IFS Filing Sys. LLC v. 11225 Heather LLC
| Decision Date | 13 November 2018 |
| Docket Number | Appeal No. 2017AP1376 |
| Citation | 385 Wis.2d 211,923 N.W.2d 176 (Table),2019 WI App 1 |
| Parties | IFS FILING SYSTEMS LLC, Plaintiff-Appellant, v. 11225 HEATHER LLC and Brennan Investment Group, LLC, Defendants-Respondents. |
| Court | Wisconsin Court of Appeals |
¶ 1 IFS Filing Systems LLC appeals from the trial court’s order, following a trial to the court.
¶ 2 This case involves a landlord/tenant dispute that resulted in a judgment of eviction and an award of damages. 11225 Heather LLC is the owner of a commercial building located in Milwaukee, Wisconsin. When Heather purchased the property, the tenant in the building was Integrated Filing Solutions LLC. Integrated subsequently assigned the lease to IFS.
¶ 3 Heather filed a small claims eviction action alleging that IFS breached the lease by failing to pay the management fee portion of the rent and by failing to provide financial statements. IFS then filed a large claims action seeking damages and declaratory judgment. IFS alleged that Heather had breached the lease by charging common area maintenance (CAM) fees and sought declaratory judgment that it had a right to purchase the property. The trial court consolidated the two actions for trial. IFS subsequently filed an amended complaint to include claims against Brennan Investment Group LLC and added new claims against Heather.
¶ 4 Following a trial to the court, the trial court (1) granted a writ of eviction and awarded damages of $83,586.07 to Heather, (2) held that Heather proved its breach of contract and tortious interference with contract claims against IFS and awarded damages of $1.25 million, (3) awarded attorney fees of $184,262.58 to Heather pursuant to the lease terms, (4) denied IFS’s claims against Brennan Investment for strict responsibility and negligent misrepresentation, and (5) denied IFS’s claims against Heather for breach of contract and contract reformation.
¶ 5 On appeal, IFS argues that the trial court erred regarding each of its holdings. IFS states that while this case involves various claims, it revolves around four main issues: (1) a dispute over CAM charges; (2) Heather’s claims that IFS did not provide financial statements; (3) Heather’s misrepresentations by omissions at the time of the assignment of the lease; and (4) IFS’s right to purchase the premises for $4.15 million.1 For the reasons stated below, we affirm.
¶ 6 The following background, which relies primarily on the trial court’s findings of fact, provides helpful context for the issues in this case. Additional facts are included in our analysis as needed.
¶ 7 This litigation involves a large commercial building located at 11225 Heather Avenue (the "property") in Milwaukee. Brennan Investment initially signed the purchase and sale agreement for the property and negotiated the lease with the tenant, Integrated. The lease was signed by Brennan Investment and Integrated. Prior to the closing on the property, Brennan Investment assigned the purchase and sale agreement and the lease to Heather, and Heather closed on the property on July 19, 2011.
¶ 8 Relevant terms of the lease include: (1) Section 5.2(A)(2) of the lease states that the lease management fee is considered part of the rent; (2) Section 15.1 states that the tenant must provide financial statements quarterly and annually, and upon request, and sets forth requirements for the financial statements, chief among them, that the financial statements be certified; and (3) Section 29.3 gives IFS a right of first refusal to buy the property—not an independent right to purchase.2
¶ 9 On January 15, 2013, IFS accepted a complete assignment of the lease from Integrated and it became responsible for all obligations under the lease. Subsequently, IFS refused to pay the portion of the rent charged as management fees and failed to produce its financial statements.
¶ 10 On March 3, 2014, Heather issued a notice of default under the lease, identifying two breaches by IFS: (1) failure to pay management fees—the notice gave IFS seven days to cure that breach; and (2) failure to provide financial statements—the notice gave IFS thirty days to cure that breach.
¶ 11 On April 29, 2014, Heather filed a small claims eviction action against IFS. Heather sought immediate possession of the property and money damages. On May 13, 2014, IFS filed a large claims action against Heather for breach of contract, declaratory judgment, and damages. Heather filed an answer and counterclaims. Heather sought rescission and counterclaimed for: (1) declaratory judgment that IFS did not have a right to purchase, and that IFS was obligated to pay the management fee and to provide financial documents upon request by Heather; (2) breach of contract; and (3) tortious interference with contract. In July 2014, Heather’s small claim eviction case was consolidated with IFS’s large claims action.
