Gage Corp. v. Tamareed Co.

Decision Date04 October 2018
Docket NumberAppeal No. 2017AP881
Citation2018 WI App 71,922 N.W.2d 310 (Table),384 Wis.2d 632
Parties The GAGE CORPORATION, INT. and Mid-City Steel, Inc., Plaintiffs-Respondents, v. TAMAREED COMPANY, Defendant-Appellant.
CourtWisconsin Court of Appeals

PER CURIAM.

¶1 This is a contract dispute involving, on one side, a sales representative, Tamareed Company, and on the other, two manufacturers, The Gage Corporation, Int., and Mid-City Steel, Inc. Tamareed contends that Gage/Mid-City owes Tamareed approximately $1.2 million as a commission payment.1 This contention is based on Tamareed's position that it fulfilled its contractual obligation to assist Gage/Mid-City in securing a contract to sell an architectural feature for a building project in Saudi Arabia. After the Saudi building project deal collapsed, Gage/Mid-City refused to pay Tamareed the $1.2 million commission it sought. This litigation followed.

¶2 Addressing summary judgment motions, the circuit court determined that Tamareed and Gage/Mid-City formed a contract through a series of letters and email messages. The court also determined, however, that this contract was ambiguous on the issue of what circumstances would trigger Tamareed’s entitlement to a commission, creating a jury issue. At trial, a jury found in Gage/Mid-City's favor that Tamareed was not entitled to a commission. Based on those verdicts, the jury did not reach questions about the amount of commission owed or the potential for exemplary damages.

¶3 On appeal, Tamareed argues that the circuit court: (1) erred in concluding that the contract between Tamareed and Gage/Mid-City was ambiguous on the issue of what would entitle Tamareed to a commission because, according to Tamareed, case law resolves the ambiguity; (2) erred in dismissing Tamareed's claim for unjust enrichment on the court's stated ground that, if a contract covers the subject of an unjust enrichment claim, an allegedly aggrieved party cannot pursue both an unjust enrichment claim and a breach of contract claim; and (3) erroneously exercised its discretion in allowing certain expert testimony at trial and instructing the jury that it could consider the expert testimony. We reject each of Tamareed’s arguments and, accordingly, affirm.2

BACKGROUND

¶4 We supplement the following summary of undisputed facts as necessary in the discussion section below. Tamareed markets and sells architectural products and services in Saudi Arabia on behalf of non-Saudi manufacturers. Sparta-based Gage and La Crosse-based Mid-City are both manufacturers.

¶5 Tamareed became aware of plans for a construction project in Saudi Arabia and worked to secure a related construction contract for Gage/Mid-City. Specifically, Gage/Mid-City was to design and produce exterior building coverings or panels (called cladding), to be installed by a Saudi contractor. Tamareed acted as a sales representative and consultant for Gage/Mid-City. In defining their contractual relationship, Tamareed and Gage/Mid-City did not enter into a formal, single-document commission agreement. Instead the parties exchanged a series of letters and emails between February 2009 and January 2012 addressing aspects of the project and their respective obligations.

¶6 As to the Saudi project itself, Gage/Mid-City struck an agreement with a Saudi building contractor, under which Gage/Mid-City would design and supply cladding, at a price exceeding $20 million. The parties call this the "supply agreement." At some point after Gage/Mid-City entered into the supply agreement, Gage/Mid-City discovered that the building contractor who was supposed to purchase and install the cladding had stolen Mid-City Steel's design and was producing "counterfeit" cladding. Gage/Mid-City commenced litigation against the building contractor in Saudi Arabia.

¶7 Gage/Mid-City and the Saudi building contractor subsequently mediated and settled their dispute for just over $3 million. Gage/Mid-City offered Tamareed a commission of approximately $65,000 out of the settlement proceeds. Tamareed rejected the offer.

¶8 Gage/Mid-City sued for a declaratory judgment in the Monroe County Circuit Court. Specifically, Gage/Mid-City asked the court to declare that Gage/Mid-City owed Tamareed no commission because the deal embodied by the supply agreement had fallen through. Tamareed counter-claimed, seeking what it refers to as its "full contract commission of $1,172,000.00." The parties filed cross motions for summary judgment.

¶9 The court determined that the parties' communications had formed a contract, but that this contract was ambiguous regarding how Tamareed would become entitled to a commission. The matter was tried to a jury, which found that Tamareed was not entitled to a commission at either of two specified times, the only times at issue: when Gage/Mid-City entered into the supply agreement, and when Gage/Mid-City received the settlement from the Saudi building contractor. The court entered judgment on the verdict, and denied Tamareed's post-verdict motions. Tamareed appeals.

