Tufail v. Midwest Hospitality, LLC
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Amjad Tufail leased property to Midwest Hospitality pursuant to a lease agreement. The City Board of Zoning Appeals ultimately approved Midwest's application for a special use permit to operate a Church's Chicken fast-food restaurant with a drive-through on the property but placed conditions on the permit. Midwest subsequently notified Tufail that it was no longer responsible for lease payments because Tufail made a false representation to Midwest regarding the terms of the lease. Specifically, Midwest contended that Tufail represented that Midwest may not be prevented from using the property for certain specified purposes. Tufail brought this breach of contract action against Midwest. Midwest counterclaimed for breach of contract, deceptive advertising, and unjust enrichment. The trial court ruled in favor of Tufail. The court of appeals reversed, determining that Midwest's early termination of the lease was justified by Tufail's misrepresentation. The Supreme Court reversed, holding that Tufail's representation was not false where (1) the representation did not include any use of the property as a Church's Chicken fast-food restaurant with a drive-through; and (2) the circuit court found Midwest was not prevented from using the property for the uses specified in the lease. Remanded.
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2013 WI 62 SUPREME COURT CASE NO.: COMPLETE TITLE: OF WISCONSIN 2011AP1451 Amjad T. Tufail, Plaintiff-Respondent-Petitioner, v. Midwest Hospitality, LLC, d/b/a Midwest Hospitality (WI), LLC, Defendant-Appellant, Aslam Khan, d/b/a Midwest Hospitality, Defendant. REVIEW OF A DECISION OF THE COURT OF APPEALS Reported at 344 Wis. 2d 297, 821 N.W.2d 412 (Ct. App. 2012 Unpublished) OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: SOURCE OF APPEAL: COURT: COUNTY: JUDGE: JUSTICES: CONCURRED: DISSENTED: NOT PARTICIPATING: July 10, 2013 April 11, 2013 Circuit Milwaukee William S. Pocan PROSSER, J., dissents. (Opinion filed.) ATTORNEYS: For the plaintiff-respondent-petitioner, there were briefs by Douglas W. Rose, Lora L. LoCoco, and Rose & deJong, S.C., Milwaukee, and oral argument by Douglas W. Rose. For the defendant-appellant, there was a brief by Christopher T. Hale, Andrew G. Frank, and Hale and Wagner, S.C., Milwaukee, and oral argument by Christopher T. Hale. 2013 WI 62 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2011AP1451 (L.C. No. 2009CV13848) STATE OF WISCONSIN : IN SUPREME COURT Amjad T. Tufail, Plaintiff-Respondent-Petitioner, v. FILED Midwest Hospitality, LLC, d/b/a Midwest Hospitality (WI), LLC, JUL 10, 2013 Defendant-Appellant, Diane M. Fremgen Clerk of Supreme Court Aslam Khan, d/b/a Midwest Hospitality, Defendant. REVIEW of a decision of the Court of Appeals. remanded. The judgment of the circuit court Reversed and is thereby affirmed. ¶1 ANN WALSH BRADLEY, J. This is a review of an unpublished opinion of the court of appeals, which reversed the circuit court's Tufail (Tufail). judgment awarding damages in favor of Amjad The case before us involves a contract dispute No. between the landlord, Hospitality, LLC Tufail, (Midwest and 2011AP1451 the over Hospitality) tenant, the Midwest terms of a commercial lease of property.1 ¶2 Tufail, appeals early erred the when termination petitioner, it of misrepresentation. asserts determined the lease Although he that was that Midwest justified acknowledges the court of Hospitality's by that Tufail's the lease unambiguously provides a representation that Midwest Hospitality may not be prevented from using the property for certain specified purposes, Tufail argues that operation of a fast-food restaurant with a drive-through is not among the purposes listed in the lease. He further asserts that all of the uses identified in the lease are permitted uses of the premises under the City of Milwaukee zoning code. ¶3 Additionally, Tufail contends that the representation was not false given that the City of Milwaukee granted a special use permit allowing the operation of a Church's Chicken restaurant, including the operation of a Church's Chicken fastfood restaurant with a drive-through. ¶4 any We conclude that the representation does not include use of restaurant the with property a as a drive-through. Church's Chicken Additionally, fast-food there is no indication that any of the uses identified in the lease were prevented under the City of Milwaukee zoning code. 1 Tufail v. Midwest Hospitality, LLC, No. 2011AP1451, unpublished slip op. (Ct. App. Aug. 1, 2012), reversing the circuit court, William S. Pocan, J., presiding. 2 No. ¶5 2011AP1451 We further conclude that the representation was not false because the circuit court found that Midwest Hospitality was not prevented from using the property for the uses specified in the lease, and its finding is not clearly Therefore, Tufail did not breach the lease. erroneous. Accordingly, we reverse the court of appeals and remand, and the judgment of the circuit court is thereby affirmed. I ¶6 of a The contract dispute in this case concerns the terms commercial lease for a property Avenue in Milwaukee, Wisconsin. located on West North Tufail had previously operated a restaurant called "New York Chicken" on the property before leasing the property to Midwest Hospitality.2 ¶7 After purchasing the property in 2000, Tufail submitted a request to the City of Milwaukee Development Center for a permit to operate a fast-food restaurant. His application was denied, but Tufail appealed to the City of Milwaukee Board of Zoning Appeals. On November 9, 2000, the Board of Zoning Appeals granted Tufail's request for a permit to operate a fastfood restaurant for a ten-year period. Under the terms of the permit, the New York Chicken restaurant was allowed to remain open until 4:00 a.m. ¶8 Sometime before the New York Chicken restaurant ceased operations in 2007 and again after operations ceased, Midwest 2 Tufail described the New York Chicken restaurant as "a chicken place" that was similar in nature to a Church's Chicken restaurant but with a different name. 3 No. Hospitality Church's approached Chicken Tufail restaurant and on inquired the about 2011AP1451 a Prior property. opening to negotiating the lease, Midwest Hospitality visited the former New York Chicken restaurant and conducted a walk-through of the property. It then prepared a written lease and the parties negotiated its terms. ¶9 Tufail and Midwest Hospitality formally executed the lease in March 2008. It was to be in effect for a five-year period beginning on April 1, 2008 and ending on March 31, 2013. Midwest Hospitality agreed to pay rent in the amount of $35,000 for the first year, which was to be paid in equal installments on a monthly basis. ¶10 Paragraph 5 of the lease specified the intended purposes for which the property may be used: 5. Use of Premises. Tenant may use and occupy the Premises for any lawful purposes, including, but not limited to, the retail sales, consumption, and delivery of food and beverages which shall include, but not be limited to, Chicken products, Fish products, bread products, salads, sandwiches, dessert items, promotional items, and any other items sold by any Church's Chicken store. Tufail also made representations in Paragraph 33 of the lease, which provide as follows, in relevant part: Landlord represents and warrants to Tenant that: . . . . (g) no existing restrictions, building and zoning ordinances, or other laws or requirements of any governmental authority prevent the use of the Premises for the purposes set forth in Paragraph 5 . . . . 