Mid Am. Steel Drum Props. v. Container Life Cycle Mgmt.
| Decision Date | 18 January 2023 |
| Docket Number | 2021AP1603 |
| Parties | Mid America Steel Drum Properties, LLC and 17H LLC, Plaintiffs-Respondents-Cross-Appellants, v. Container Life Cycle Management LLC, Defendant-Appellant-Cross-Respondent. |
| Court | Wisconsin Court of Appeals |
Not recommended for publication in the official reports.
APPEAL and CROSS-APPEAL from a judgment and an order of the circuit court for Milwaukee County No. 2019CV644, LAURA GRAMLING PEREZ, Judge. Affirmed.
Before Brash, C.J., Donald, P.J., and White, J.
¶1 Container Life Cycle Management LLC appeals the judgment and order entered in favor of Mid America Steel Drum Properties LLC and 17H LLC (collectively, Mid America), upon a jury verdict which found that Container Life had committed trespass and unlawfully withheld possession of several parcels owned by Mid America, and was unjustly enriched by that conduct. Container Life argued that it thought those parcels were included in a lease it had entered into with Mid America. It therefore filed a counterclaim for reformation of that lease to include one parcel in particular, referred to as the "Trailer Yard," in the lease; that counterclaim was dismissed by the trial court.
¶2 On appeal, Container Life contends that the trial court erred in dismissing its counterclaim to reform the lease. Container Life also asserts that the trial court erroneously exercised its discretion with regard to several issues relating to jury instructions and the special verdict, as well as its denial of Container Life's motion to bifurcate the trial to address the equitable issue of lease reformation prior to addressing the legal claims presented by Mid America.
¶3 Additionally, Mid America cross-appeals regarding its claim for punitive damages. It asserts that the trial court applied the wrong legal standard when it refused to allow the jury to consider whether punitive damages were warranted, based on Container Life's unauthorized use of the parcels.
¶4 Upon review, we conclude that the trial court did not erroneously exercise its discretion in any of the decisions being challenged by Container Life. We also reject Mid America's argument in its cross-appeal that the trial court applied the wrong legal standard in considering its punitive damages claim. Therefore, we affirm.
¶5 Mid America is owned by Michael Higgins and his brother Timothy. Mid America's business operation involved the reconditioning of steel drums, a process which included stripping, reforming, repainting, and adding new parts to the used containers, and then testing those reconditioned containers. The main operating site where this process was performed is located at 8570 South Chicago Road in Oak Creek.
¶6 To the immediate south of the main operating site is a parcel located on East Puetz Road-the Trailer Yard parcel-which is also owned by Mid America. The Trailer Yard parcel was used by Mid America to store used drums until they could be reconditioned at the main operating site. Additionally, Mid America owned another parcel on South Chicago Road also utilized by the business, known as the "Drop Off Lot."[1]
¶7 Container Life was formed in 2010, and sought to build a national network of drum reconditioners. To that end, it approached the Higginses about purchasing Mid America. In a letter of intent sent to the Higginses in March 2011 Container Life indicated that it wished to purchase the business assets but not the real property associated with the business; rather, the purchase agreement was to include a lease for the real property used by the business. The letter referred to the real estate and other items it was not purchasing, such as some of the equipment, as "Excluded Assets." It further stated that Container Life would conduct due diligence on the Excluded Assets, including the real property, to determine their "value, condition, and fitness … for their intended use" prior to entering into a lease. Michael Higgins understood this to mean that after Container Life reviewed the real property available from Mid America, it would lease the property it thought was "necessary for the business." Mid America gave Container Life access to its property for approximately thirty months to conduct its due diligence.
¶8 Container Life and Mid America entered into an Asset Purchase Agreement in November 2013.[2] The Agreement included a schedule of real property involved in the transaction, including the "Oak Creek" property, which was defined as "the real estate and improvements thereto located at 8570 South Chicago Road, Oak Creek, Wisconsin." The Agreement further stated that there was a lease for that South Chicago Road property; however, neither the Trailer Yard, nor its address on Puetz Road, were referenced as being part of the leased property.
