Brew City v. Ferchill Group
| Decision Date | 13 December 2006 |
| Docket Number | No. 2004AP3238.,2004AP3238. |
| Citation | 2006 WI 128,724 N.W.2d 879 |
| Parties | BREW CITY REDEVELOPMENT GROUP, LLC, Plaintiff-Appellant, v. The FERCHILL GROUP, John T. Ferchill, Wispark, LLC, Jerold P. Franke, Juneau Avenue Partners, LLC, JTMK-Pabst, Ltd., Highland Best, LLC, ABC Company, Inc., or Partnership, and DEF Company, Inc. or Partnership, Defendants-Respondents-Petitioners. |
| Court | Wisconsin Supreme Court |
For the defendants-respondents-petitioners there were briefs by Matthew W. O'Neill and Friebert, Finerty & St. John, S.C., Milwaukee; R. Ryan Stoll and Skadden, Arps, Slate, Meagher & Flom, LLP, Chicago, IL, and oral argument by Matthew W. O'Neill.
For the plaintiff-appellant there was a brief by William M. Cannon, Sarah F. Kaas, Brett A. Eckstein, and Cannon & Dunphy, S.C., Brookfield, and oral argument by William M. Cannon.
An amicus curiae brief was filed by Joseph D. Kearney and Appellate Consulting Group, Milwaukee, on behalf of Wisconsin Manufacturers and Commerce.
An amicus curiae brief was filed by Debra P. Conrad and Thomas D. Larson, Madison, on behalf of the Wisconsin Realtors Association.
An amicus curiae brief was filed by William C. Gleisner, III and the Law Offices of William Gleisner, Milwaukee; E. Campion Kersten and Kersten & McKinnon, S.C., Milwaukee, on behalf of the Wisconsin Academy of Trial Lawyers.
An amicus curiae brief was filed by Timothy M. Hansen and Michael Best & Friedrich LLP, Milwaukee, on behalf of the National Association of Industrial and Office Properties, Wisconsin Chapter and the Wisconsin Builders Association.
This is a review of a published court of appeals decision affirming in part and reversing in part an order of the Circuit Court of Milwaukee County. That order dismissed, with limited right to replead, the complaint filed by Brew City Redevelopment Group, LLC, against the Ferchill Group, John T. Ferchill, Wispark, LLC, Jerold P. Franke, Juneau Avenue Partners, LLC, JTMK-Pabst, Ltd., Highland Best, LLC, and other unknown entities (collectively, "Ferchill Group").1
¶ 2 This case arises out of a dispute over the purchase and planned redevelopment of the property and buildings of a defunct brewery in downtown Milwaukee. Brew City alleges an array of contract and tort causes of action against various combinations of defendants. The circuit court dismissed all of the causes of action. The court of appeals reversed some of these dismissals, modified others, and affirmed the remainder. Both tort and contract claims remain, and the interface between them occasions this review.
¶ 3 The Ferchill Group seeks review, contending (1) that Brew City's malicious injury to business claim under Wis. Stat. § 134.01 (2003-04)2 is barred by the economic loss doctrine; (2) that Franke and Ferchill are immune from tortious interference with contract claims by virtue of being members or managers of limited liability companies (LLCs); and (3) that the intracorporate conspiracy doctrine bars Brew City's claims for conspiracy to tortiously interfere with contract and conspiracy to maliciously injure business.
¶ 4 We determine first that the economic loss doctrine does not apply to Brew City's malicious injury to business claim. Second, under the facts alleged in Brew City's complaint, Franke and Ferchill are not immune from liability under Wis. Stat. § 183.0304. Third, the intracorporate conspiracy doctrine does not bar Brew City's claims, as alleged, for conspiracy to maliciously injure business under Wis. Stat. § 134.01 and for conspiracy to tortiously interfere with contract. Although we apply a different rationale with respect to Brew City's § 134.01 claims, we affirm the court of appeals.
¶ 5 The facts set forth below come from the plaintiff's complaint. We reference additional facts from the complaint as needed in the discussion sections of this opinion.
¶ 6 The property that is the subject of this dispute is the site of the Pabst Brewing Company's downtown Milwaukee brewery, which Pabst closed in 1996. The complex consists of 27 buildings, most of which were built in the late nineteenth century. Brew City, whose president and CEO is James Haertel, acquired the right to purchase the property. On June 5, 2002, Brew City assigned that right to Wispark. According to Brew City's complaint, Jerold Franke is Wispark's president.
¶ 7 Haertel executed the June 5 assignment agreement on behalf of Brew City, and Franke executed the agreement on behalf of Wispark. Among the provisions of the agreement were the following:
• Brew City assigned to Wispark its contractual right to buy the Pabst property;
• Upon its acquisition of the property, Wispark was to convey to Brew City title to Buildings 27, 28, and 35 on the property;
• Brew City and Wispark agreed that the development of buildings 27, 28, and 35 would be subject to mutually agreeable restrictive covenants, and in accordance with master planning considerations for the property;
• Wispark was to employ Haertel as a consultant to Wispark for two years after Wispark acquired the property;
• Wispark was to provide Brew City with up to ten percent of the environmental remediation credit that Wispark would receive from Pabst as reimbursement for Brew City's environmental remediation of buildings 27, 28, and 35;
• Brew City acknowledged that Wispark intended to create a new entity to own the Pabst property;
• Brew City was to receive a five percent ownership in the new entity.