4 No. 2011AP1451 Landlord hereby acknowledges that Tenant is relying upon all of the foregoing representations and warranties in executing this Lease and that matters so represented and warranted are material ones, and Landlord accordingly agrees that any misrepresentation or breach of such warranty will be reason for Tenant to terminate this Lease. Furthermore, the lease contained an integration clause providing that the written lease set forth all understandings between Tufail and Midwest Hospitality: This Lease, the exhibits, rider and addendum, if any, attached hereto and forming a part hereof set forth all the covenants, promises, agreements, conditions, terms, provisions and understandings by and between the Landlord and Tenant concerning the Premises. There are no other such matters, whether oral or written, between Landlord and Tenant other than are set forth herein. No change, modification, alteration, amendment, addition or deletion to this Lease shall be binding upon Landlord or Tenant unless it is in writing and executed by the person to be so charged with the same. Landlord and Tenant have negotiated the terms of this Lease; therefore, this Lease shall not be interpreted or construed against or in favor of any party. ¶11 After the lease was executed, entered the property and began renovation. Midwest Hospitality It completed some initial preparation work, but did not ultimately complete the renovations. ¶12 The renovation work ended in May 2008 when Midwest Hospitality was informed that it needed to obtain a special use permit in order to operate a fast-food restaurant with a drivethrough at the property. A special use permit is a particular type of permit required by the City of Milwaukee in order to use a property for certain purposes under the zoning code. 5 Although No. 2011AP1451 a sit-down restaurant3 is classified as a "Permitted Use," a fast-food restaurant4 is classified as a "Limited Use" requiring a special use permit. ¶13 Upon being advised of the permit requirement, Midwest Hospitality applied for a special use permit to operate a Church's Chicken fast-food restaurant with a drive-through on the property. community The groups application that opposed was met adding with a opposition Church's by Chicken restaurant to the neighborhood.5 ¶14 Zoning Despite the opposition, the City of Milwaukee Board of Appeals application for ultimately a special approved use issued on September 22, 2008. permit Midwest in a Hospitality's written decision The special use permit was issued 3 A "sit-down restaurant" is defined in the zoning code as "a restaurant where the food or beverages sold are consumed at tables located on the premises, where taking food or beverages from the premises is purely incidental, where food or beverages are normally served utilizing nondisposable containers and utensils and where the consumption of food or beverages in vehicles on the premises in which the building is located does not regularly occur . . . ." 4 A "restaurant, fast-food/carryout" is defined in the zoning code as "a restaurant other than a sit-down restaurant where the manner of preparation, packaging and serving of food or beverages encourages their consumption outside the building." 5 Midwest Hospitality in its brief describes those individuals or groups opposing its application as "neighbors, physicians, Walnut Way Conservation Corporation (a local neighborhood association) and even a Wisconsin State Representative." 6 No. 2011AP1451 subject to certain conditions, which are set forth in relevant part as follows: 10. That this use, both fast-food/carry-out and drivethrough, closes by 9:00 p.m. 11. That this Special Use is granted for a period of one (1) year, commencing with the date hereof. At trial, a Midwest Hospitality representative testified that the conditions in the special use permit changed the business's profitability forecast and rendered the operation of a Church's Chicken restaurant on the property not worth the investment: Q. And now could you have run the Church's Chicken at 1635 West North with restrictions on the evening hours to 9:00 p.m. and a new review by [the Board of Zoning Appeals] every year? A. No way. It would just be impossible. It wouldn't even be worth the investment. . . . [The 9:00 closing restriction] changed our forecast that we had in mind for the profitability of this business . . . . ¶15 After the special use permit was approved, Midwest Hospitality notified Tufail that it would stop paying rent. It sent a letter to Tufail arguing that it was not responsible for the lease payments because a special use permit was required to operate a Church's Chicken fast-food restaurant with a drivethrough. It therefore contended that Tufail made a false representation and that it was entitled to terminate the lease before the five-year term expired. ¶16 Tufail, in turn, commenced the present action. He alleged a breach of contract claim, an anticipatory breach of contract claim, and a claim for breach of the duty of good faith and fair dealing. Midwest Hospitality later pled counterclaims 7 No. 2011AP1451 alleging a breach of contract, deceptive advertising contrary to Wis. Stat. § 100.18 (2009-10), and unjust enrichment. ¶17 The circuit court presided over trial, which took place in March 2011. a three-day bench At the conclusion of the trial, the circuit court made findings of fact relating to the claims advanced majority of in the Church's pleadings. Chicken operations, but not all." It found restaurants that have the "vast drive-through Additionally, "Midwest Hospitality's application for a special use permit to use the subject property for a fast-food restaurant with a drive-through was approved by the City of Milwaukee," and it was not "prevent[ed], in any way, [] from opening a Church's Chicken restaurant at the subject property with a drive-through and as a fast food restaurant."6 ¶18 Turning to examine the text of the lease, the circuit court determined that it unambiguously failed to set forth any use as a fast-food restaurant with a drive-through. It concluded that "Midwest Hospitality was able to use the subject property for its intended use as set forth in the lease." Furthermore, it determined that "even if the subject lease was interpreted to include as an intended use a fast food restaurant with a drive-through, that intended use was allowed by the City of Milwaukee." Ultimately, there was "no evidence presented that [Tufail's] representations and warranties were not true." 6 Additional discussion of the circuit court's findings of fact may be found at ¶¶39-41, infra. 8 No. ¶19 2011AP1451 Because Tufail did not breach the lease, the circuit court concluded that Midwest Hospitality's early termination of the lease was itself a breach of contract. It proceeded to enter a judgment awarding Tufail $90,033.21 in damages. ¶20 Midwest Hospitality appealed and the court of appeals reversed the circuit court. Tufail v. Midwest Hospitality, LLC, No. 2011AP1451, unpublished slip op. (Ct. App. Aug. 1, 2012). It concluded that the "early termination of the lease was justified by Tufail's misrepresentation," stating that Tufail's representation that "no Hospitality's] zoning operation of a laws restricting Church's Chicken [Midwest fast-food restaurant on the leased premises" was "false from the moment the parties signed the lease." ¶21 Id., ¶¶1, 9. The court of appeals rejected Tufail's argument that he did not make a false representation because the lease does not set forth a use as a fast-food restaurant with a drivethrough. Id., ¶8. It concluded that by reference to "Church's Chicken," Paragraph 5 of the lease "allowed the operation as a Church's Chicken" and that it was "not necessary for the use provision in the lease to include operation of a fast-food restaurant. fast-food restaurant." additional words allowing A Church's Chicken is a Id. II ¶22 breached This the case lease, representation. requires a us written to determine contract, by whether making a Tufail false The interpretation of a contract presents a 9 No. question of conclusions appeals. law, which rendered by we determine the circuit 2011AP1451 independently court and of court the the of Ehlinger v. Hauser, 2010 WI 54, ¶47, 325 Wis. 2d 287, ¶47, 785 N.W.2d 328. ¶23 Here, the circuit court presided bench trial and made findings of fact. court's findings of fact unless they over a three-day We accept the circuit are clearly erroneous. Phelps v. Physicians Ins. Co. of Wisconsin, Inc., 2009 WI 74, ¶34, 319 Wis. 2d 1, 768 N.W.2d 615. III ¶24 The sole question presented on review is whether Tufail breached the lease by making a false representation. lease is a written contract and our analysis is The controlled entirely by well-established canons of contract interpretation. Accordingly, as a preface to addressing the question presented, it is helpful to review those basic principles of contract interpretation relevant to the issue before us. ¶25 to the Contract interpretation generally seeks to give effect parties' intentions. Network, 2004 WI 28, However, "subjective ¶22, intent Seitzinger 270 is Wis. not 2d the v. Community 1, 676 be-all Health N.W.2d and 426. end-all." Kernz v. J.L. French Corp., 2003 WI App 140, ¶9, 266 Wis. 2d 124, 667 N.W.2d 751. Rather, "unambiguous contract language controls contract interpretation." ¶26 Where the terms of Id. a contract are clear and unambiguous, we construe the contract according to its literal 10 No. terms. 2011AP1451 Maryland Arms Ltd. Partnership v. Connell, 2010 WI 64, ¶23, 326 Wis. 2d 300, 786 N.W.2d 15 (quoting Gorton v. Hostak, Henzl & Bichler, S.C., 217 Wis. 2d 493, 506, 577 N.W.2d 617 (1998)). "We presume the parties' intent is evidenced by the words they chose, if those words are unambiguous." Kernz, 266 Wis. 2d 124, ¶9. ¶27 If the terms of the contract are ambiguous, evidence extrinsic to the contract itself may be used to determine the parties' intent. Seitzinger, 270 Wis. 2d 1, ¶22. "A contract provision is ambiguous if it is fairly susceptible of more than one construction." Mgm't Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158, 177, 557 N.W.2d 67 (1996). ¶28 Contract language is construed according to its plain or ordinary meaning, Huml v. Vlazny, 2006 WI 87, ¶52, 293 Wis. 2d 169, person 716 N.W.2d would circumstances." 