¶9 The Higginses assumed that this indicated that Container Life had "selected the parcels [it] wanted to lease[,]" which did not include the Trailer Yard. Michael Higgins testified at the trial that as part of its due diligence, Container Life had conducted an environmental analysis on the property and determined that there could be some contamination on the property, particularly at the location of a "chop shop" that was on the Trailer Yard parcel. Michael stated that he had been told "very directly" by Container Life that they did not "want to operate on any contaminated or potentially contaminated property." Therefore, the Higginses presumed that Container Life had decided not to include the Trailer Yard in the lease.
¶10 However, the president of Container Life, Randy Stacy, thought the Oak Creek property, as identified in the Agreement, included the other parcels used by Mid America in its business, particularly the Trailer Yard. This misunderstanding was shared by "numerous people" at Container Life, including its general counsel and the outside attorneys who drafted the lease.
¶11 Shortly after the Agreement was executed, Michael Higgins told Stacy that Container Life was using parcels it had not leased, including the Trailer Yard. Michael stated that if Container Life was going to continue using these parcels, they would have to "get something worked out in terms of a lease." Stacy agreed; however, no other leases were ever executed.
¶12 Mid America then filed the complaint underlying this appeal in January 2019, alleging that Container Life was trespassing on the Trailer Yard and the Drop Off Lot and claiming that Container Life was being unjustly enriched through its use of those parcels; Mid America sought to eject Container Life from those premises. In response, Container Life filed a counterclaim seeking reformation of the lease to include the Trailer Yard.
¶13 The matter then proceeded to a jury trial in April 2021. Prior to the trial, however, Container Life filed a motion to bifurcate, arguing that its counterclaim for reformation-an equitable claim that must be tried to the court, as opposed to a jury-should be tried first, before the jury trial on Mid America's claims. The trial court denied the motion, noting its concern that hearing the reformation counterclaim first could potentially lead to the court making factual findings on certain issues that overlap with the legal claims of Mid America, which Mid America had the right to put before a jury.
¶14 After the trial had begun, Container Life requested the inclusion of a jury instruction on the duty to speak relating to the Higginses' duty to inform Container Life that the Trailer Yard and Drop Off Lot were separate parcels from the main operating site. The trial court rejected the request as untimely, because it was not included in Container Life's proposed jury instructions even though this was an argument that it had asserted throughout the litigation of this matter. The trial court further found that the instruction was not necessary because it relates to fraud claims, and there were no fraud claims alleged in this case.
¶15 Also during the trial, Container Life requested that several advisory questions relating to its reformation counterclaim be submitted to the jury. Specifically, the questions proposed by Container Life asked whether either party had made a mistake relating to the property included in the lease, and whether this was a misrepresentation-either willful or innocent-by the Higginses and Mid America.
¶16 The trial court rejected this request as well. It again commented on the lack of timeliness of the request by Container Life since it was being raised in the middle of trial, and these questions had not previously been included with the proposed jury instructions and special verdict forms submitted by the parties prior to the trial. The court further noted that although some additional instructions and verdict questions had been proposed by the parties since the pretrial deadline, those supplemental filings were helpful to "focus and winnow the information for the jury" regarding the legal claims the jury was deciding. However, these proposed special verdict questions regarding Container Life's reformation counterclaim would be "essentially sort of adding an entirely new kind of claim to the issues for the jury to decide midway through the trial," which the court deemed to be inappropriate.
¶17 The trial court further observed that the reformation counterclaim was "reasonably straightforward" and a "pretty typical type of matter that the [c]ourt makes decisions about all the time." Therefore, the court determined that the proposed advisory jury questions were not "necessary or appropriate."
¶18 Another issue arose at the end of the trial with a pattern jury instruction that was submitted regarding implied consent for the use of the parcels at issue. This instruction, Wis JI-Civil 8015,...
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