Lopardo v. Fleming Companies, Inc.

• Decision Date: 03 October 1996
• Docket Number: Nos. 95-2694,95-2771,s. 95-2694
• Citation: 97 F.3d 921
• Parties: Richard J. LOPARDO and Catherine A. Lopardo, Plaintiffs-Appellees and Cross-Appellants, v. FLEMING COMPANIES, INC., Godfrey Company, and Store Equipment, Inc., Defendants Third-Party Plaintiffs-Appellants and Cross-Appellees, v. CONTINENTAL CASUALTY COMPANY, Intervenor Defendant-Appellee, and Liberty Mutual Insurance Company and American Motorists Insurance Company, Third-Party Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 921

97 F.3d 921

Richard J. LOPARDO and Catherine A. Lopardo, Plaintiffs-Appellees and Cross-Appellants, v. FLEMING COMPANIES, INC., Godfrey Company, and Store

Equipment, Inc., Defendants Third-Party Plaintiffs-Appellants and Cross-Appellees, v. CONTINENTAL CASUALTY COMPANY, Intervenor Defendant-Appellee, and Liberty Mutual Insurance Company and American Motorists

Insurance Company, Third-Party Defendants-Appellees.

Nos. 95-2694, 95-2771.

United States Court of Appeals, Seventh Circuit.

Argued March 27, 1996.

Decided Oct. 3, 1996.

Dennis L. Fisher (argued), Christopher L. Rexroat, Meissner & Tierney, Milwaukee, WI, for Catherine A. Lopardo in both cases.

Christopher L. Rexroat, Meissner & Tierney, Milwaukee, WI, for Richard J. Lopardo in No. 95-2694.

Russell C. Brannen, O'Neil, Cannon & Hollman, Edward A. Hannan, Hugh R. Braun (argued), M. Susan Maloney, Godfrey, Braun & Hayes, Milwaukee, WI, for Godfrey

Co. and Store Equipment, Inc. in No. 95-2694.

Russell C. Brannen, O'Neil, Cannon & Hollman, Edward A. Hannan, M. Susan Maloney, Godfrey Braun & Hayes, Milwaukee, WI, for Fleming Companies, Inc. in No. 95-2694.

Kurt H. Frauen (argued), Bogelt, Powell, Peterson & Frauen, Milwaukee, WI, for Liberty Mutual Ins. Co. in No. 95-2694.

James E. Bors, Rick E. Hills (argued), Hills & Hicks, Brookfield, WI, for American Motorists Ins. Co. in No. 95-2694.

Dennis L. Fisher, Christopher L. Rexroat, Meissner & Tierney, Milwaukee, WI, for Richard J. Lopardo in No. 95-2771.

Russell C. Brannen, O'Neil, Cannon & Hollman, Milwaukee, WI, Hugh R. Braun (argued), Godfrey, Braun & Hayes, Milwaukee, WI, for Fleming Companies, Inc. in No. 95-2771.

Russell C. Brannen, O'Neil, Cannon & Hollman, Milwaukee, WI, Hugh R. Braun, Godfrey, Braun & Hayes, Milwaukee, WI, for Godfrey Co. and Store Equipment, Inc. in No. 95-2771.

Before EASTERBROOK, KANNE, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

A pier on Middle Lake, Lauderdale Lakes, Wisconsin, provides the backdrop for this decade-long saga between Richard and Catherine Lopardo, on the one hand, and the Godfrey Company and its affiliates, on the other. Our role in this diversity case is to decide whether the district court correctly awarded the relatively modest sum of $54,920 to the Lopardos as compensation for Godfrey's maintenance of a pier that interfered with their riparian rights--a decision that turns exclusively on Wisconsin law of riparian rights, nuisance, trespass, and damages. We must also decide whether the district court correctly dismissed the three insurance company parties, Continental Casualty Company ("Continental"), Liberty Mutual Insurance Company ("Liberty"), and American Motorists Insurance Company ("AMICO"), from the suit. After all is said and done, we conclude that the district court did not clearly err in its findings of fact. Although our analysis of Wisconsin law differs somewhat from that of the district court, in the final analysis the result is the same, and we affirm that court's judgment.

I

The story began when James E. Godfrey, the former president of Godfrey Company, decided that he wanted to try his hand at the real estate development business during his retirement years. Godfrey, a Wisconsin corporation with its headquarters in Waukesha, Wisconsin, owns about 100 grocery stores in southeastern Wisconsin. In November of 1987, both Godfrey and its wholly owned subsidiary, Store Equipment, were taken over by Fleming Companies, Inc., an Oklahoma corporation with its headquarters in that state. (Unless the facts require otherwise, we refer to all three--Mr. Godfrey, Godfrey Company, and Store Equipment, as "Godfrey.") In 1976, Godfrey acquired an 800-acre parcel of land in Walworth County, Wisconsin, which had about 400 feet of frontage on Middle Lake in the Lauderdale chain.

