Finch v. Southside Lincoln-Mercury, Inc.
| Citation | 2004 WI App 110,274 Wis.2d 719,685 N.W.2d 154 |
| Decision Date | 20 May 2004 |
| Docket Number | No. 02-2618.,02-2618. |
| Parties | James A. FINCH and Tricia K. Finch, Plaintiffs-Appellants, v. SOUTHSIDE LINCOLN-MERCURY, INC., Defendant, FORD MOTOR COMPANY, R. G. Singletary, S. D. Majercik and S. L. Griffin, Defendants-Respondents. |
| Court | Wisconsin Court of Appeals |
On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Paul R. Norman and Sarah A. Zylstra of Boardman, Suhr, Curry & Field LLP, Madison.
On behalf of the defendants-respondents, R.G. Singletary, S.D. Majercik and S.L. Griffin, the cause was submitted on the brief of Gregory P. Seibold of Murphy Desmond, S.C., Madison.
On behalf of the defendant-respondent, Ford Motor Company, the cause was submitted on the brief of Thomas J. Keiffer of Hale, Skemp, Hanson, Skemp & Sleik, La Crosse, and Kurt D. Williams and Stephen M. Bledsoe of Berkowitz Stanton Brandt Williams & Shaw, LLP, Kansas City, Mo.
Before Deininger, P.J., Dykman and Vergeront, JJ.
¶ 1.
James and Tricia Finch appeal the dismissal of their claims against Ford Motor Company and three of its employees who served as directors of Southside Lincoln-Mercury, Inc. The trial court concluded that certain language in the lease between the Finches and Southside absolved Ford, Southside's controlling shareholder, and the three directors from any liability for the Finches' claims against them. The Finches contend that the court erred in dismissing their claims because the clause at issue did not bar their claims for breach of fiduciary duty, tortious interference with a contract, and violation of the Uniform Fraudulent Transfer Act, and that each of these claims was well pled in their amended complaint. We agree that the last two claims should not have been dismissed. Accordingly, we reverse the appealed order in part and remand for further proceedings on the tortious interference and UFTA claims.
¶ 2. The trial court terminated this litigation at the pleading stage by granting motions to dismiss the Finches' complaint, from whose allegations we derive the following background facts. James Finch owned Finch's Southside Lincoln-Mercury, Inc., which in turn operated two motor vehicle dealerships in La Crosse and West Salem from 1994 until 1999 under franchise agreements with Ford Motor Company.1 Finch and his wife, Tricia, own the land and buildings where the two dealerships operated. Representatives of Ford proposed in 1998 that Finch sell his corporation's Mercury and Lincoln dealership assets to Southside Lincoln-Mercury, Inc. (Southside), a Delaware "dealer development corporation" formed and controlled by Ford.2 ¶ 3. Finch's corporation entered into an asset-purchase agreement with Southside in 1999. Southside agreed to purchase substantially all of the dealership's assets, including its franchise rights, which were relinquished to Ford so that Ford could, in turn, grant them to Southside. In conjunction with the sale of corporate assets, James and Tricia Finch entered into written leases with Southside for the two dealership locations. The La Crosse dealership facility lease was for a term of 120 months and required Southside to pay the Finches $17,000 per month, as well as to pay all real estate taxes, insurance, utilities, and maintenance expenses. The West Salem dealership facility lease was for a term of sixty months and obligated Southside to pay $7,000 per month, again in addition to all real estate taxes, insurance, utilities, and maintenance expenses. Ford also appointed three Ford employees (named as defendants-respondents in the caption) to serve as directors of Southside.
¶ 4. Southside ceased doing business in early 2001 and, according to the Finches, the corporation "transferred" its franchise rights to Ford for no value. The Finches assert that the franchise rights had a fair market value in excess of one million dollars. As a result of the business cessation and franchise transfer, Southside did not have sufficient remaining assets to pay its outstanding obligations, including its obligations to the Finches under the two dealership leases. Southside informed the Finches that it was insolvent and intended to default on all future obligations under the leases.
