Anthony Gagliano Co. v. Openfirst, LLC
| Decision Date | 08 January 2013 |
| Docket Number | No. 2012AP122.,2012AP122. |
| Citation | 828 N.W.2d 268,2013 WI App 19,346 Wis.2d 47 |
| Court | Wisconsin Court of Appeals |
| Parties | ANTHONY GAGLIANO & CO., INC., Plaintiff–Appellant, v. OPENFIRST, LLC, Robert Kraft, Quad Graphics, Inc. and New Electronic Printing Systems, LLC, Defendants–Respondents, RWK Enterprises, Inc., d/b/a Alphagraphics, Inc., OFH Distribution, LLC, f/k/a Openfirst Holdings and New Diversified Mailing Services, LLC, Defendants. |
OPINION TEXT STARTS HERE
On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Thomas Armstrong and Beth J. Kushner of von Briesen & Roper, S.C., Milwaukee.
On behalf of the defendant-respondent, Robert Kraft, the cause was submitted on the brief of James W. Greer and Lisa M. Lawless of Whyte Hirschboeck Dudek S.C., Milwaukee.
On behalf of the defendants-respondents, Quad/Graphics, Inc., Openfirst, LLC, and New Electronic Printing Systems, LLC, the cause was submitted on the briefs of Michael B. Apfeld and Michael D. Huitink of Godfrey & Kahn, S.C., Milwaukee.
Before FINE, BRENNAN and GUNDRUM, JJ.
[346 Wis.2d 50]¶ 1 Anthony Gagliano & Co., Inc., appeals the circuit-court's order dismissing its claims against New Electronic Printing Systems, LLC, Openfirst, LLC, Robert Kraft, and Quad/Graphics, Inc., in connection with space leased from Gagliano.1 We reverse.
¶ 2 This appeal has its genesis in a May 22, 2000, lease between Gagliano, as landlord, and Electronic Printing Systems, Inc., as tenant, for space in Gagliano's building at 300 North Jefferson Street in Milwaukee. The lease encompassed two aspects of the property, described by the lease as “Demised Premises I” of “approximately 50,000 rentable square feet,” and “Demised Premises II” of “approximately 40,000 rentable square feet.” By its terms, the lease was to expire:on June 23, 2006, for Demised Premises I, and, for Demised Premises II, six years “after Tenant takes occupancy.”
¶ 3 The lease, in paragraph “2.4” (which we mention because, as we will see, other documents reference this paragraph), gave Gagliano, as the “landlord,” the right to renew the lease for four more years “p[r]ovided that Landlord gives notice to Tenant at least 120 days prior to the expiration dates of this Lease of its intention to renew this Lease pursuant to the same terms as contained herein but subject to the renewal rent as specified in Schedule I attached and made a part hereof.” If Gagliano did “not renew the terms of this Lease as specified herein, Tenant shall be required to vacate the Premises and this Lease shall be deemed to be terminated and of no further force and effect on the Expiration Dates.” The lease also restricted Electronic Printing Systems's right to assign the lease or sublet the space:
Notice to Landlord. Tenant shall not, without Landlord's prior consent, (a) assign this Lease or any interest under it by voluntary act, operation of law or otherwise; or (b) sublet the Premises or any part of it. Landlord's consent to a proposed assignment or subletting shall not be unreasonably withheld. If Landlord does not consent or deny within ten (10) business days after Tenant's notice, Landlord's consent shall be deemed granted.
The Lease also provided that “Tenant and any and all guarantors of this Lease shall remain fully liable under this Lease and their guaranties, respectively, despite any sublease or assignment.”
[346 Wis.2d 52]¶ 4 The lease provided where “notices, consents, and payments” were to be sent:
+-----------------------------------------------------------------------------+
¦ ¦Landlord: ¦Tenant [Electronic Printing Systems]: ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦ ¦ ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦A. Gagliano Co., Inc. ¦Prior to Commencement Date: ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦300 North Jefferson Street¦ ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦P.O. Box 511302 ¦320 East Buffalo Street ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦Milwaukee, WI 53203 ¦Milwaukee, WI 53202 ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦ ¦ ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦ ¦After Commencement Date, the Premises. ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦ ¦300 North Jefferson Street ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦ ¦ ¦
+--------+--------------------------+-----------------------------------------¦
¦ ¦ ¦Milwaukee, WI 53202 ¦
+-----------------------------------------------------------------------------+
Kraft founded Electronic Printing Systems in 1996, used the word “Openfirst” as a business name, and was its president and chief executive officer. In 1999, however, Kraft sold Electronic Printing Systems to Ohio-based Target Marketing Solutions, Inc. Although, as we have seen, the May 22, 2000, lease designated “Electronic Printing Systems, Inc.” as the “ ‘Tenant,’ ” the execution line for the “ ‘Tenant’ ” identified it as “Electronic Printing Systems, LLC,” for which Kraft signed. (Emphasis added, uppercasing omitted.) Kraft also guaranteed the lease, both “personally” and on behalf of “Target Marketing Solutions, Inc.” (Uppercasing omitted.)