807, understand consistent the with words to "what a mean Seitzinger, 270 Wis. 2d 1, ¶22. reasonable under the For a business contract, that is "the manner that it would be understood by persons in the business to which the contract relates." Columbia Propane, L.P. v. Wisconsin Gas Co., 2003 WI 38, ¶12, 261 Wis. 2d 70, 661 N.W.2d 776. ¶29 Id., ¶12. The court construes contracts "as they are written." Ultimately, "the office of judicial construction is not to make contracts . . . but to determine what the parties contracted to do." Marion v. Orson's Camera Centers, Inc., 29 Wis. 138 2d 339, 345, N.W.2d 11 733 (1966) (quoting Wisconsin No. 2011AP1451 Marine & Fire Ins. Co. Bank v. Wilkin, 95 Wis. 111, 115, 69 N.W. 354 (1897). ¶30 Additionally, as this court recently stated, courts may not consider evidence of prior or contemporaneous oral or written agreements between the parties if a contract is fully integrated: A contract that represents the final and complete expression of the parties' agreement is considered fully "integrated." If the contract is integrated, absent the existence of fraud, duress, or mutual mistake, the court construing the contract may not consider evidence of any prior or contemporaneous oral or written agreement between the parties. Town Bank v. City Real Estate Development, LLC, 2010 WI 134, ¶37, 330 Wis. 2d 340, 793 N.W.2d 476. If a contract contains "an clause, unambiguous merger or integration the court is barred from considering evidence of any prior or contemporaneous understandings or agreements between the parties, even as to the issue of integration." Id., ¶39; Peterson v. Cornerstone Property Development, LLC, 2006 WI App 132, ¶31, 294 Wis. 2d 800, 720 N.W.2d 716 (quoting Ziegler Co. v. Rexnord, Inc., 139 Wis. 2d 593, 608-09 n.11, 407 N.W.2d 873 (1987)) (courts may not consider extrinsic evidence to "vary or contradict the terms of a writing" when the contract is fully integrated). ¶31 In this case, contains an integration as quoted clause. above, It the states lease that at issue the entire agreement between the parties has been reduced to writing. plainly states without qualification that "all" of It the understandings between the parties are set forth in the lease 12 No. and any attached exhibits, riders, or addendums. 2011AP1451 Therefore, we are guided by the text of the lease, not by any extrinsic, unwritten understandings that may have existed between the parties.7 Id.; Peterson, 294 Wis. 2d 800, ¶31 (quoting Ziegler Co., 139 Wis. 2d at 608-09 n.11). ¶32 Having reviewed the relevant canons of contract interpretation, we turn now to address the question of whether Tufail breached the lease by making a false representation. Our inquiry hinges first on the meaning of Tufail's representation as it is written representation is in the false lease, under the and second, facts of on this whether the case. The representation states as follows: Landlord represents and warrants to Tenant that: . . . . 7 Contrary to the unambiguous integration clause, Midwest Hospitality urges us to consider the parties' unwritten "understanding of Church's Chicken" as a fast-food restaurant. It contends that "Church's Chicken was understood to be a fastfood restaurant by all parties," and that understanding is "inherent in interpreting [the lease's references to] 'Church's Chicken' . . . regardless of the absence of 'fast-food' in the Use of Premises provision." In effect, it contends that "there is no such thing" as a sit-down Church's Chicken restaurant. Here, however, the parties have expressly stated that "[t]his Lease . . . set[s] forth all the . . . understandings by and between the Landlord and Tenant concerning the Premises." In light of the parties' unambiguous statement that no additional understandings existed between them concerning the lease, we decline to consider Midwest Hospitality's "understanding of Church's Chicken" as a particular type of fast-food restaurant when such an understanding is not presented in the text of the lease. 13 No. 2011AP1451 (g) no existing restrictions, building and zoning ordinances, or other laws or requirements of any governmental authority prevent the use of the Premises for the purposes set forth in Paragraph 5 . . . . Paragraph 5 of the lease, in turn, provides that: 5. Use of Premises. Tenant may use and occupy the Premises for any lawful purpose, including, but not limited to, the retail sales, consumption, and delivery of food and beverages which shall include, but not be limited to, Chicken products, Fish products, bread products, salads, sandwiches, dessert items, promotional items, and any other items sold by any Church's Chicken store. ¶33 Tufail provides that acknowledges Midwest that Hospitality the may lease not be unambiguously prevented using the property for certain specified purposes. from He advances, however, that a fast-food restaurant with a drive-through is not among the "purposes set forth in Paragraph 5." asserts that permitted uses zoning code. use all permit of of the the uses identified premises under in the Furthermore, he Paragraph City of 5 are Milwaukee Given that the City of Milwaukee granted a special allowing the operation of a Church's Chicken restaurant, including the operation of a Church's Chicken fastfood restaurant with a drive-through, he contends that the representation was not false. ¶34 Midwest Hospitality likewise acknowledges the unambiguous text of the lease, but further argues that the lease 14 No. 2011AP1451 incorporates the fact that "Church's Chicken was understood to be a fast-food restaurant by all parties."8 ¶35 We construe the contract as it is clearly written. Midwest Hospitality may not be prevented from using the property for the purposes specifically identified in Paragraph 5. Paragraph 5 then identifies the various products which may be consumed, sold, distributed, or otherwise used on the property. ¶36 Among the products identified in Paragraph 5 is counted "any other items sold by any Church's Chicken store." Midwest Hospitality argues, and the court of appeals concluded, that the reference to a "Church's Chicken" in Paragraph 5 requires that a Church's Chicken fast-food restaurant with a drive-through may be operated on the property. We reject that argument. 8 Tufail states in his brief that "[t]he lease is unambiguous," while Midwest Hospitality argues that Tufail "unambiguously warrantied that there were no zoning restrictions preventing . . . the contemplated use of the Property." Their respective "unambiguous" constructions of the lease diverge greatly in scope. That the parties have construed the representation differently does not alone render it ambiguous. Ambiguity is found where a contract "is fairly susceptible of more than one construction," not necessarily where different constructions are argued. Mgm't Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158, 177, 557 N.W.2d 67 (1996). We must interpret the lease "as it stands, even though the parties may have placed a different construction on it." Cernohorsky v. Northern Liquid Gas Co., 268 Wis. 586, 593, 68 N.W.2d 429 (1955); see also Brew City Redevelopment Group, LLC v. The Ferchill Group, 2006 WI App 39, ¶3, 289 Wis. 2d 795, 714 N.W.2d 582. 15 No. ¶37 A mere reference to products used by 2011AP1451 a "Church's Chicken store" does not represent that Midwest Hospitality may operate a Church's Chicken fast-food restaurant with a drivethrough. may not specified The lease plainly provides that Midwest Hospitality be prevented purposes. requirement that the from using Notably the absent property may property from be that used as for certain, list a is any fast-food restaurant with a drive-through.9 ¶38 Accordingly, we conclude that Tufail's representation requires simply that Midwest Hospitality may not be prevented from using the property for the purposes specifically identified in Paragraph 5. Having ascertained the plain meaning of the representation, all that remains is to determine whether the representation is false under these facts. 