Kramer v. Alpine Valley Resort, Inc., 81-344

• Decision Date: 02 July 1982
• Docket Number: No. 81-344,81-344
• Citation: 108 Wis.2d 417,321 N.W.2d 293
• Parties: Eric W. KRAMER, Plaintiff-Respondent, v. ALPINE VALLEY RESORT, INC., a Wisconsin Corporation, Defendant-Appellant-Petitioner, Foxfire at Alpine Valley, a/k/a Foxwood at Alpine Valley, a partnership, and Alan B. Kaiser, individually and as a partner in Foxfire at Alpine Valley, a/k/a Foxwood at Alpine Valley, Defendants.
• Court: Wisconsin Supreme Court

Page 293

321 N.W.2d 293

108 Wis.2d 417

Eric W. KRAMER, Plaintiff-Respondent, v. ALPINE VALLEY RESORT, INC., a Wisconsin Corporation Defendant-Appellant-Petitioner Foxfire at Alpine Valley, a/k/a Foxwood at Alpine Valley, a partnership, and Alan B. Kaiser, individually and as a partner in Foxfire at Alpine Valley, a/k/a Foxwood at Alpine Valley, Defendants.

No. 81-344.

Supreme Court of Wisconsin.

Argued June 1, 1982.

Decided July 2, 1982.

Frederick R. Hardt, argued for defendant-appellant-petitioner; Godfrey, Pfeil & Neshek, S. C., Elkhorn, on brief.

Steven M. Epstein, Milwaukee, argued for plaintiff-respondent; Levine & Epstein, Milwaukee, on brief.

CECI, Justice.

Eric W. Kramer (plaintiff) brought this action seeking monetary damages on alternative theories of promissory estoppel and breach of contract. Defendants, Alpine Valley Resort, Inc. (Alpine Valley) and Alan B. Kaiser (Kaiser) filed answers denying liability as to both claims. The case was tried without a jury on September 5, 1980 before the Hon. ROBERT H. GOLLMAR in Walworth county circuit court.

At trial neither defendant offered any testimony; they relied solely on cross-examination of plaintiff's witnesses. In a memorandum decision the trial court found that plaintiff established the three elements necessary to recover under the doctrine of promissory estoppel and granted judgment to plaintiff. The trial court awarded damages in the amount of $5,500 for lost teaching salary, $500 (100 hours at $5 per hour) for plaintiff's labor in constructing the leather shop, $843.79 for cost of construction materials, $365 for interest on money borrowed for the project, $345 for profits not earned because of plaintiff's involvement in the workshop-gallery and $100 plus interest for the security deposit.

Alpine Valley appealed from the judgment. The court of appeals affirmed the judgment of the trial court. Alpine Valley sought and was granted a review of the decision of the court of appeals. 105 Wis.2d 757, 315 N.W.2d 729.

This review raises the following issue:

Does the existence of a lease agreement bar recovery under the doctrine of promissory estoppel?

Because we conclude that under the facts of this case the lease agreement does not embody the total business relationship of the parties, the lease agreement does not bar recovery under promissory estoppel. Therefore, we affirm the holding of the court of appeals.

Alpine Valley is a large resort area located in East Troy, Wisconsin. Open all year-round, Alpine Valley operates as a ski resort in the winter and in the summer it sponsors a series of musical events.

In March of 1976, Alpine Valley formed a partnership with Kaiser to develop a commercial complex known as Foxfire at Alpine Valley (Foxfire). Foxfire was designed to be a $4,000,000 workshop-gallery, pavilion and tennis complex located on the premises of Alpine Valley.

The workshop-gallery was to provide craftsmen with a place to work and sell their completed handmade products. The gallery was structured so that the various artistic disciplines would form separate cooperatives. Each cooperative was to be headed by a director. Pursuant to the partnership agreement, Alpine Valley furnished the capital necessary to build the complex and Kaiser sought craftsmen to lease space in the gallery.

In an effort to solicit craftsmen, Kaiser prepared and distributed a number of informational brochures relating to the workshop-gallery. These brochures were paid for and reviewed by Alpine Valley. ¹ The brochures set forth a floor plan showing how the various cooperatives were to be set up and emphasized the large number of people who would visit Foxfire. ²

Plaintiff was contacted by one of Kaiser's associates to become a member of a leather cooperative that was being formed at Foxfire. Initially, plaintiff was not interested in the cooperative because he was teaching full-time at the Van Gorder-Walden School in Chicago. Although plaintiff told the associate he was not interested in the project, the associate asked plaintiff if he would be willing to look at the package of literature explaining Foxfire. Plaintiff agreed to receive the information.