¶ 5 On May 18, 2001, Gagliano, as the “ ‘Landlord,’ ” leased to “Openfirst, Inc.” as the “ ‘Tenant,’ ” 1,848 square feet of space in the same building, (300 North Jefferson Street) that was the subject of the May 22, 2000, lease between Gagliano and Electronic Printing Systems. Even though the May 22, 2000, lease described Electronic Printing Systems as the tenant, and the May 18, 2001, lease described “Openfirst, Inc.” as the “ ‘Tenant,’ ” the May 18, 2001, lease referenced the May 22, 2000, lease as being “ between the parties ” to the May 18, 2001, lease. (Emphasis added.) We italicized the words “between the parties” because this supports the assertion in Gagliano's appellate brief that this phrase was an “acknowledg[ment] that the May 22, 2000, [Electronic Printing Systems] lease was considered a lease with Openfirst,” which the brief also asserts was “the owner of [Electronic Printing Systems].” 2 The May 18, 2001, lease also restricted the tenant's right to assign the lease or sublet the space: “Tenant may not assign or sublease any interest in the Premises without the prior written consent of Landlord, which shall not be unreasonably withheld.” Further, the typed lease's reference to which provisions of the May 22, 2000, lease between the parties were to be incorporated into the May 18 lease added in handwriting “¶ 2.4” of the May 22 lease. The lease also specified how the parties could give each other notice: “Notices under this lease shall not be deemed valid unless given or served in writing and forwarded by mail, postage prepaid, addressed as follows:
LANDLORD:
A. Gagliano Co., Inc.
Openfirst, Inc.
320 East Buffalo Street
Milwaukee, Wisconsin 53202
Such addresses may be changed from time to time by either party by providing notice as set forth above.
Kraft executed the May 18, 2001, lease on behalf of Openfirst, Inc. He also executed an October 29, 2001, amendment to that lease on behalf of “Openfirst, Inc.,” as “ ‘Tenant,’ ” which extended the lease term to November[346 Wis.2d 55]7, 2004. (Bolding and uppercasing omitted.) The Amendment also recited that Openfirst, Inc. as Tenant, “certifies, confirms and agrees that as of the date of this Amendment [October 29, 2001](a) the [May 22, 2000] Lease, as amended hereby, is in full force and effect and is legal, valid, binding and enforceable against Tenant in accordance with its respective terms.”
¶ 6 Scott Kossoris, who, according to his affidavit, was a vice-president of finance at Electronic Printing Systems, Inc., and was a member of its management team, explained that things changed in 2002:
In 2002 [Target Marketing Solutions] subsequently renamed Openfirst, sold the business to Prairie Capital II, L.P., a Chicago based private equity fund. Prairie Capital created Openfirst Holdings, LLC (“Holdings”) for the purposes of acquiring the assets of the [Electronic Printing Systems, Inc.] business and assumed liability for, among other things, the Gagliano leases. As part of that transaction, the Gagliano leases were assigned to an operating entity of [Openfirst] Holdings named New Electronic Printing Systems, LLC (“New EPS”).
(Parentheticals omitted.) By letter on an Openfirst letterhead dated October 16, 2002, to Gagliano at the 300 Jefferson Street address, “Electronic Printing Systems, Inc.” by Kossoris sought Gagliano's consent for the assignment:
Electronic Printing Systems intends to enter into an Asset Purchase Agreement with Openfirst Holdings, LLC, New Diversified Mailing Services, LLC, New Electronic Printing Systems, LLC or affiliates thereof (collectively referred to as “Buyer”). Buyer will purchase substantially all of [Electronic Printing Systems']s assets, including the rights under the Agreement and will assume the obligations under the Agreement (the “Proposed Transaction”).
The purpose of this letter is to request that you consent to [Electronic Printing Systems]'s assignment of the Agreement...
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