DISCUSSION
I. INTERPRETATION OF FOSTER

¶10 Tamareed makes an argument that rests entirely on its interpretation of Foster v. Holbrook-Armstrong Iron Co. , 158 Wis. 447, 149 N.W. 148 (1914), to the effect that Foster resolves the issue of whether Tamareed was entitled to a commission. We reject this argument for reasons we now explain.

¶11 The parties do not dispute any aspect of the following propositions. "A contract provision is ambiguous if it is fairly susceptible of more than one construction. When a contract provision is ambiguous, and therefore must be construed by the use of extrinsic evidence, the question is one of contract interpretation for the jury." Management Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co. , 206 Wis. 2d 158, 177, 557 N.W.2d 67 (1996) (citations omitted); Fontana Builders, Inc. v. Assurance Co. of Am. , 2016 WI 52, ¶¶ 42-48, 369 Wis. 2d 495, 882 N.W.2d 398 (interpretation of contract is a question for the jury when necessary to resolve factual disputes, as illuminated by extrinsic evidence, about the parties' understandings at the time they entered into the contract). The circuit court here applied these principles in a series of related rulings made before, during, and after trial. The court determined that 2009-2012 exchanges of letters and emails between Tamareed and Gage/Mid-City formed a contract, but that the contract was ambiguous in defining the circumstances under which Tamareed would become entitled to a commission payment. For those reasons, the court determined, the jury needed to hear evidence and make findings regarding the parties' understandings at the time the contract was formed.

¶12 Tamareed argues that there was no need for a jury trial. Tamareed submits that Foster stands for a rule that renders irrelevant any ambiguity in the Tamareed-Gage/Mid-City contract on the topic of whether Tamareed became entitled to a commission. We now summarize Foster , further summarize Tamareed's Foster -based argument, and explain why we conclude that Foster does not support Tamareed.

¶13 The plaintiff in Foster fulfilled contractual obligations to the defendant that included securing a contract for the defendant to sell engines to a third party. Foster , 158 Wis. at 448-50. The third party failed to perform on its obligation to buy the engines from the defendant. Id. As a result, the defendant refused to pay the commission to the plaintiff. Id. The Foster court decided that, based on the terms of the contract between the plaintiff and defendant, the plaintiff was entitled to recover the commission stipulated in the contract. Id. at 451.

¶14 Tamareed interprets Foster to stand for a blanket rule that favors commissioned sales agents. Tamareed's interpretation would apply whenever there is a contract between buyer (here, the Saudi contractor) and a seller (Gage/Mid-City) that was procured by a seller's agent (Tamareed), regardless of whether the goods are delivered to the buyer or whether the buyer pays for the goods. In that situation, the blanket rule would entitle the seller's agent to its commission if the buyer breaches its contractual obligation to buy, and the seller accepts payment in settlement from the buyer for any violation of seller’s rights unrelated to the commission agreement. Based on this rule, Tamareed argues, "it simply doesn't matter whether the contract was ambiguous" on the topic of the circumstances in which Tamareed became entitled to a commission.

¶15 Foster does not stand for any such blanket rule. Instead, the court plainly based its decisions on constructions of the specific contract at issue in Foster , and the facts in Foster diverge in significant ways from the facts here. See Foster , 158 Wis. at 448-51. The contract in Foster unambiguously established the circumstances that would trigger the plaintiff's entitlement to the stipulated commission: the plaintiff was to be paid a commission "in consideration for" specific obligations that the plaintiff undertook, regardless whether the goods were delivered by the seller or the buyer paid in full for the goods. Id. at 448, 450. In contrast, here the parties exchanged many statements in forming their agreement, including statements that could support a determination that Tamareed's commission was to be triggered only by Gage/Mid-City receiving payment for goods sold.3 There is no dispute that Gage/Mid-City never received payment for goods sold.

¶16 As the Foster court explained, the seller in Foster settled with the breaching buyer after the seller knew that it had incurred liability for the commission to the sales representative. See Foster , 158 Wis. at 451 ("And settlement having been made with full knowledge on the part of the [seller] of its liability to [the sales representative] under its contract with them, the presumption arises that it considered the $20,000 sufficient to discharge such liability, as well as to reimburse it for...

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