¶ 5. The Finches sued Southside, Ford and the three directors, alleging claims of breach of fiduciary duty and intentional interference with a contract against both Ford and the directors, and a fraudulent transfer claim under WIS. STAT. § 242.05(1) (2001-02)3 against Ford.4 Ford, joined by the directors, moved to dismiss the Finches' claims on the basis of the following language contained in both dealership facility leases:5
¶ 6. The trial court accepted the defendants' arguments and dismissed all claims against Ford and the directors. The Finches appeal, contending that: (1) the quoted language cannot be enforced to absolve Ford and the directors from tort liability for intentional or reckless acts; (2) if not void as against public policy, paragraph 20 is inapplicable to the claims the Finches' pled; and (3) in the alternative, paragraph 20 is ambiguous as to its scope, thereby rendering dismissal of the Finches' claims at this stage improper. The Finches also contend that each of the dismissed causes of action were properly pled and must thus survive the defendants' dismissal motions.
¶ 7. Ford and the directors moved to dismiss the Finches' complaint against them for failure to state a claim upon which relief can be granted. See WIS. STAT. § 802.06(2)(a)6. The trial court granted the motions and dismissed all claims against these defendants. On appeal, however, the directors contend that we should employ summary judgment methodology because the trial court considered a matter outside the pleadings (paragraph 20 in the Finch-Southside lease), thereby converting the motion to one for summary judgment. See § 802.06(2)(b) ( ). The directors further contend that the Finches were thus obligated, but failed, to file countering affidavits so as to place in dispute the parties' intent regarding the scope of paragraph 20. ¶ 8. The Finches referred to the lease in their complaint but did not attach or incorporate it in their pleading. Ford first brought paragraph 20 to the court's attention by attaching a copy of it to its motion to dismiss. Ford contended in its trial court brief that federal case law permits a court to consider a document attached to a motion to dismiss if the document is referred to in the plaintiff's complaint and is central to the plaintiff's claim. See Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)
. The Finches acceded to the court's consideration of the lease language, as did the directors. At no point, however, did the directors or any other party contend that the trial court must treat the motions to dismiss as summary judgment motions because it considered the lease language.
¶ 9. We note that when a court converts a motion to dismiss for failure to state a claim into a motion for summary judgment pursuant to WIS. STAT. § 802.06(2)(b), the court must notify the parties of its intent and provide them a reasonable opportunity to present material made pertinent by WIS. STAT. § 802.08. CTI of Northeast Wisconsin, LLC v. Herrell, 2003 WI App 19, ¶ 6, 259 Wis. 2d 756, 656 N.W.2d 794. This did not occur because, as we have noted, all parties were content to have the court consider the lease language in resolving the defendants' motions to dismiss for failure to state a claim. Because the directors joined Ford in relying on the lease language to support their motion to dismiss for failure to state a claim, we conclude they are estopped from making arguments on appeal premised on the Finches' failure to file countering affidavits.6
¶ 10. Our review is thus of the granting of a motion to dismiss for failure to state a claim, a question of law that we decide de novo. See Beloit Liquidating Trust v. Grade (Beloit II), 2004 WI 39, ¶ 17, 270 Wis. 2d 356, 677 N.W.2d 298
. In our review, we, like the parties and the trial court have done, will treat the complaint as incorporating the language of the Finch-Southside lease. In examining the complaint, we are to liberally construe the pleadings and accept as true all facts pleaded by the plaintiff and all inferences that can reasonably be derived from those facts. Id. Dismissal at the pleading stage is appropriate only if it appears certain that under no circumstances can the plaintiff recover. Id.
¶ 11. The Finches' argument against allowing paragraph 20 to bar their claims against Ford and the directors rests primarily on RESTATEMENT (SECOND) OF CONTRACTS § 195(1), which provides that "[a] term exempting a party from tort liability for harm caused intentionally or recklessly is unenforceable on grounds of public policy." Id. They contend that the Restatement principle means that paragraph 20 cannot be enforced, at least insofar as it attempts to...
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