶91 The Agreement, as it relates to attorney fees, states as follows:
This Agreement shall be given the broadest, lawful and enforceable scope permissible for the protection of the parties. . . . In any action concerning this Agreement, the party obtaining the monetary judgment, after all offsets, shall also be entitled to recover reasonable attorneys fees and costs. The remedies mentioned herein shall be cumulative and in addition to any other remedies which the non-breaching party may have at law or in equity.
¶92 Following the verdict, the circuit court granted the Statzes' motion for reasonable attorney fees under the terms of the contract.
¶93 The court of appeals examined the contract's language about
"the party obtaining the monetary judgment . . . [being] entitled to
recover reasonable attorneys fees and costs." The court of appeals noted that under Hunzinger
Construction Co. v. Granite Resources Corp., 196
¶94 Since we are reversing the court of appeals on the monetary judgment for the tradename infringement claim, it makes little sense to deny recovery of the attorney fees awarded by the circuit court.
¶95
¶96 First, the provision in question begins by stating that it is to be "given the broadest, lawful and enforceable scope permissible for the protection of the parties."
¶97 Second, other provisions in the Agreement clearly contemplate that
"[t]he remedies . . . shall be cumulative. . . ."
¶98 Third, in light of the language about "any other remedies [available] . . . at law or in equity," we read the phrase "non-breaching party" as referring to the party not at fault. In this context, we do not read "non-breaching party" to limit recovery to contract actions.
¶99 Finally, the tradename infringement claim is clearly in the category of "any action concerning this Agreement" because the Agreement was the instrument by which ownership of the tradename in question was transferred.
¶100 Our conclusion is consistent with the analysis of the Radford court, which faced a similar claim by defendants who objected to the award of the entire amount of attorney fees. There, unlike in this case, the jury had rejected some of plaintiffs' arguments; even so, the court held:
We hold that the entire amount of the plaintiffs' attorney's fees was properly assessed against the defendants. Under federal law, the losing party is not entitled to a reduction in attorney's fees for time spent on unsuccessful claims, if the winning party achieved substantial success and the unsuccessful claims were brought and pursued in good faith. This rule is particularly applicable where, as here, all of the plaintiffs' claims arise out of a common core of facts.
Radford, 163
¶101 Giving the terms of the Agreement the "broadest, lawful and enforceable scope permissible," we view the Agreement as one intended to procure and protect the right to the tradename, and we are satisfied that the tradename infringement claim fits within the category of "any other remedies which the non-breaching party may have at law or in equity" and within the category of "any action concerning this Agreement." Therefore, we hold that awarding the entire amount of the fees and costs pursuant to the Agreement is appropriate.
¶102 Of course, appeals cost money, too, and the Statzes have continued
to incur attorney fees and costs in defending the circuit court judgment on
appeal. They, therefore, ask this court
to sustain the award of attorney fees and costs, order that it include fees and
costs incurred on appeal, and remand for a determination of the additional
reasonable attorney fees and costs incurred on appeal. In support of this, they cite Chase Lumber
and Fuel Co. v. Chase, 228
¶103 The Statzes raised the same issue in their brief to the court of
appeals.
¶104 For one thing, the holding in Chase Lumber is narrower than
the Statzes imply. The court of appeals
there held only that where a circuit court awards attorney fees as a result of
frivolous action, the prevailing party is entitled to attorney fees if it is
forced to defend that award on appeal. Chase
Lumber, 228
VII. CONCLUSION
¶105 For the reasons set forth above, we affirm in part and reverse in
part the decision of the court of appeals.
We agree with the court of appeals that there was sufficient evidence
for the verdict that
¶106 However, we disagree with the decision of the court of appeals holding that there was insufficient evidence to support compensatory and punitive damages on the tradename infringement claim. We are satisfied that the evidence is sufficient to support the compensatory and punitive damage awards, and we reverse the decision of the court of appeals in regard to those matters. We also reverse the court of appeals' decision to limit the attorney fees award to those attributable only to the contract claim. Our decision has the effect of reversing the court of appeals' actions on compensatory and punitive damages for tradename infringement and its reasons for remand, and approving the circuit court's original rulings.
¶107 On remand, the circuit court is to determine whether, under the purchase agreement, the Statzes are entitled to attorney fees incurred in connection with the appeal, and if entitled, then in what amount.
By the Court.—The decision of the court of appeals is affirmed in part, reversed in part, and the cause is remanded to the circuit court.
[1] D.L. Anderson's Lakeside
Leisure Co. v.
[2] D.L. Anderson's Lakeside Leisure Co., Inc., is also a party to this case. We will refer to all of the plaintiffs-respondents-petitioners collectively as "the Statzes."
[3] In testimony at the trial, "rip rapping" was described as "dumping crushed rock on the shoreline."
[4] "[M]arine contracting, shoreline restoration, rip rapping, landscaping, manufacture, sales and service of marine accessories, docks[,] piers, lifts, and hoists" are collectively referred to as "the Pier and Lift Business" in the purchase agreement later entered by Anderson and the Statzes.