9 Likewise, the lease does not set forth any requirements regarding the conditions specified in the special use permit relating to the hours of operation or the time period in which any permit must be renewed. Despite the lack of reference to a fast-food restaurant or to the conditions set forth in the special use permit, the dissent interprets the lease to mean that Tufail "warrant[ied] that there were no zoning requirements with which Midwest had to comply in order to sell Church's Chicken products in a fast-food restaurant." Dissent, ¶78; see also dissent, ¶¶94, 101. In relying on words that cannot be found in the lease, the dissent appears to rewrite it. The representation in the lease simply states that no existing restrictions, building and zoning ordinances, or other laws or requirements prevent Midwest Hospitality from using the property for the purposes identified in Paragraph 5. It focuses on whether Midwest Hospitality is prevented from using the property for certain purposes, not on whether Midwest Hospitality had to comply with various governmental regulations. 16 No. ¶39 In this case, the circuit court 2011AP1451 made extensive findings of fact at the conclusion of a three-day bench trial. It found that "[t]he vast majority of Church's Chicken restaurants have drive-through operations, but not all." There was "no evidence" showing that Tufail knew about the many other Church's Chicken restaurants, whether or not they had drivethrough operations, or about Church's Chicken franchise requirements such as closing times. ¶40 The circuit court also found that the parties "entered into a written lease in March of 2008," which was, by its own terms, to last for a five-year period. signed that and a Midwest special Hospitality use permit took was After the lease was occupancy, required from it discovered the City of Milwaukee "so that it could have a drive-through as part of the restaurant." ¶41 Furthermore, the circuit court found that "Midwest Hospitality's application for a special use permit to use the subject property for a fast food restaurant with a drive-through was approved by the City of Milwaukee." Although it observed that the approval "was not exactly as Midwest Hospitality may have wanted" due to the conditions in the special use permit, it found that Midwest Hospitality was not prevented, "in any way, [] from opening a Church's Chicken restaurant at the subject property." The special use permit allowed operation "with a drive-through and as a fast food restaurant": But the special use permit as approved by the City of Milwaukee did not prevent, in any way, Midwest 17 No. 2011AP1451 Hospitality from opening a Church's Chicken restaurant at the subject property with a drive-through and as a fast food restaurant. Therefore, the Court finds that even if the subject lease was interpreted to include as an intended use a fast food restaurant with a drive-through, that intended use was allowed by the City of Milwaukee. The representations and warranties of Mr. Tufail contained in the lease itself are for the intended use as specifically set forth in the lease in paragraph five, and there was no evidence presented that those representations and warranties were not true. Accordingly, the circuit court determined that "the claim that Mr. Tufail made misrepresentations was not established." ¶42 No one argues that the findings of the circuit court, to the extent that they set forth the dispositive facts of this case, are clearly erroneous. Phelps, 319 Wis. 2d 1, ¶34. likewise that see erroneous. no indication its findings are We clearly Therefore, we are bound to accept those findings, including the circuit court's finding that Midwest Hospitality was not in fact prevented from opening a Church's Chicken restaurant at the subject property. ¶43 Given the lack of any reference in the lease to a fast-food restaurant with a drive-through, there is no indication in the facts that the uses of the property, as they are stated in Paragraph 5 of the lease, were prevented. There is no indication that any of the uses specified in Paragraph 5 cannot be performed at a sit-down restaurant, which permitted use under the City of Milwaukee zoning code. the fact that Midwest Hospitality was granted a is a Rather, special use permit specifically allowing use of the property as a Church's Chicken restaurant soundly refutes 18 the premise that Midwest No. 2011AP1451 Hospitality was prevented from using the property for any of the purposes stated in Paragraph 5. ¶44 We further observe that even if we accepted Midwest Hospitality's understanding argument of that Church's there Chicken" as is a an "undisputed fast-food restaurant with a drive-through and that the representation incorporates that "undisputed understanding," the representation is still not false under these facts. when the special use The circuit court expressly found that permit was granted by the City of Milwaukee, Midwest Hospitality was allowed to operate a Church's Chicken fast-food restaurant with a drive-through. ¶45 The facts of this case indicate that although Midwest Hospitality was not prevented from using the property for the purposes identified in Paragraph 5 of the lease, those purposes alone did not necessarily ensure that the proposed Church's Chicken restaurant was worth Midwest Hospitality's investment. However, as the circuit court observed, "[t]here was nothing to prevent Midwest Hospitality from putting contingencies in the lease about hours of operation, a drive-through or anything else deemed necessary. It did not." to which the parties agreed. We interpret only the contract Marion, 29 Wis. 2d at 345. ¶46 Ultimately, the result of this case is compelled by basic principles of contract interpretation and by the circuit court's findings of fact following a three-day bench trial. Tufail explicitly represented in paragraph 33 of the lease that 19 No. Midwest Hospitality would not be prevented from 2011AP1451 using the property for the listed purposes. ¶47 support The circuit court found that there was no evidence to the argument Additionally, prevented "in it that found any the that way" representations Midwest from were Hospitality opening a untrue. was Church's not Chicken restaurant at the leased property. ¢ "The representations and warranties of Mr. Tufail contained in the lease itself are for the intended use as specifically set forth in the lease in paragraph five, and there was no evidence presented that those representations and warranties were not true." ¢ "[T]he special use permit as approved by the City of Milwaukee did not prevent, in any way, Midwest Hospitality from opening a Church's Chicken restaurant at the subject property with a drive-through and as a fast food restaurant." ¶48 Importantly, the circuit court specifically found that even if the lease was interpreted to include uses not explicitly listed in its terms uses as a fast-food restaurant with a drive-through that the evidence showed that such uses were not prevented. ¢ "Therefore, the Court finds that even if the subject lease was interpreted to include as an intended use a fast food restaurant with a drive-through, intended use was allowed by the City of Milwaukee." 20 that No. ¶49 2011AP1451 There has been no showing that the circuit court's dispositive findings of fact are clearly erroneous. has even attempted to advance such an argument. No party Accordingly, we conclude that Tufail did not breach the lease by making a false representation. IV ¶50 In sum, we conclude that the representation does not include any use of the property as a Church's Chicken fast-food restaurant with a drive-through. Additionally, there is no indication that any of the uses identified in the lease were prevented under the City of Milwaukee zoning code. ¶51 We further conclude that the representation was not false because the circuit court found that Midwest Hospitality was not prevented from using the property for the uses specified in the lease, and its finding is not clearly Therefore, Tufail did not breach the lease. erroneous. Accordingly, we reverse the court of appeals and remand, and the judgment of the circuit court is thereby affirmed. By the Court. The reversed and remanded. decision of the court of appeals is The judgment of the circuit court is thereby affirmed. 21 No. ¶52 DAVID T. PROSSER, J. (dissenting). 