¶ 8 Juneau Avenue Partners ("Juneau") was created as the new entity to own the Pabst property. According to the complaint, Juneau is a joint venture between JTMK-Pabst and Highland Best. The complaint alleges that JTMK-Pabst is an affiliate of the Ferchill Group, and that Wispark is the sole member of Highland Best. It also states that John Ferchill is president and chief executive officer of the Ferchill Group, and a member of JTMK-Pabst. Brew City asserts that at a September 10, 2002, closing, Juneau purchased the property from Pabst.
¶ 9 After the closing, Brew City and Juneau were unable to agree on the restrictive covenants for buildings 27, 28, and 35, the easements for those buildings, and the nature of Brew City's five percent equity interest in Juneau. There were also disputes between the parties regarding the transfer of title to buildings 27, 28, and 35 to Brew City, payment of Haertel's consulting salary,3 and payment of the environmental remediation credit.
¶ 10 Brew City filed this lawsuit, alleging the following nine claims for relief:
1. Against Wispark for breach of an "implied duty of good faith";
2. Against Wispark for breach of contract;
3. Against Franke, Ferchill, and JTMK-Pabst for intentional interference with Brew City's contract with Wispark;
4. Against Juneau for "breach of fiduciary duty";
5. Against Wispark for conversion;
6. Against all the defendants for malicious "injury to business" under Wis. Stat. § 134.01;
7. Against Franke, Ferchill, and JTMK-Pabst for conspiracy to intentionally interfere with Brew City's contract with Wispark;
8. Against Wispark and Juneau Avenue Partners for conspiracy to convert Brew City's property; and
9. Against all the defendants for punitive damages.
¶ 11 The complaint also alleges a number of instances of "rough treatment" of Haertel and Brew City by Franke, Ferchill, and Juneau Avenue Partners. For example, it alleges that during a tour of the Pabst property with the Milwaukee mayor, Franke stated that "we're going to have Haertel so tied up with covenants and restrictions, that we will control those buildings as well." It also alleges that Ferchill berated Haertel at a meeting, that Wispark or Juneau changed the locks on buildings 27, 28, and 35 to prevent Brew City's access, and that Juneau interfered with Brew City's negotiations with a potential lessee. Further, Brew City alleges that at several of Juneau's meetings, Franke and Ferchill made comments regarding whether Haertel had "suffered enough" and concluded that "No, Haertel has not suffered enough."
¶ 12 The circuit court dismissed the first and second causes of action against Wispark for breach of contract and breach of duty of good faith, but granted leave for Brew City to file an amended complaint against Juneau for those causes of action. It dismissed all of the other claims with prejudice.
¶ 13 The court of appeals reversed the dismissals of counts one and two. Ferchill Group has not petitioned for review of that aspect of the court of appeals decision, and those contract claims are not before us.
¶ 14 The essential questions in this review concern whether Brew City can pursue three tort claims against the various individuals and entities involved in the sale of the property. The court of appeals reversed the dismissal of Brew City's sixth cause of action, a tort claim against all defendants for conspiracy to maliciously injure reputation and business under Wis. Stat. § 134.01, "except insofar as it asserts claims against Highland Best and JTMK-Pabst for acts done as members or managers of Juneau." Brew City, 289 Wis.2d 795, ¶ 19, 714 N.W.2d 582. It affirmed the dismissal of two additional tort claims, Brew City's third claim for intentional interference with contract, and its seventh claim for conspiracy to intentionally interfere with contract. However, the dismissals were modified to be dismissals without prejudice. Ferchill Group seeks review of the court of appeals' actions as to these tort claims.4
¶ 15 This case comes to the court on review of a motion to dismiss. We address whether Brew City's complaint asserts claims upon which relief can be granted. Such an inquiry presents questions of law subject to independent appellate review. Walberg v. St. Francis Home, Inc., 2005 WI 64, ¶ 6, 281 Wis.2d 99, 697 N.W.2d 36.
¶ 16 A reviewing court takes as true the facts alleged in the complaint. Methodist Manor of...
To continue reading
Request your trial
-
Medline Indus., Inc. v. Diversey, Inc.
...267, ¶56 (Table) (Wis. Ct. App. May 20, 2021) (citing Brew City Redevelopment Grp., LLC v. Ferchill Grp., 297 Wis.3d 606 ¶37 n.9, 724 N.W.2d 879 (2006) ; Briesemeister v. Lehner, 295 Wis. 2d 429 ¶48, 720 N.W.2d 531 (Wis.Ct. App. 2006) ).a. Melchior's Ability to Interfere with a Contract bet......
-
Carlson v. City of Delafield
...The malice required to prove a claim under § 134.01 is more than an intent to do harm. Brew City Redevelopment Group, LLC v. Ferchill Group, 297 Wis.2d 606, 724 N.W.2d 879, 886 n. 7 (2006). What is required is an intent to do “wrongful” harm. Id. Such harm does not include incidental harms ......
-
In re Syngenta AG Mir 162 Corn Litig.
...the ELD as a doctrine that applies in the context of contractual relationships. For instance, in Brew City Redevelopment Group, LLC v. Ferchill Group, 297 Wis.2d 606, 724 N.W.2d 879 (2006), the Wisconsin Supreme Court defined the ELD as a doctrine intended to prevent a party to a contract f......
-
Starsurgical Inc. v. Aperta, LLC
...Dombrowski v. Dowling, 459 F.2d 190, 193, 196 (7th Cir.1972); Brew City Redevelopment Grp., LLC v. Ferchill Grp., 297 Wis.2d 606, 628–29, 724 N.W.2d 879 (2006). The doctrine is based on the idea that officers' acts are acts of the corporation, and a corporation cannot conspire with itself. ......