[5] The Agreement's noncompetition clause provided that:
a. [F]or a period of seven (7) years from the Closing Date [Anderson] will neither permit Anderson's name to be used by nor engage in or carry on, directly or indirectly, either for itself or as a member of a partnership, limited liability company, or as a stockholder, investor, officer or director of a corporation (other than Buyer or a subsidiary or affiliate of Buyer) or as an employee, agent, associate or consultant of any person, partnership or corporation (other than Buyer or a subsidiary or affiliate of Buyer) any business in competition with the Pier and Lift Business as carried on by Buyer.
b. The restrictive covenant in this Section 6.5 shall apply within a
120-mile radius of the City of
[6]
[7] Prior to selling the
business to the Statzes,
[8] In 2005, after the Statzes
filed suit,
[9] The Agreement contained a provision in the section on “Noncompetition” that stated:
The term of the covenants contained in Section 6.5 shall be tolled for the period commencing on the date any successful action is filed for injunctive relief or damages arising out of a breach by Seller or Anderson of Section 6.5 and ending upon final adjudication (including appeals) of such action.
[10] It also upheld the
injunctive relief granted by the circuit court, slightly modifying the
injunction to include the words "within 120 miles." D.L. Anderson's Lakeside Leisure, 306
[11] "[T]he burden of proof
rests upon each person claiming damages to satisfy you by the greater weight of
the credible evidence, to a reasonable certainty, that the person sustained
damages with respect to the element or elements mentioned in the question and
the amount of the damages. . . . Credible evidence means
evidence you believe in light of reason and common sense. 'Reasonable certainty' means that you are
persuaded based upon a rational consideration of the evidence. Absolute certainty is not required, but a
guess is not enough to meet the burden of proof."
[12] The instruction given to the
jury varied slightly from Wis JI——Civil 3735; e.g., the standard instruction
uses the word "because" rather than "as a result" and
defines benefit as "the net gain he or she would have realized from the
contract." The jury was instructed
as follows:
The measure of damages for a breach of contract is the amount which will compensate the plaintiff for the loss suffered as a result of the breach. A party who is injured should, as far as it is possible to do by monetary award, be placed in the position in which he or she would have been had the contract been performed. The fundamental basis for an award of damages for breach of contract is just compensation for losses as a result of the breach. A party whose contract has been breached is not entitled to be placed in a better position because of the breach than the party would have been had the contract been performed. The injured party is entitled to the benefit of his or her agreement, but for the failure of the other party to perform.
[13] "Instruction and verdict conference. . . .
The court shall inform counsel on the record of its proposed action on the
motions and of the instructions and verdict it proposes to submit. Counsel may object to the proposed
instructions or verdict on the grounds of incompleteness or other error,
stating the grounds for objection with particularity on the record. Failure to object at the conference
constitutes a waiver of any error in the proposed instructions or
verdict."
All subsequent references to the Wisconsin Statutes are to the 2005-06 version unless otherwise indicated.
[14] Both parties submitted
jury instructions as to tradename infringement.
During the jury instructions conference, the court and counsel for the
two parties methodically worked through the exact wording of each of the
instructions, including the proposed tradename instruction. The transcript of the conference runs 78
pages. Earlier in the day, the court had
asked counsel to review together their own submitted instructions: "At a minimum, it seems the Tradename
and Unfair Competition you agree on. . . . And I also think if
you read your Damages ones, I'm not sure they're that terribly far apart, so
see what you can merge and then what you can't." When the jury instructions conference began,
the court said, "We're going to start with areas of disagreement with the
tradename proposal. Did you come
close? Any closer?" The record reflects no objection by
[15] There is no
[16] Anderson cites to 3 J. Thomas
McCarthy, McCarthy on Trademarks and Unfair Competition § 18:33
(4th ed. 2007), for the proposition that "[w]hile the buyer of a business
obtains the right to the seller's name as a mark, the seller can continue such
usage also, unless there is express language in the contract giving the buyer
the exclusive right to
use the personal name as a mark."
He omits the introductory words to that sentence: "Some courts
imply that . . . ."
The cases that imply that, according to the treatise, are cases from
[17] The jury was instructed that:
Likelihood of confusion is also determined by evaluating the following factors: The degree of similarity between the names, the similarity of the products and overlap of marketing channels, area and manner of concurrent use, the degree of care likely to be exercised by consumers, the strength and distinctiveness of plaintiff's——it's name, not mark, evidence of actual confusion, and defendants' intent when selecting the name "Anderson Marine."
No one factor or consideration is conclusive, but each aspect should be weighed in light of the total evidence at the trial. However, while actual confusion or deception is not essential to a finding of tradename infringement and unfair competition, such evidence is entitled to substantial weight.
[18] Q: "And when you started Anderson Marine, you knew that by naming it Anderson Marine that your former customers would be familiar with that name and would associate you with Anderson Marine?" A: "They would associate me, yes."