¶ 12 Heather filed a motion for summary judgment regarding IFS’s claims and the trial court issued several decisions regarding the motion. Ultimately, the trial court granted summary judgment dismissing IFS’s claim for declaratory judgment that under the lease it had a right to purchase the property. The trial court held that IFS had only a right of first refusal, not a right to purchase.
¶ 13 IFS filed an amended complaint joining Brennan Investment, alleging claims for both strict responsibility misrepresentation and negligent misrepresentation against Heather and Brennan Investment, and claims for both breach of contract and equitable contract reformation against Heather. Heather and Brennan Investment brought a motion to dismiss IFS’s claims in the amended complaint. On October 28, 2015, the trial court granted the motion as to IFS’s claims against Heather for strict responsibility misrepresentation, negligent misrepresentation, and breach of contract regarding IFS’s claim that it had a right to purchase. It denied the motion to dismiss regarding the remaining claims.
¶ 14 The matter then proceeded to a three-day court trial commencing on January 9, 2017. The trial court found that IFS breached the lease and awarded Heather $83,586.07 for unpaid rent, $184,262.58 for attorney fees pursuant to the lease, and granted a judgment of eviction. The trial court also found that IFS breached the contract by failing to provide financial statements, and had tortiously interfered with Heather’s ability to sell the property, and awarded Heather $1.25 million in damages—it found that the damages were the same under either claim. It also denied all of IFS’s claims against Heather and Brennan Investment.
¶ 15 On June 16, 2017, the trial court issued a final order and on August 2, 2017, it issued an order staying enforcement of the final order pending appeal. This appeal followed.
¶ 16 IFS contends that there is no basis for the trial court’s determinations that Heather is entitled to a writ of eviction, that Heather proved its breach of contract claim, or that that Heather proved its tortious interference claim. IFS also contends that Heather breached the contract and misrepresented material facts. IFS also contends that the trial court erred in granting summary judgment to Heather regarding IFS’s declaratory judgment claim that it has a right to purchase the property. We address these arguments in sequence.
¶ 17 Basically, IFS challenges the sufficiency of the evidence to support the trial court’s extensive findings. On appeal, we will not reverse the trial court’s fact findings unless they are clearly erroneous. See WIS. STAT. § 805.17(2) (2015-16).3 A finding is clearly erroneous if it is not supported by the record. Royster-Clark, Inc. v. Olsen’s Mill, Inc. , 2006 WI 46, ¶ 11, 290 Wis. 2d 264, 714 N.W.2d 530. Under the clearly erroneous standard, "even though the evidence would permit a contrary finding, findings of fact will be affirmed on appeal as long as the evidence would permit a reasonable person to make the same finding." Reusch v. Roob , 2000 WI App 76, ¶ 8, 234 Wis. 2d 270, 610 N.W.2d 168. Additionally, we search the record for evidence supporting the trial court’s finding, not for evidence opposing it. See Mentzel v. City of Oshkosh , 146 Wis. 2d 804, 808, 432 N.W.2d 609 (Ct. App. 1988).
¶ 18 We defer to the trial court’s findings of fact. See Adams Outdoor Advert., Ltd. v. City of Madison , 2006 WI 104, ¶ 27, 294 Wis. 2d 441, 717 N.W.2d 803 (). A finding of fact will not be set aside merely because some evidence supports a contrary finding. See Cogswell v. Robertshaw Controls Co. , 87 Wis. 2d 243, 249, 274 N.W.2d 647 (1979).
¶ 19 Furthermore, "[i]t is the appellant’s responsibility to ensure completion of the appellate record and ‘when an appellate record is incomplete in connection with an issue raised by the appellant, we must assume that the missing material supports the trial court’s ruling.’ " See Gaethke v. Pozder , 2017 WI App 38, ¶ 36, 376 Wis. 2d 448, 899 N.W.2d 381 ().4
¶ 20 Application of the law to the facts presents a question of law that we review de novo . See Adams Outdoor , 294 Wis. 2d 441, ¶ 27. The "interpretation of an unambiguous contract presents a question of law for this court’s independent review." See Betz v. Diamond Jim’s Auto Sales , 2014 WI 66, ¶ 24, 355 Wis. 2d 301, 849 N.W.2d 292. However, whether a party’s breach is material is a question of fact. See Management Comput. Servs., Inc. v. Hawkins, Ash, Baptie & Co. , 206 Wis. 2d 158, 184, 557 N.W.2d 67 (1996) ; see also Wm. G. Tannhaeuser Co. v. Holiday House, Inc. , 1 Wis. 2d 370, 374, 83 N.W.2d 880 (1957).
¶ 21 IFS contends that it was not required to pay the management fees under the terms of the lease and that it complied with the...
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