2011AP1451.dtp Amjad Tufail (Tufail) and Midwest Hospitality, LLC (Midwest) entered into a lease in which Tufail unambiguously warranted that there were no local ordinances that would prevent Midwest from operating a fast-food Church's Chicken restaurant on Tufail's property. majority opinion concludes that Tufail did not breach The this warranty because the lease did not define "Church's Chicken" as a fast-food restaurant. However, the only reasonable meaning of "Church's Chicken" is a fast-food restaurant. ¶53 Even if the lease were deemed ambiguous, the extrinsic evidence demonstrates that Church's Chicken is a fast-food restaurant, and both parties were aware of that fact when they signed the lease. Tufail's warranty that no ordinances prevented the operation of a Church's Chicken was false because the Milwaukee zoning code requires any freestanding fast-food restaurant to have a special use permit. Therefore, Tufail breached the lease. ¶54 The majority opinion employs a sterile, technical interpretation of the lease that abandons the basic principles of contract interpretation. When interpreting a contract, the court's goal has always been to effect the intent of the parties as it is expressed importance of in upholding the language this because people in business of principle use the contract. cannot contracts to be try The overstated to minimize uncertainty in relation to their reasonable expectations. ¶55 Parties generally economic interests. enter agreements to advance their Risks, of course, are inevitable. 1 But if No. 2011AP1451.dtp one party is able to frustrate the basic purpose of a contract through an unreasonable interpretation of its terms and commitments, instability will follow, and we will be left with a system of law that rewards the more cunning party and disregards mutual intent. Because the majority opinion supports an implausible interpretation of the lease contract in this case, I must respectfully dissent. I ¶56 In 2000 Tufail purchased a property with a freestanding building located at 1635 West North Avenue (the Property) in Milwaukee. Chicken fast-food The Property was operated as a New York restaurant, and operation until the fall of 2007. been a Church's Chicken. Tufail continued that The Property had formerly In fact, Tufail later testified that "it was an old design Church's Chicken which [he] was running." Tufail was not inexperienced in the restaurant business; he owned four other restaurants. ¶57 When he acquired the Property in 2000, Tufail wanted to continue operating the fast-food restaurant. denied by a city plan examiner. His request was Tufail was told that a fast- food restaurant was a special use under the zoning code and he would need to obtain a special use permit. He eventually acquired a ten-year special use permit from the Milwaukee Board of Zoning Appeals (BOZA). When Tufail temporarily closed the restaurant in or about October of 2007, he had approximately three years left on his ten-year special use permit before it would have to be renewed. 2 No. ¶58 Midwest approached Tufail about 2011AP1451.dtp opening a Church's Chicken restaurant at the Property both before and after Tufail shut down operation of his New York Chicken. Midwest is a corporate entity that operates Church's Chicken restaurants and is owned by Aslam Khan (Khan). Munshi Ali, a Church's Chicken manager at a different location, approached Tufail four or five times and stated that Khan wanted to lease Tufail's property to operate a Church's Chicken. Property Chicken. with several Khan stated Khan himself eventually visited the other that people he affiliated owned many with Church's Church's Chicken restaurants in the Midwest and said that Tufail's property value would go up if Church's Chicken moved in. ¶59 Two or three days after Khan visited the Property, Khan sent an agent, Tariq Malik (Malik), to Tufail with a lease drafted by Midwest. Malik and Tufail went to Tufail's attorney, who made some changes to the lease. However, the attorney did not alter Paragraph 5, which contained the provisions regarding the use of the premises. At some point before he signed the lease, Tufail visited a Church's Chicken at another location to see how Midwest would alter the Property. ¶60 Tufail and Midwest entered into a five-year lease (the Lease) for the Property in March 2008. The "Use of Premises" section in Paragraph 5 of the Lease stated: Tenant may use and occupy the Premises for any lawful purpose, including, but not limited to, the retail sales, consumption, and delivery of food and beverages which shall include, but not be limited to, Chicken products, Fish products, bread products, salads, sandwiches, dessert items, promotional items, 3 No. and any store. other ¶61 "Representations The items sold by and any 2011AP1451.dtp Church's Warranties" Chicken section of the Lease, in Paragraph 33(g), stated that the landlord represents and warrants that "no existing restrictions, building and zoning ordinances, or other laws or requirements of any governmental authority prevent the use of the Premises for the purposes set forth in Paragraph 5." ¶62 The Lease "Representations also and stated at Warranties" the end section of that the the representations and warranties "are material ones, and Landlord accordingly agrees that any misrepresentation or breach of such warranty will be reason for Tenant to terminate this Lease." ¶63 Regarding interpretation of these provisions, Paragraph 38 of the Lease said, "This Lease shall be interpreted to the broadest extent possible to give full and fair meaning to the intentions of the parties hereto." (Emphasis added.) ¶64 Midwest entered the Property and began remodeling it in May 2008. substantial According to Midwest, the Property required a amount of cleaning and repair work. However, Midwest suspended the renovation when it was denied a building permit. ¶65 When Midwest applied for that permit, it was told that it would have to apply for a special use permit to operate a fast-food restaurant in a freestanding building. The examiner for the City, Barbara Jones, stated in her denial letter that the Milwaukee zoning code did not allow the Property to be used as a fast-food restaurant. Thus, Midwest unexpectedly learned 4 No. 2011AP1451.dtp that it was faced with the same obstacles with zoning ordinances that Tufail had faced roughly eight years earlier. What Midwest did not know was that Tufail's business had been cited for 21 health code violations by the city in 2007 and had antagonized a lot of nearby residents. ¶66 On May 29, 2008, Midwest applied for a special use permit to operate a fast-food restaurant with a drive-through within 150 feet of residential property. Four sections of the City of Milwaukee zoning code were in play. Section 295-203- 9.f. defines a sit-down restaurant as: a restaurant where the food or beverages sold are consumed at tables located on the premises, where taking food or beverages from the premises is purely incidental, where food or beverages are normally served utilizing nondisposable containers and utensils and where the consumption of food or beverages in vehicles on the premises in which the building is located does not regularly occur, or where the restaurant is located within a building containing more than one principal use other than another restaurant. This term does not include a tavern. ¶67 Section 295-203-9.g. defines a fast-food or carry-out restaurant as "a restaurant other than a sit-down restaurant where the manner of preparation, packaging and serving of food or beverages encourages their consumption outside the building. This term does not include a tavern." Section 295-603-2.o. requires that a fast-food restaurant be in a building containing at least one permitted use, or the restaurant must get a special use permit. Finally, Section 295-603-2.j.3. states that a drive-through may not be located within 150 feet of residential property. 5 No. ¶68 Midwest's intended use of the 2011AP1451.dtp Property was inconsistent with the definition of a sit-down restaurant. The city the immediately recognized that Church's Chicken, like prior New York Chicken, is a fast-food restaurant and it would likely expect to use the existing drive-through. a special use permit, operating a Church's Thus, without Chicken on the Property would violate two separate zoning code provisions: the prohibition against operating a freestanding fast-food restaurant and the prohibition against having a drive-through within 150 feet of residential property. ¶69 signed In September 2008, approximately six months after it the operate different Lease, the Midwest obtained restaurant. conditions imposed on Tufail. on a However, Midwest special the from city the use permit imposed conditions to very it had Tufail obtained a ten-year permit; Midwest received a one-year permit with no assurance of renewal. was permitted to operate until 4:00 a.m. Tufail Midwest could operate its Church's Chicken until only 9:00 p.m. The city's permit also required Church's Chicken to pick up all garbage within a one-block radius of the Property. The president of Falcon Holdings, which operates Midwest, testified that it would be too expensive to take care of all the garbage within a block of the Property and that a Church's Chicken would be less profitable if it had to close at 9:00 p.m. ¶70 The BOZA chairman stated that Midwest faced a difficult decision whether to invest "hundreds of thousands of dollars for a one year approval by this board. 