After reading the informational brochures, plaintiff became interested in Foxfire. Plaintiff testified that his change of mind was due to the fact that a business the size of Alpine Valley was involved in the project and the statement in the brochure that a thousand people would walk through Foxfire daily. Plaintiff visited Alpine Valley in June of 1976 and eventually agreed to become the director of the leather cooperative.

After committing himself to become director of the leather cooperative, plaintiff informed Ed Van Gorder, head of the Van Gorder-Walden School, that he would not be returning for the next school year. Van Gorder testified that he asked plaintiff to consider teaching half-time. Plaintiff agreed to teach half-time for a salary of $5,500, exactly half of his full-time salary.

The workshop-gallery was scheduled to open in October of 1976. In preparation for the opening, plaintiff borrowed money for the actual construction of the leather cooperative workshop. He paid $843.79 for materials and $365 for interest on money borrowed for the project. Plaintiff also estimated that he worked 100 hours himself on the construction work.

Foxfire and the plaintiff entered into four successive leases with each superceding its predecessor. The fourth lease was signed on November 12, 1976, and was in the form of a letter from plaintiff to the supervisor of the Foxfire workshop-gallery. The lease provided that the leather cooperative would rent 1,020 square feet of the workshop-gallery. The leather cooperative was to pay rent of $9 per square foot and a commission of five percent of the cooperative's annual gross sales exceeding $50,000. The lease also gave the leather cooperative a right of first refusal for adjacent floor space. Attached to the lease was a "Statement of Structure and Purpose" which delineated the responsibilities of the director and members of the cooperative.

Due to a series of delays, the workshop-gallery did not open until November 27, 1976. After opening, the gallery remained open for the following three weekends. The decision to close was a unilateral one made by Joseph Kosik, the principal owner of Alpine Valley. At the time of the closing, the representatives of Foxfire told the plaintiff that the gallery would reopen in the late spring of 1977. The workshop-gallery never reopened. However, during the winter months, Alpine Valley did furnish the workshop members with a room where they could sell their products.

On review, Alpine Valley argues that the existence of an unambiguous contract between plaintiff and Foxfire acts as a bar against recovery under promissory estoppel and limits plaintiff's recovery to breach of contract. Usually, we could accept Alpine Valley's argument. However, in cases such as the present where the contract executed by the parties represents a minor aspect of a larger business relationship, we cannot agree with Alpine Valley's general proposition. In situations where the contract fails to embody essential elements of the total business relationship of the parties, we conclude that the existence of a contract does not bar recovery under promissory estoppel.

Promissory Estoppel

In Hoffman v. Red Owl Stores, Inc., 26 Wis.2d 683, 133 N.W.2d 267 (1965) this court held that a cause of action may be grounded upon promissory estoppel ³ when the following three conditions are met:

1. The promisor must make a promise which he should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee;

2. the promise must induce such action or forbearance; and

3. injustice can only be avoided by enforcement of the promise.

Id. at 698, 133 N.W.2d 267.

The first two requirements are issues of fact while the third requirement, that enforcement of the promise is necessary to avoid injustice, involves a policy decision by the court. Hoffman at 698, 133 N.W.2d 267.

The trial court found that all three conditions existed. On review, Alpine Valley does not raise an issue with respect to these findings. ⁴ Therefore, we need not inquire as to whether the evidence was sufficient to support the trial court's findings.

In support of its position that the lease agreement precludes recovery under promissory estoppel, Alpine Valley relies heavily on a quote from Goff v. Massachusetts Protective Association, Inc., 46 Wis.2d 712, 176 N.W.2d 576 (1970) which reads:

"... [T]he contracts are a complete defense to the cause of action based on promissory estoppel...." Id. at 717, 176 N.W.2d 576.

This quotation, when read in isolation from the entire opinion, may appear to favor Alpine Valley's argument. However, a closer examination of Goff reveals that it is factually distinguishable from the present case.

In Goff, the plaintiff entered into a special agent contract with the defendant insurance company to sell insurance. By the terms of the contract, Goff agreed not to act as agent or broker for any other insurance company. The contract allowed either party to terminate the contract by giving thirty days' written notice to the other party. The insurance company terminated Goff's contract because he acted as agent for other insurance companies.

Goff labeled one of his causes of actions promissory estoppel. Goff contended that because the insurance company knew of his selling activities with other companies, it had waived the right to object to his conduct. In addressing the issue, this court stated:

"...[t]he gist of this argument is not promissory estoppel because there is no promise; it is a plain estoppel argument that the companies cannot rely on his breach of...