Wisconsin Music Network, Inc. v. Kohl's Food Stores, Inc., 97-2434

• Decision Date: 16 February 1999
• Docket Number: No. 97-2434,97-2434
• Citation: 224 Wis.2d 936,592 N.W.2d 318
• Parties: NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. WISCONSIN MUSIC NETWORK, INC., Plaintiff-Respondent-Cross-Appellant, v. KOHL'S FOOD STORES, INC., Defendant-Appellant-Cross-Respondent.
• Court: Wisconsin Court of Appeals

Page 318

592 N.W.2d 318

224 Wis.2d 936

NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES.

WISCONSIN MUSIC NETWORK, INC., Plaintiff-Respondent-Cross-Appellant, v. KOHL'S FOOD STORES, INC., Defendant-Appellant-Cross-Respondent.

No. 97-2434.

Court of Appeals of Wisconsin.

Feb. 16, 1999.

APPEAL and CROSS-APPEAL from a judgment of the circuit court for Milwaukee County: CHRISTOPHER R. FOLEY, Judge. Affirmed in part; reversed in part and cause remanded with directions.

Before Fine, Schudson and Curley, JJ.

PER CURIAM.

Kohl's Food Stores, Inc. (Kohl's), appeals from a judgment, following the entry of partial summary judgments and a subsequent bench trial, granting Wisconsin Music Network, Inc. (WMN), damages of $106,079.45, plus interest, attorney fees, and costs and disbursements, for numerous breach of contract claims. ¹ Kohl's presents various arguments, all essentially challenging the trial court's conclusions that it breached the contracts, and that WMN did not.

WMN cross-appeals, arguing that the trial court erred in determining the basis for computing the damages on the three contracts that contained a modified liquidated damages clause, and in determining the attorney fees.

On the appeal, we conclude that the trial court correctly determined all issues. On the cross-appeal, we conclude that the trial court correctly determined the damages. We also conclude, however, that the trial court erred in determining WMN's attorney fees. Therefore, we affirm in part and reverse in part and remand with directions.

I. BACKGROUND

This case is a fact-intensive one involving many years and numerous contracts. As summarized in Judge George A. Burns's November 30, 1995 memorandum decision on the parties' cross-motions for summary judgment:

This is a contract case in which each of the contracting parties have [sic] moved for summary judgment. Plaintiff, Wisconsin Music Network, Inc. (WMN), is engaged in the business of providing subscription music programming to commercial business establishments located in southeastern Wisconsin and northern Illinois. Defendant, Kohl's Food Stores (Kohl's), which is a subsidiary of Great Atlantic and Pacific Tea Company (A & P), is a well-known food store chain engaged in the retail sale of food and other products in southeastern Wisconsin. By their cross-motions, both parties agree that there are no material issues of fact going to the question of which party breached the contracts between them.

.

For the most part, the essential facts giving rise to this litigation are not disputed. The parties have had a business relationship spanning nearing [sic] 40 ² years prior to the commencement of this action. During that time, a series of contracts were [sic] entered into whereby the Plaintiff agreed to supply subscription music programming to those locations of Kohl's stores as would be requested from time to time. At any time that Kohl's desired services to be provided or expanded at a specific location, a written contract or amendment was signed by the parties.

.

It is undisputed that on November 1st, 1993, WMN changed the subscription music programming it provided to all of its customers, including the Defendant, Kohl's, from MUZAK to AEI music programming. In conjunction with this change of service, WMN sent a written notification to all of its customers, including each of the Kohl's store locations as well as its corporate headquarters in Milwaukee, Wisconsin.

.

In a July 1994 letter, written over seven months after WMN first noticed Kohl's of its change in music programming services, [Kohl's] advised WMN that, "We are initialling (sic) our ninety (90) days notice to cancel the contracts ."

It is undisputed that later in 1994, Kohl's formally terminated all of the agreements effective December 31st, 1994.

(Footnote added.) Rather than further elaborating the extensive factual background and procedural history, at this point we will simply acknowledge our review of the forty-six contracts and related documents at issue, and the numerous trial court decisions and orders. We will refer to additional factual details as necessary in our discussion of the arguments on appeal.