6 There is no No. guarantee of an approval after one year." appeared to share the chairman's 2011AP1451.dtp The local community concern, and many city residents opposed the special use permit. ¶71 Due to the long delay in obtaining any special use permit and then the severe restrictions added to the permit, Midwest stopped paying rent. II ¶72 The plain language of the Lease unambiguously demonstrates that the parties intended for Midwest to operate a Church's court's Chicken goal in fast-food restaurant on contract interpretation the Property. The is to the discern intentions of the parties as expressed in the language of the contract. Town Bank v. City Real Estate Dev., LLC, 2010 WI 134, ¶33, 330 Wis. 2d 340, 793 N.W.2d 476. The court will look at the ordinary meaning of the contractual language, and if it is unambiguous, the contractual interpretation remains within the four corners of the contract. Id. A contract is ambiguous when "it is susceptible to more than one reasonable interpretation." Id. ¶73 The broad language in the Lease unambiguously suggests that Midwest could have operated almost any lawful business on the Property. Paragraph 5 of the Lease states that "Tenant may use and occupy the Premises for any lawful purpose . . . ." It was not unreasonable for Midwest to assume that it could operate a freestanding fast-food restaurant because that is a seemingly lawful purpose and because New York Chicken had operated on the property in that manner. Moreover, the Lease quickly narrows 7 No. its intent by adding the words 2011AP1451.dtp "including . . . the retail sales, consumption, and delivery of food and beverages." Then the Lease pinpoints its objective by naming "Chicken products, Fish products, items, bread promotional products, items, and salads, any sandwiches, dessert items by other sold any Church's Chicken store." (Emphasis added.) ¶74 The Lease in this case is unambiguous because it uses "Church's Chicken" according to its ordinary meaning: a fastfood restaurant.1 The Lease states that Midwest may use the Property for "retail sales, consumption, and delivery of food and beverages which shall include . . . Chicken products . . . and any other items sold by any Church's Chicken store." ¶75 Courts must interpret a contract "in the manner that it would be understood by persons in the business to which the contract relates." Columbia Propane, L.P. v. Wis. Gas Co., 2003 WI 38, ¶12, 261 Wis. 2d 70, 661 N.W.2d 776.2 In the restaurant business, "Church s Chicken is a highly recognized brand name in the Quick Service Restaurant sector and is one of the largest quick-service chicken concepts in the [w]orld." Church's Chicken Celebrates Its Southern Hospitality with Kick Off of New 1 Interestingly, the first Church's Chicken restaurant was called "Church's Fried Chicken-To-Go." One Man, One Chicken Legacy, Churchs.com, http://www.churchs.com/about.html (last visited June 25, 2013). Church's Chicken has always been a fast-food restaurant. 2 See also N. Gate Corp. v. Nat'l Food Stores, 30 Wis. 2d 317, 321, 140 N.W.2d 744 (1966); All-Star Ins. Corp. v. APS Ins. Agency, Inc., 112 Wis. 2d 329, 333, 332 N.W.2d 828 (Ct. App. 1983); 17A Am. Jur. 2d Contracts § 337 (2004). 8 No. Advertising Campaign, (Nov. 2011AP1451.dtp 3, 2011), http://www.businesswire.com/news/home/20111103005028/en/Church%E 2%80%99s-Chicken-Celebrates-Southern-Hospitality-KickAdvertising. Because of Church's Chicken's "highly recognized brand name," the court of appeals had no trouble asserting that, "[i]t is undisputed here that a Church's Chicken is a fast-food restaurant. It was not necessary for the use provision in the lease to include additional words allowing operation of a fastfood restaurant. A Church's Chicken is a fast-food restaurant." Tufail v. Midwest Hospitality, LLC, No. 2011AP1451, unpublished slip op., ¶8 (Wis. Ct. App. Aug. 1, 2012). ¶76 Even though Tufail is correct that not everyone would understand what a Church's Chicken is, its reputation in the restaurant industry demonstrates that those would know that it is a fast-food restaurant.3 in the business Since the only reasonable meaning of "Church's Chicken" is a fast-food chicken restaurant, a paragraph that allows for the sale of "items sold by any Church's Chicken store" unambiguously contemplates the operation of the Property as a fast-food restaurant. ¶77 Furthermore, the Lease explicitly calls for broad interpretation to avoid an unfair reading of the contract and to "give full and fair meaning to the intentions of the parties." It would not be reasonable to define "Church's Chicken" in a way that contradicts argues that its "Church's true definition. Chicken" 3 must Midwest refer to persuasively a fast-food At trial, Tufail's own expert understood that a Church's Chicken is a fast-food restaurant and that Midwest intended to operate a freestanding Church's Chicken on the Property. 9 No. 2011AP1451.dtp restaurant because all Church's Chicken restaurants are fastfood restaurants. Since the zoning code did not permit a fast- food restaurant on the Property and Church's Chicken is a fastfood restaurant, Tufail's warranty that no ordinances prevented the operation of a Church's Chicken on the Property was false.4 ¶78 The problem with Tufail's warranty is apparent when compared to another Lease provision. Paragraph 24(b) says, "If allowed by local governmental authorities, Tenant shall have the right to erect and maintain exterior free standing sign(s) in the location cooperate forth on with Tenant fully governmental Tenant's set permits, sign(s)." Exhibit licenses, This 'A'. in Landlord obtaining approvals paragraph is all and clear agrees required variances that to the for tenant might need to get government permits or variances in order to erect the desired signage. In contrast, Paragraph 33(g) provides a broad warranty that there are no "requirements of any governmental authority" that would prevent the tenant from using the Property as specified in Paragraph 5. Tufail was not forced to embrace the broad warranty in Paragraph 33(g). He could have made a qualified commitment as appears in Paragraph 24(b), or he could have forthrightly disclosed the zoning regulations and made the Lease contingent upon receipt of a satisfactory special 4 The majority opinion observes that the circuit court made a finding of fact that not all Church's Chicken restaurants have a drive-through. Majority op., ¶39. However, the drive-through issue is a red herring. Church's Chicken is undeniably a fastfood restaurant chain. The zoning code prohibited the operation of a freestanding fast-food restaurant regardless of whether that restaurant had a drive-through. Tufail warranted against that obstacle. 10 No. use permit. 2011AP1451.dtp However, because Tufail warranted that there were no zoning requirements with which Midwest had to comply in order to sell Church's Chicken products in a fast-food restaurant, Tufail must be held to his promise. III ¶79 Tufail's operation of a "Church's Chicken" warranty Church's is that no restrictions prevent Chicken is unambiguous, but deemed ambiguous, the parol the even if evidence demonstrates that the parties understood Church's Chicken to be a fast-food restaurant. If a contract is ambiguous, the court may use parol evidence to explain the ambiguous term. Bank, 330 Wis. 2d 340, ¶38. Tufail admitted that Town "[t]he intended purpose of the Lease, as represented by Midwest, was for it to open a new Church's Chicken restaurant at the Leased Premises." Tufail had to know that Church's Chicken is a fast- food restaurant because his New York Chicken restaurant was an old Church's Chicken. Furthermore, Tufail saw that Church's Chicken is a fast-food restaurant when he visited one before signing the Lease. ¶80 Tufail's visit is important because the parties' course of dealings can clarify contractual ambiguities. See Martinson v. Brooks Equip. Leasing, Inc., 36 Wis. 2d 209, 219, 152 N.W.2d 849 (1967). In Martinson, the contract for the construction of a pool was ambiguous because it incorporated plans for a pool but did not explicitly incorporate plans for a filter system. Id. at 218-19. However, the evidence showed that the appellant knew that the filter system was part of the 11 No. plans for the pool. Id. 2011AP1451.dtp Furthermore, because the plans for the pool included the plans for the filter system and the contractor used a single set of plans to construct both, the plans for the filter system were part of the contract. Id. at 219-20. The course of dealings in the present case demonstrates that Tufail knew what the term "Church's Chicken" meant. He had visited another Church's Chicken fast-food restaurant to see how Midwest would alter the Property. knew and intended This visit shows that the parties that