Godfrey first subdivided the parcel into a number of subdivisions, only two of which are relevant here: Westmoor and Southmoor. Of those two, only Westmoor had lake frontage. Godfrey then subdivided Westmoor into five lots, four of which were lake front properties, and it subdivided Southmoor into twenty-four lots. To give the future residents of Southmoor access to the lake, Godfrey created a 40-foot easement on the north portion of Westmoor's Lot 3, which was recorded on June 16, 1977. It built an 80-foot pier from the end of the Lot 3 easement, hoping that this would enhance the attractiveness of the Southmoor lots.

After building the initial 80-foot pier, Godfrey decided to expand it by adding an 11-foot "T" section, with six new boat slips. Godfrey submitted the plans for the extension to Robert A. Bramer, a field warden of the Wisconsin Department of Natural Resources (DNR). The plans used the "straight line," or "extended lot lines" method of determining riparian rights, see Wis Admn.Code NR § 326.07(2)(c), which involves a simple extension of the onshore property lines into the lake. After a meeting with Godfrey's lawyer and surveyor, Warden Bramer signed a letter addressed to Attorney Rodney Thorson, which said in part:

It is my opinion that the State would have no objection to the eleven-foot addition together with proposed pier slips. The only problem I would foresee would be that a building permit might necessarily have to be acquired from the local township and the future owner of Lots 3 and 4, Westmoor Subdivision would have to be apprised of the location of the pier and boat slips as they have riparian rights themselves as the owner[s] of Lots 3 and 4 and might have a possible cause of action against the owner of the pier if the ingress and egress of boats in the pier slips interferred [sic] with their respective navigation rights. Obviously, this situation would seem to be solved if they saw the pier's location before they purchased and would quite clearly have no objection if they were allowed to use the boat slips.

Sadly enough, nothing turned out to be "obvious" about the extended pier, but Warden Bramer's premonition of trouble was fulfilled beyond anyone's expectations.

With DNR's blessing (as it believed), Godfrey built the approved pier extension, at a time when it still owned both Lot 3 and Lot 4. In 1985, Godfrey Company sold Lot 3 to the Lopardos for $60,000, subject to the recorded easement for Southmoor access to the lake on the north 40 feet. (While the real estate contract mentioned the easement, unfortunately the deed did not, which caused some problems later on.) The Lopardos viewed the lot before they bought it, and they saw the pier in place. No one specifically advised them, however, that the existing pier might violate the riparian zone of the part of Lot 3 that was not subject to the 40-foot easement. In March 1987, the Lopardos began to make preparations to build a home on their lot. They hired Ken Abernathy, a registered land surveyor, to prepare an official survey for them. Because the shoreline of the Westmoor Subdivision is jagged and concave, Abernathy used the co-terminous or "Knitter" method to determine the riparian zone of Lot 3. This method (unlike the straight line method) showed that the Godfrey pier substantially encroached into the Lot 3 riparian zone.

Upset, the Lopardos wrote to Godfrey immediately, informing it that the pier infringed their rights and asking that it be moved. When Godfrey did not respond, the Lopardos asked for help from the DNR. A DNR official examined the pier and agreed with Abernathy both that the co-terminous method was the correct one for this property, and that the pier interfered with the Lopardo's riparian rights. On March 11, 1988, they filed a formal complaint with the DNR. Two months later, another DNR official wrote to Godfrey, strongly recommending that it reconstruct the pier. DNR then scheduled a hearing for August 18, 1988, but that hearing was postponed on a stipulation by the parties to submit the dispute to the Walworth County Circuit Court.

As expected, Godfrey, its associated companies, and a number of the Southmoor owners filed a suit in January 1989, for a declaratory judgment in the Circuit Court of Walworth County. Godfrey claimed error in drafting the 1985 deed to the Lopardos, and it sought reformation of the deed to remove the 40-foot strip altogether from the description of Lot 3, as well as a declaratory judgment on whether the pier infringed Lot 3's riparian rights. The Lopardos counterclaimed on August 28, 1989, seeking a declaration of their sole right as riparian owners to construct a pier on Lot 3, an order requiring Godfrey to remove the existing pier, and "damages in an amount to be determined." After some procedural back-and-forth and a trial before Judge Carlson of the Circuit Court, victory seemed to be within Godfrey's reach. Judge Carlson ordered the 1985 deed reformed to exclude the 40-foot area entirely from Lot 3, declared that Godfrey had riparian rights to use the pier where it was, and decided that the Lopardos were estopped from complaining that it violated their riparian rights.

On appeal, the pendulum swung back to the Lopardos. The Wisconsin Court of Appeals reversed most of Judge Carlson's rulings in Godfrey Company v. Lopardo, 164 Wis.2d 352, 474 N.W.2d 786 (App.1991). While the court agreed that the Lopardos' deed had to be reformed, it concluded that Godfrey had not retained a fee interest in the north forty. Instead, the deed was reformed to show the 40-foot easement in favor of the Southmoor owners. With respect to riparian rights, the court first decided that an easement owner like Godfrey could, after the 1989 enactment of Wis. Stat. Ann. § 30.131(1), build a pier from the easement, provided that the six conditions set forth in the statute were satisfied. The court concluded that Godfrey met the first five, but that there was a potential problem with (6), which required that "[t]he placement of the wharf or pier complies with the provisions of this chapter, with any rules promulgated under this chapter...