II. THE APPEAL

A. Breach

Kohl's first argues that providing MUZAK was a material term of its contracts with WMN and, therefore, that WMN materially breached the contracts when it substituted AEI for MUZAK. ³ The trial court, however, granting partial summary judgment, concluded that "the essential purpose of all of the contracts was to provide background music programming services[,] not to provide 'MUZAK service[,]' " and "that the music provided by WMN through AEI was comparable in quality and performance to WMN's previous service in providing MUZAK." The trial court also concluded that, even assuming the provision of MUZAK was a material term of the contracts, Kohl's accepted contractual modification by receiving notice of the switch to AEI and by continuing to receive the AEI programming for more than seven months before acting to terminate WMN's services.

"Upon review of a summary judgment decision, we apply the standards set forth in [§ 802.08(2), STATS.], in the same manner as the trial court." Scheunemann v. City of West Bend, 179 Wis.2d 469, 475, 507 N.W.2d 163, 165 (Ct.App.1993). Although our standard of review is de novo, "we value a trial court's decision on such questions" particularly when, as here, the trial court has carefully considered the submissions and "provided a thorough and well-reasoned decision." Id. at 475-76, 507 N.W.2d at 165.

"In order to establish a breach of contract sufficient to constitute repudiation of the entire agreement[,] the nonperformance must be substantial and the breach so serious as to destroy the essential objects of the contract." Seidling v. Unichem, Inc., 52 Wis.2d 552, 554, 191 N.W.2d 205, 207 (1971). "A party has substantially performed if he [or she] has met the essential purpose of the contract." Marshall & Ilsley Bank v. Pump, 88 Wis.2d 323, 333, 276 N.W.2d 295, 299 (1979). In determining whether a party "has substantially performed," courts should consider "the character of the promised performance, the purposes it was expected to serve and the extent to which nonperformance has defeated those purposes." Id. We conclude that the trial court correctly concluded that WMN's substitution of AEI for MUZAK did not constitute a material breach.

Kohl's argues that the specification of "MUZAK" on almost all the contracts, either in the contract terms or in the logo at the top of the contracts, established that the provision of MUZAK was a material term of the contracts. In response, WMN points out that the contracts after July 27, 1977 explicitly required that it provide not MUZAK, but rather, "its Directed Music Service and/or Hold-Line service," and that "MUZAK" was merely one of several logos on the contracts "simply advertis[ing] one of the products [WMN] sold."

We conclude that, by providing AEI, WMN continued to meet "the essential purpose[s] of the contract[s]." See id. As Kohl's concedes in its brief to this court, "[t]he music provided by AEI and MUZAK is indistinguishable to the listener." Further, as WMN points out, "Kohl's executed the last contract at issue in this case nearly five months after the change in the music programming service" and, months later, in the letter providing notice that it would be canceling the contracts, still "did not identify the switch from 'Muzak' service as the reason for its cancellation."

Kohl's argues that, despite the indistinguishable nature of the music services, the switch from MUZAK to AEI constituted a material breach because, as a result of the switch, it was unable to gain various advantages available under national contractual agreements between A & P and MUZAK. As the trial court correctly concluded, however, this argument is "entirely beside the mark when considering what transpired between the contracting parties." Regardless of whether it lost some subsequent opportunity to share in its parent company's relationship with MUZAK, Kohl's simply does not dispute WMN's assertion that "[t]here was no diminution in the value or quality of the service [WMN] was contractually obligated to provide to Kohl's." Accordingly, we agree with the trial court's conclusions regarding breach of contract. ⁴

B. Damages

Kohl's next argues that "the letter amendment to the pre-1970 contracts was unambiguous and [it] was entitled to summary judgment as to the proper termination of the pre-1970 contracts." Kohl's explains: "WMN's interpretation of the letter amendment," which, the trial court concluded, extended the renewal periods of the pre-1970 contracts from one year to ten, "substantially enhances the damages to which WMN is arguably entitled." As Kohl's elaborates:

WMN's interpretation would require Kohl's, after the termination of the agreement, to pay the monthly charge of each contract to the end of the ten year term (most of which are in 2000 or 2001) rather than to the end of the one year renewal term provided for in many of the original contracts.

Judge Christopher R. Foley concluded that the letter amendment's reference to "existing standard agreements" encompassed two agreements executed on the same day and prior to the letter amendment, establishing successive ten-year renewal periods. We conclude that the trial court was correct.

The facts are undisputed. The pre-1970 contracts provided for one-year renewal periods. ⁵ On July 23, 1970, however, WMN and Kohl's agreed to the "letter amendment" providing "that effective January 1, 1971, that existing agreements to provide Music by MUZAK service to all of Kohl's various enterprises is [sic] hereby extended and renewed for a period of ten (10) years under the same terms and conditions as evidenced by the various existing...