Midwest would operate a fast-food restaurant on the Property. ¶81 because Tufail's interpretation of the Lease is also suspect it would meaningless, and render courts portions superfluous. the inclusion "Church's Chicken" interpreting avoid of contracts to make See DeWitt Ross & Stevens, S.C. v. Galaxy Gaming & Racing Ltd. P'ship, 2004 WI 92, ¶44, 273 Wis. 2d 577, 682 N.W.2d 839. Galaxy under payments, but In DeWitt, a law firm provided services to a contract Galaxy that had no charged assets interest or income. on untimely Id., ¶7. Galaxy's owner guaranteed full payment, but the guaranty was silent as to whether the owner would pay interest. Id., ¶43. It would have been meaningless to include the interest clause in the contract with Galaxy, a company with no assets, unless the owner's guaranty for full payment included a guaranty to pay the interest. Id., ¶¶46-47. Similarly, it would make little sense for the Lease to mention "Church's Chicken" four times if that term could refer to any type of restaurant. suggest that since the Lease 12 does not Tufail seems to explicitly define No. 2011AP1451.dtp "Church's Chicken," no warranty would be violated if a Church's Chicken could open and operate under any circumstance. However, the "Church's Chicken" term is useful only if it refers to the Church's Chicken fast-food restaurants that actually exist. IV ¶82 Tufail. After a trial, the circuit court ruled in favor of In so doing, the court appears to have overlooked or discounted critical testimony, problem to focus on the minimized drive-through, the fast-food shifted the zoning blame to Midwest for failing to engage in due diligence, and disregarded an explicit provision in the Lease. ¶83 property From to restaurant. the open outset, and Midwest operate Paragraph 33(g) a of sought to Church's the lease Chicken Lease was Tufail's fast-food designed to minimize the hazard of an existing zoning barrier against the operation of a traditional Church's Chicken restaurant and to provide an escape clause from a five-year lease if an existing barrier unexpectedly materialized. Midwest no doubt wanted a drive-through which is often, if not always, a component of a fast-food restaurant. If a drive-through were the sole or major sticking point, the specific representations in the Lease might present a different case. ¶84 issue. The circuit court recast the facts and narrowed the The circuit court found that "there was no evidence presented that Tufail knew about the many other Church's Chicken restaurants, whether or not they had drive-through operations or other Church's Chicken franchise requirements." 13 No. ¶85 2011AP1451.dtp In my view, the statement about Tufail's knowledge is clearly erroneous, and the court's emphasis on the drive-through problem fails to deal with Midwest's legal argument that there were two zoning problems they had to face, contrary to Tufail's warranty. ¶86 As to his knowledge, Tufail testified that the restaurant he bought in 2000 was a drive-through and carry-out fast-food restaurant: Q All right. And when you Property], was it an ongoing restaurant? A It was chicken place. Q a running bought restaurant. It [the was a What was the name of it then? A At that time it was a New York Chicken. But basically it was a Church's Chicken place closed down. And the [previous owner], he bought it from Church's Chicken and put the name They didn't let him use their Church's Chicken. They So he put a New York Chicken [there]. (Emphasis added.) ¶87 Tufail acknowledged that "it Church's Chicken which [he] was running." was an old design (Emphasis added.) He said that he used Church's Chicken equipment in his New York Chicken equipment and for suggested its new that Church's operation. Chicken Tufail use the visited same another Church's Chicken in Milwaukee, and he discussed the new interior and exterior alterations that Midwest intended to make. He expected that Midwest would make his property look like other Church's Chicken restaurants. He testified that the purpose of 14 No. 2011AP1451.dtp the Lease "as it was presented by Midwest [was] to open a new Church's Chicken restaurant at the leased premises." ¶88 In March 2007, before the Lease was fully negotiated and signed, Tufail was visited by Khan who oversees more than 100 Church's Chicken franchises in the Midwest. The circuit court and the majority appear to believe that Khan and Tufail never discussed what a Church's Chicken restaurant is all about, so that Tufail really did not know. This view of the facts is unrealistic is Tufail's if not incredible acknowledgment at and trial that directly he contrary understood to Midwest could not operate the Property without a special use permit. ¶89 In short, the court's finding that Tufail knew nothing about other Church's Chicken restaurants cannot be squared with the record. ¶90 The court made another questionable finding of fact. The court found that, "[i]n early 2008, after the [New York Chicken] restaurant had closed, Tufail was then approached by representatives of Midwest Hospitality who sought to lease the subject property." (Emphasis added.) the record, writes in his brief: about opening prior to and a Church's immediately Tufail's attorney, citing "Midwest had approached Tufail Chicken after restaurant Tufail at the temporarily location ceased operations of his chicken restaurant." (Emphasis added.) In short, Tufail's attorney corrected the circuit court's findings of fact. 15 No. ¶91 The court of appeals in its 2011AP1451.dtp recitation of facts simply disregarded the circuit court's mistaken "findings" on both matters discussed above. ¶92 As noted, the circuit court found that "there was no evidence that Tufail knew . . . whether other Church's Chicken restaurants had drive-through operations." It also found that "the vast majority of Church's Chicken restaurants have drivethrough operations, but not all." (Emphasis added.) The latter finding is correct, but it is seriously incomplete. The court made no finding that there was any Church's Chicken restaurant that was not a fast-food restaurant. The court also made no finding that there was any freestanding Church's Chicken that did not have a drive-through operation. More important for purposes of this case is that the Property had been operated as a freestanding fast-food restaurant and was intended by Midwest to be operated restaurant. as a freestanding Church's Chicken fast-food The point is that the Property's operation as a fast-food restaurant was not allowed by the Milwaukee zoning code without a special use permit. ¶93 fact Although about the Church's circuit Chicken Tufail warranted otherwise. court made sparse restaurants, findings about Midwest's lack of due diligence. it findings made lengthy The court said: Brian Parrish is a commercial real estate broker who testified about industry custom and practice relating to commercial leases. Parrish testified that prior to entering into commercial leases parties routinely perform due diligence and described that as the period of time prior to the occupant taking occupancy to uncover any issues that they may encounter that would inhibit them from doing what they intend to do at that property, and that includes 16 of No. 2011AP1451.dtp government approvals, construction costs, financing, inspections. He further testified that any issues of import to the tenant[,] those items could have been a contingency, a due diligence item, in the lease. Midwest Hospitality did not perform proper due diligence. In fact, Mr. Habash specifically testified that Midwest Hospitality didn't do any due diligence. He stated it was because of trust and assurances by Mr. Tufail. But the Court does not find the testimony of Mr. Habash about reliance on Mr. Tufail credible. Mr. Habash is a senior executive at Midwest Hospitality who has been involved with the lease and renovation of many prior Church's Chicken restaurants. Mr. Habash is the president of the independent franchise council of over 750 such restaurants. Mr. Habash was at the subject property before entering into the lease and saw its poor condition. It is not credible to believe that Mr. Habash relied upon statements of Mr. Tufail when making the decision of whether or not to have Midwest Hospitality enter into the subject lease. Rather, it is more credible that Mr. Habash relied upon his own knowledge, experience, and personal inspection. (Emphasis added.) ¶94 The circuit court's oral decision suggests that the court believed that Midwest should have thoroughly investigated all applicable zoning requirements before signing the Lease that Paragraph 33(g) does not mean anything because Midwest should have previously discovered the requirements for a special use permit. These sentiments appear to substitute the court's expectations for the parties' intentions. ¶95 The majority opinion does not acknowledge the circuit court's reliance on "due diligence" as a justification for not enforcing the warranties in the Lease. This raises a very important issue of contract law. ¶96 This court has observed that, "in general, the laws in existence at the time of the contract are incorporated into that 17 No. contract." 