Northern Air Serv. Inc. v. Link

• Decision Date: 14 July 2011
• Docket Number: No. 2008AP2897.,2008AP2897.
• Citation: 336 Wis.2d 1,804 N.W.2d 458,2011 WI 75
• Parties: NORTHERN AIR SERVICES, INC., Link Snacks Global, Inc. and Link Holdings, Inc., Plaintiffs–Respondents,Troy J. Link, Link Snacks, Inc., L.S.I., Inc.—New Glarus and L.S.I., Inc., Plaintiffs–Respondents–Cross–Appellants,John E. Link, Plaintiff–Respondent–Cross–Appellant–Petitioner,v.Jay E. LINK, Defendant–Third–Party Plaintiff–Appellant–Cross–Respondent–Petitioner,v.John A. Hermeier, Lawrence J. Jarvela, Michael McDonald, Richard May, Link Buildings, Inc. and Jack Link Cattle Company, Inc., Third–Party Defendants–Respondents.
• Court: Wisconsin Supreme Court

336 Wis.2d 1

804 N.W.2d 458

2011 WI 75

NORTHERN AIR SERVICES, INC., Link Snacks Global, Inc. and Link Holdings, Inc., Plaintiffs–Respondents,Troy J. Link, Link Snacks, Inc., L.S.I., Inc.—New Glarus and L.S.I., Inc., Plaintiffs–Respondents–Cross–Appellants,John E. Link, Plaintiff–Respondent–Cross–Appellant–Petitioner,

v.Jay E. LINK, Defendant–Third–Party Plaintiff–Appellant–Cross–Respondent–Petitioner,

v.John A. Hermeier, Lawrence J. Jarvela, Michael McDonald, Richard May, Link Buildings, Inc. and Jack Link Cattle Company, Inc., Third–Party Defendants–Respondents.

No. 2008AP2897.

Supreme Court of Wisconsin.

July 14, 2011.

For the defendant-third-party-plaintiff-appellant-cross-respondent-petitioner oral argument by Michael J. Aprahamian, Foley & Lardner LLP, Milwaukee, with whom on the briefs were Michael S. Heffernan, Michael A. Bowen, and Brian E. Cothroll, Milwaukee and Thomas O. Mulligan, Spooner.For plaintiff-respondent-cross-appellant-petitioner oral argument by Brian P. Norton, Freeborn and Peters, Chicago. There were briefs by Michael D. Freeborn, Brian P. Norton, Michael P. Kornak, and Andrew C. Nordahl, Chicago, and Webster A. Hart, Stephanie L. Finn, Herrick & Hart, S.C. Eau Claire.MICHAEL J. GABLEMAN, J.

This case is a complex civil action that initially involved fourteen different parties in eighteen separate, but related, claims and counterclaims. The controversy centers on a bitter interfamilial dispute among John Link (Jack) and his two sons, Jay Link (Jay) and Troy Link (Troy). The Link family owns various companies that produce and distribute meat and cheese snacks.

¶ 2 In August 2005, after a number of conflicts between Jack and Jay, Jay's employment ended at Link Snacks, Inc. (Link Snacks). In September 2005, Jack and Troy filed suit seeking specific performance of a Buy–Sell Agreement that would require Jay to surrender his shares in Link Snacks. Jay filed counterclaims alleging that Jack and Troy had breached fiduciary duties owed to Jay as a minority shareholder by “squeezing” Jay out of Link Snacks in a scheme to buy Jay's shares at a discounted price.

¶ 3 After two years of discovery, the Washburn County Circuit Court, Eugene D. Harrington, Judge, presiding, conducted a trial in three phases, which included a six-week jury trial. The jury found that Jack and Troy breached fiduciary duties owed to Jay, and jury also found that Jay breached fiduciary duties owed to Link Snacks. During the third phase of the trial, after the jury's verdicts, the circuit court granted specific enforcement of the Buy–Sell Agreement and concluded that Jay, as a matter of law, had not been oppressed under Wis. Stat. § 180.1430(2)(b) (2005–06).¹

¶ 4 Jay appealed three issues to the court of appeals. First, he argued that the circuit court erred in its conclusion that Jay had not been oppressed by Jack and Troy. Second, he argued that the circuit court erred in limiting the evidence he could present regarding his theory of damages relating to his breach of fiduciary duty claims against Jack and Troy. Third, he argued that the circuit court erred in remitting the punitive damages awarded against Jack for breaching fiduciary duties owed to Jay.

¶ 5 Jack cross-appealed the jury's verdict awarding punitive damages to Jay. Link Snacks also moved to dismiss Jay's appeals related to: (1) Jay's contention that the evidence at trial established oppression as a matter of law; and (2) Jay's argument that the circuit court erred in limiting the evidence Jay could present regarding his theory of damages relating to his breach of fiduciary duty claims against Jack and Troy.

¶ 6 This is a review of a judgment and an order of the court of appeals. ² The judgment of the court of appeals granted Jack and the remaining respondents and cross-appellants partial dismissal of Jay's appeal. The order of the court of appeals, which was issued separately, reversed the circuit court order remitting a punitive damages award against Jack, reasoning that Jack's postverdict motion requesting the remittitur was untimely filed under Wis. Stat. § 805.16.

