D.L. Anderson's Lakeside v. Anderson

• Decision Date: 02 December 2008
• Docket Number: No. 2007AP46.,2007AP46.
• Citation: 2008 WI 126,757 N.W.2d 803
• Parties: D.L. ANDERSON'S LAKESIDE LEISURE CO., INC., M. Scott Statz and Steven Statz, Plaintiffs-Respondents-Petitioners, v. Donald ANDERSON and Anderson Marine, LLC, Defendants-Appellants-Cross Petitioners.
• Court: Wisconsin Supreme Court

757 N.W.2d 803

2008 WI 126

D.L. ANDERSON'S LAKESIDE LEISURE CO., INC., M. Scott Statz and Steven Statz, Plaintiffs-Respondents-Petitioners, v. Donald ANDERSON and Anderson Marine, LLC, Defendants-Appellants-Cross Petitioners.

No. 2007AP46.

Supreme Court of Wisconsin.

December 2, 2008.

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, Madison, and oral argument by Michael B. Van Sicklen and Bree Grossi Wilde.

¶ 1 N. PATRICK CROOKS, J

This is a review of a published court of appeals decision¹ 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 Anderson breached the Asset Purchase Agreement's noncompetition clause, and for the award of compensatory damages on that claim. We agree, too, that once the jury found breach, the circuit court properly extended the duration of the noncompetition clause in accordance with the purchase agreement. We also agree with the court of appeals that there was sufficient evidence on which the jury could find that Anderson infringed on the Statzes' tradename.

¶ 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, Anderson began building the business that would eventually become D.L. Anderson Co. He started with sailboat rentals and soon expanded to selling and installing piers and boatlifts. By 1982 he was operating under the name D.L. Anderson Co. The business grew to offer a range of marine services and products, including marine contracting; shoreline restoration; rip rapping;³ landscaping; and manufacture, sales and service of marine accessories, docks, piers, lifts and hoists.⁴

¶ 7 In 2000 Anderson sold the business to the Statzes for $891,000. The Asset Purchase Agreement (Agreement) stated, "The Purchased Assets being transferred by Seller to Buyer pursuant to this Agreement include, but are not limited to, equipment, tools, inventory, the trade name D.L. Anderson Co., customer lists, customer history, customer contracts, vendor lists, vendor contracts and agreements, protected territories, franchises, business telephone and fax numbers, business e-mail addresses, internet web site and addresses, and goodwill." The purchase price consisted of $400,000 for restrictions on competition,⁵ $200,000 for goodwill and use of the tradename, and $291,000 for equipment and inventory.

¶ 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 Anderson told the Statzes at the time of the sale that he intended to get out of the marine contracting business and go into real estate. But beginning in 2002, he made a series of business deals that the Statzes saw as violating the Agreement.

¶ 10 In August 2002, Anderson entered an agreement with Kann Manufacturing Corporation relating to "products, technologies and marketing strategies regarding an invention relating to a work boat for boatlifts. ..." In November 2003, Anderson was observed using the prototype of the work boat on his property. In May 2004, Anderson submitted a patent application for a "work boat for installing and removing boatlifts."⁶ At trial Anderson testified that he had planned to mass-produce and sell the work boat.

¶ 11 Sometime in late 2002 or early 2003, Anderson took a job with Pier Pleasure, a Minnesota-based manufacturer and distributor of piers and boatlifts.⁷ As a factory representative for Pier Pleasure, he established three new dealerships within the region covered by the noncompetition clause, provided display and marketing support for dealerships, set and maintained sales performance levels for each dealership, obtained sales forecasts, and assisted with warranty issues and product training. His responsibilities covered a four-state area, including Wisconsin. He also received commissions on sales.

¶ 12 In 2003, Anderson formed Anderson Marine, LLC, and acquired a business known as The Sailboat House near the Statzes' business. Anderson operated the business under the name The Sailboat House at Anderson Marine, and maintained websites and phone book listings as both The Sailboat House and Anderson Marine.⁸ Anderson's new business sold, stored, and repaired motorboats and sailboats, and sold marine accessories.

¶ 13 On at least one occasion in 2003, Anderson publicized his capability for doing shoreline restoration and landscape work. In November 2003, the Middleton Times-Tribune newspaper printed a photo of a brush cutter being used to cut down brush along the edge of a pond. The photo identified the operator as "Don Anderson of Anderson Marine, LLC."

¶ 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 Anderson from competing in the pier and lift business, and from using their tradename or any similar name. They also requested compensatory damages, punitive damages, attorney fees, and costs.

¶ 15 Following a jury trial in Dane County Circuit Court in April 2006, the Honorable Shelley Gaylord presiding, a jury returned a special verdict finding that Anderson had breached the noncompetition clause and awarding $15,000 in compensatory damages. The jury also found Anderson had infringed on the D.L. Anderson tradename and awarded the Statzes $75,000 in compensatory damages. In addition, the jury awarded $160,000 in punitive damages against Anderson and $20,000 in punitive damages against Anderson Marine, LLC.

¶ 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 Anderson filed motions after verdict requesting an order to change the answers to the verdict questions, a new trial, and judgment notwithstanding the verdict.

¶ 18 The circuit court denied Anderson's motions. The circuit court extended the restrictive covenants, granted the injunctive relief, and awarded the attorney fees requested by the Statzes.

¶ 19 Anderson appealed. As noted above, the court of appeals affirmed the verdict as to the findings of breach, damages awarded for breach, and tradename infringement; it reversed the jury's award of compensatory and punitive damages for tradename infringement; and it remanded to the circuit court for a determination of attorney fees only for the breach claim.¹⁰ D.L. Anderson's Lakeside Leisure Co. v. Anderson, 2007 WI App 269, 306 Wis.2d 470, 744 N.W.2d 300.

¶ 20 The Statzes petitioned this court for review; Anderson cross-petitioned for review. Review was granted on March 18, 2008.

II. STANDARD OF REVIEW

¶ 21 The jury found that Anderson breached the Agreement and infringed the tradename, and it awarded the Statzes damages on both claims. We start by setting forth the general standard of review governing jury verdicts. When we come to issues for which other standards of review are applicable, we will note the appropriate standard prior to addressing the issue.

¶ 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 Wis.2d 534, 543, 472 N.W.2d 790 (Ct.App.1991). The reviewing court has a "duty to search for credible evidence to sustain the jury's verdict." Id. "We afford special deference to a jury determination in those situations in...