2011AP1451.dtp Dairyland Greyhound Park, Inc. v. Doyle, 2006 WI 107, ¶60, 295 Wis. 2d 1, 719 N.W.2d 408 (citing Von Hoffman v. City of Quincy, 71 U.S. 535, 550 n.30 (1866)). The court of appeals has said: "It must be assumed that parties to a contract had knowledge agreement." 468 of the law in effect at the time of the Krause v. Mass. Bay Ins. Co., 161 Wis. 2d 711, 718, N.W.2d 755 (Ct. App. 1991) (citing Menard v. Sass, 127 Wis. 2d 397, 399, 379 N.W.2d 344 (Ct. App. 1985)). ¶97 parties Although seldom these have principles equal may knowledge of be sound the law. in general, One party cannot sign a contract assuring the other party that it will have no problems under existing law and then assert diligence defense when that assurance proves false. a due This axiom was eloquently stated in the English case of Redgrave v. Hurd: There is another proposition of law of very great importance which I think it is necessary for me to state, because, with great deference to the very learned Judge from whom this appeal comes, I think it is not quite accurately stated in his judgment. If a man is induced to enter into a contract by a false representation it is not a sufficient answer to him to say, "If you had used due diligence you would have found out that the statement was untrue. You had the means afforded you of discovering its falsity, and did not choose to avail yourself of them." I take it to be a settled doctrine of equity, not only as regards specific performance but also as regards rescission, that this is not an answer unless there is such delay as constitutes a defence under the Statute of Limitations. Redgrave v. Hurd, [1881] 20 Ch.D. 1 at 13 (Eng.) (first emphasis added). One hundred years later, this ancient doctrine was embodied in our Restatement (Second) of Contracts, § 172 (1981): "A recipient's fault in not knowing or discovering the facts 18 No. before making the contract does not make 2011AP1451.dtp his reliance unjustified unless it amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing." ¶98 If the Supreme Court of Wisconsin intends to reject these principles, it ought to explain why. Rejection of these principles will certainly have implications for the enforcement of Wis. Stat. § 100.18, which was one of Midwest's counterclaims in this case. ¶99 court. One other item undermines the ruling of the circuit The court looked to Paragraph 5 of the Lease and said: "If Paragraph Five were vague or ambiguous in any way, the Court finds that the language contained therein was drafted by Midwest Hospitality and it should be construed against the drafter." This is directly contrary to Paragraph 36 of the Lease, which provides in part: "Landlord and Tenant have negotiated the terms of this Lease; therefore, this Lease shall not be interpreted or construed against or in favor of any party." (Emphasis added.) ¶100 In sum, the majority opinion heavily relies on the findings of fact and conclusions of law of the circuit court and completely rejects the well-considered decision of the court of appeals. This is a mistake of the first order. V ¶101 The majority opinion also relies on the "integration clause" in the contract as precluding any consideration of parol evidence. This too is an error because the integration clause applies only to prior agreements. An integration clause "does not bar the use of extrinsic evidence to clarify the meaning of 19 No. an ambiguous text." 2011AP1451.dtp Roth v. City of Glendale, 2000 WI 100, ¶49, 237 Wis. 2d 173, 614 N.W.2d 467 (Sykes, J., concurring) (quoting Bidlack v. Wheelabrator 1993)); see also Corp., 993 Restatement F.2d (Second) 603, of 608 (7th Contracts Cir. § 214 (extrinsic evidence is admissible to establish the meaning of a writing even if integrated). ¶102 If there is an integration clause, courts "may not consider evidence written of agreement any prior between the or contemporaneous parties." Wis. 2d 340, ¶37 (footnote omitted). Town oral or Bank, 330 In Town Bank, there was a commitment letter before the parties signed the contract, and the integration clause in the contract precluded consideration of the prior commitment letter. there was no prior oral Id., ¶41. or written In the present case, agreement regarding Property or the definition of "Church's Chicken." the If there were any ambiguity in the term "Church's Chicken," the integration clause would not prevent the use of extrinsic evidence to interpret that term in the Lease. ¶103 Even if the Lease were viewed as not specifying the operation of a Church's Chicken fast-food restaurant, the intent of the parties compels that interpretation. Lease allows for the use of the Property traditionally sold by any Church's Chicken. sold by Church's Chicken are Paragraph 5 of the fast-food to sell items Items traditionally items, and the only reasonable interpretation is that an establishment selling fastfood items is a fast-food establishment. Because the court's goal in construing a contract is to give effect to the parties' 20 No. 2011AP1451.dtp intent, Town Bank, 330 Wis. 2d 340, ¶33, it is reasonable to interpret the inclusion of "Church's Chicken" to mean that Midwest could operate a Church's Chicken fast-food restaurant. VI ¶104 The majority opinion leans upon the fact that Midwest ultimately attained a special use permit to operate a fast-food restaurant with a drive-through. false warranty. ordinances or Paragraph 5. The Lease restrictions This does not remedy Tufail's warranted preventing While Midwest obtained that the a there one-year no specified uses were in special use permit, that permit did not change the fact that operating a freestanding restaurant at the Property was not a permitted use. The city plan examiner denied Midwest's application to operate a Church's Chicken on prevented such a use. the Property because the zoning code Midwest could have terminated the Lease at that point, but it acted in good faith and worked hard to obtain a special use permit. Unfortunately, the excessive restrictions in the permit prevented Midwest from operating a Church's Chicken because the restrictions made it economically impracticable to do so. ¶105 Tufail had a permit to operate his New York Chicken from 10:00 a.m. to 4:00 a.m. 18 hours a day, seven days a week. Midwest received a permit that allowed it to operate until only 9:00 p.m., which likely was seven hours per day and 49 hours per week less than Tufail had operated. If the Church's Chicken restaurant were designed to open at 11:00 a.m., the restaurant would operate only ten hours per day. 21 This completely scuttled No. Midwest's business model for a restaurant 2011AP1451.dtp located at the intersection of North Avenue and 17th Street in Milwaukee. ¶106 Moreover, the that special use Chicken. The requirement that Midwest pick up garbage within a one-block radius Property operation was of a another burden the the imposed economic of prevented permit prohibitive. Church's As the majority points out, a Midwest representative testified that the special use permit imposed restrictions that would have made the operation of a Church's Chicken "impossible." ¶14. Majority op., An economic impossibility is just as preventative as a physical or legal impossibility. The circuit court apparently failed to consider these insurmountable economic burdens when it stated that the special use permit "did not prevent, in any way, Midwest Hospitality from opening a Church's Chicken restaurant at the subject property with a drive-through and as a fast food restaurant." The special use permit's restrictions and uncertainty effectively prevented the operation of the Church's Chicken that the parties intended. VII ¶107 When Tufail signed the Lease, he misrepresented that there were no ordinances that would prevent any Property contemplated in Paragraph 5 of the Lease. use of the Although the Lease did not define "Church's Chicken," the only meaning of that term is a fast-food restaurant. Even if "Church's Chicken" is ambiguous, the parol evidence demonstrates that both parties understood that a Church's Chicken is a fast-food restaurant. Since the Milwaukee zoning code states that a freestanding fast22 No. food restaurant is not a permitted use, Tufail 2011AP1451.dtp breached warranty. ¶108 For the foregoing reasons, I respectfully dissent. 23 his No. 1 2011AP1451.dtp
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