¶ 7 Three issues are before this court:

¶ 8 First, Jack argues that the court of appeals erred in reinstating the $5,000,000 punitive damages award against him. The court of appeals reinstated the punitive damages award because Jack's postverdict motion requesting the remittitur was untimely filed under Wis. Stat. § 805.16. Jack argues that: (1) the circuit court properly considered his postverdict motion under State v. Treadway, 2002 WI App 195, 257 Wis.2d 467, 651 N.W.2d 334; or (2) alternatively, if the circuit court did err in its reliance on Treadway, the bright-line rule articulated in St. John's Home of Milwaukee v. Continental Casualty Co., 150 Wis.2d 37, 441 N.W.2d 219 (1989), should be extended to limit the discretion of the clerk of circuit court in accepting pleadings received after usual business hours.

¶ 9 Second, Jay argues that the court of appeals erred in concluding that, under the benefit-estoppel doctrine,³ he waived his right to appeal the judicial dissolution claim under Wis. Stat. § 180.1430(2)(b).

¶ 10 Third, Jay argues that the court of appeals erred in concluding that, under the benefit-estoppel doctrine, he waived his right to appeal whether the circuit court erred in limiting the evidence Jay could present regarding his theory of damages relating to his breach of fiduciary duty claims against Jack and Troy. He submits that the benefit-estoppel doctrine is inapplicable to the instant case because, among other things, his appeal of the circuit court's decision to limit the evidence he could present regarding his fiduciary duty damages theory relating to his breach of fiduciary duty claims against Jack and Troy is independent of the circuit court's order enforcing the Buy–Sell Agreement.

¶ 11 We hold the following: ⁴

(1) The circuit court erred in remitting the award of punitive damages against Jack. The circuit court's reliance on Treadway in considering Jack's tardy postverdict motion was misplaced. Treadway does not apply to multi-phase civil actions, such as the instant case. Further, we would decline to extend the bright-line rule of St. John's Home in order to limit the discretion of the clerk of circuit court in accepting pleadings received after usual business hours. Accordingly, we affirm the court of appeals in its conclusion the circuit court improperly considered Jack's postverdict motion.

(2) The court of appeals properly rejected Jay's oppression claim under Wis. Stat. § 180.1430(2)(b). We do not address, however, whether Jay waived his right to bring his oppression claim under the benefit-estoppel doctrine because we conclude he does not have standing to appeal his oppression claim under § 180.1430(2)(b). The statutory language of § 180.1430(2)(b) clearly states that a party must be a “shareholder” in order to seek judicial dissolution of a corporation. Jay lost his status as a shareholder in Link Snacks when he surrendered his shares under the Buy–Sell Agreement. Therefore, we affirm the court of appeals on this issue, but on different grounds.

(3) Jay did not, under the benefit-estoppel doctrine, waive his right to appeal the circuit court's decision to limit the evidence Jay could present regarding his theory of damages relating to his breach of fiduciary duty claims against Jack and Troy. The contractual obligations set forth in the Buy–Sell Agreement, which were enforced by the circuit court, would not be affected if Jay, on appeal, were successful in arguing that the circuit court erred in limiting the evidence Jay could present regarding his theory of damages relating to his breach of fiduciary duty claims against Jack and Troy. Consequently, the benefit-estoppel doctrine is inapplicable to Jay's appeal of the circuit court's decision to limit the evidence Jay could present regarding his fiduciary duty damages theory relating to his breach of fiduciary duty claims against Jack and Troy. We therefore reverse and remand to the court of appeals to decide whether the circuit court erred in limiting the evidence Jay could present regarding his theory of damages relating to his breach of fiduciary duty claims against Jack and Troy.

I. BACKGROUND

¶ 12 In the mid–1980s, Jack began selling meat snacks in Minong, Wisconsin. The business steadily expanded, and in 1995, Link Snacks, Inc., ⁵ became entirely family-owned when Jack's sons, Jay and Troy, acquired shares of the company.

¶ 13 As a condition precedent to their ownership of the company shares, the three Links agreed to enter into a Buy–Sell Agreement. Among other things, the Buy–Sell Agreement granted the company “the option to redeem all or a portion” of Jack, Troy, or Jay's shares if their employment with Link Snacks was terminated, with or without cause. As set forth in the Buy–Sell Agreement, the purchase price for such shares would be the “fair market value” ⁶ determined by an appraiser mutually agreed upon by the parties.

¶ 14 Jack, Jay and Troy managed to co-exist in a state of grudging comity until around 2002. At this point, the somewhat-amicable relations between Jack and Jay began to fray, and conflicts between the two arose with increasing frequency. Jack and Jay had serious disagreements about how to run the company. Their disagreements and mutual animosity eventually culminated in a 2005 Departure Memorandum executed by Link Snacks and Jay. In the Departure Memorandum, the parties agreed that Jay would be terminated as an employee and officer of Link Snacks and Link affiliates and the parties would attempt to negotiate an amicable buy-out of all Jay's interests in the various Link-related companies.⁷

¶ 15 After executing the Departure Memorandum, there was a period of unsuccessful negotiation regarding the documents necessary to close the purchase of Jay's shares.⁸

II. PROCEDURAL HISTORY

¶ 16 On September 23, 2005, Link Snacks, Jack, Troy, and several other ...