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COURT OF
APPEALS
DECISION
DATED AND
RELEASED
July
18, 1996
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NOTICE
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A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats.
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This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports.
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No. 95-0436
STATE OF WISCONSIN IN
COURT OF APPEALS
STANLEY
W. ANDERSON, JACKIE BOHNE, B.J. SMAIL,
DEL
DEERING, JAMES LOOCK, ELIZABETH SIMONS,
ALICE
U'REN, ALLEN MULDERINK, JENNIFER DETERMANN,
JOHN
ANDERSON, DAVID KOSTER, ON BEHALF OF
THEMSELVES
AND AS REPRESENTATIVES OF A CLASS OF
ALL
OTHERS SIMILARLY SITUATED,
Plaintiffs-Appellants,
v.
THE
REGENTS OF THE UNIVERSITY OF CALIFORNIA,
Defendant-Respondent,
DON
KRAMER, INDIVIDUALLY, AND
D/B/A
NATION WIDE SPORTS PRODUCTION,
S
& E TRAVEL & TOURS,
A
FOREIGN CORPORATION AND
TICKETS
AND TOURS, BRENDA TRAINER,
INDIVIDUALLY,
AND D/B/A PYRAMID TRAVEL,
JEFFREY
MANLEY, INDIVIDUALLY AND
MONONA
TRAVEL, INC.,
SCOTT
SMITH, INDIVIDUALLY, AND
IAN
CHALMERS, INDIVIDUALLY, AND
CHARTER
CLUBS INTERNATIONAL, INC.,
A
GEORGIA CORPORATION,
JERRY
L. NORSMAN, INDIVIDUALLY, AND
D/B/A
THE NORSE COMPANY,
A
WISCONSIN CORPORATION,
D/B/A
NORSE COMPANY TRAVEL CENTRE,
JEFFREY
BOWLES, INDIVIDUALLY, AND
D/B/A
BOWLES TRAVEL SERVICE, INC.,
A
WISCONSIN CORPORATION,
D/B/A
CARLSON TRAVEL NETWORK/SOUTH
TOWNE
TRAVEL, WINSTON BARKER,
INDIVIDUALLY,
AND D/B/A BARKER
TOURS,
AND SPORTS TOURS,
MARK
WINZENRIED, INDIVIDUALLY, AND
D/B/A
WORLD ATHLETIC TOURS, INC.,
A
WISCONSIN CORPORATION,
MEYER-LARSON
TRAVEL ENTERPRISES, INC.,
A
WISCONSIN CORPORATION,
ALI
SADRZADEH, D/B/A APOLLO TRAVEL
AGENCY,
US TOURS, ARNCO INTERNATIONAL,
LTD.,
A FOREIGN CORPORATION,
THE
MELBOURNE GROUP/US TOURS,
KOEPCKE
TRAVEL AGENCY, INC.,
A
WISCONSIN CORPORATION,
NATIONAL
BANK OF ROYAL OAK,
A
NATIONAL BANK DOMICILED IN MICHIGAN,
ENTERTAINMENT
SPLS. INCORPORATED,
A
FOREIGN CORPORATION, D/B/A TICKET TIME,
STATE
OF CALIFORNIA,
Defendants,
BOARD
OF REGENTS OF THE UNIVERSITY OF CALIFORNIA,
Defendant-Respondent,
UNIVERSITY
OF CALIFORNIA LOS ANGELES,
UNIVERSITY
OF CALIFORNIA LOS ANGELES
ATHLETIC
DEPARTMENT,
Defendants.
APPEAL
from an order of the circuit court for Dane County: P. CHARLES JONES, Judge. Affirmed.
Before
Eich, C.J., Gartzke, P.J., and Sundby, J.
GARTZKE,
P.J. Stanley W. Anderson, et al.
appeal from an order dismissing their complaint against the Board of Regents of
the University of California (UCLA) for failure to state a claim. Plaintiffs were customers of tour operators
and ticket agencies with whom they contracted for tour packages to the 1994
Rose Bowl game held on January 1, 1994, in Pasadena, California. The tours included tickets to the Rose Bowl
game. When plaintiffs arrived at
Pasadena they learned that tickets were unavailable, and they did not attend
the game or they paid more than the $46 face value for tickets.
Plaintiffs
allege that UCLA contracted for the plaintiffs' benefit but violated the
contract, interfered with contracts the plaintiffs had with tour operators,
engaged in a conspiracy, and negligently distributed its Rose Bowl allotment of
tickets, to the plaintiffs' damage. We
conclude that the complaint fails to state a claim against UCLA and affirm the
order dismissing the complaint.
I. SUMMARY OF FACTS
The
trial court summarized the factual allegations in plaintiffs' second amended
complaint as follows:
The
Rose Bowl is sponsored yearly by the Tournament of Roses Association
("Tournament") and features football teams from the Pacific Ten
Conference ("PAC-10") collegiate athletic conference and the Big Ten
Conference ("The Big Ten") collegiate conference. In 1994, the PAC-10 was represented by the
University of California Los Angeles (UCLA) while the University of Wisconsin
represented the Big Ten. UCLA is a
public university of the State of California, governed by Cal. Regents.
Participation
in the 1994 Rose Bowl [was] controlled by an agreement between the PAC-10, the
Big Ten and the Tournament, entitled ["]PAC-10 TOURNAMENT BIG TEN ROSE
BOWL AGREEMENT["] ("the Agreement")[,] which was signed by the
parties on March 16, 1992. The
Agreement contained several provisions governing ticket sales and distribution
between the two conferences. Paragraph
23, entitled ["]Ticket Distribution,["] states in part:
....
e. Except for mutual complimentary tickets, all
game tickets shall be sold at full face value to the persons to whom they are
consigned. The price of such tickets
shall be included in the determination of Net Income. Notwithstanding the foregoing, member institutions of the PAC-10
and/or the BIG TEN may establish lower ticket prices for bona fide members of their
student bodies; provided, however, that said institution shall account for all
such tickets at full face value.
Paragraph
24, entitled ["]Ticket Allocation,["] states in part:
....
b. In the event a Conference representative
anticipates that it may have unused tickets, it may offer to sell such tickets
first to the other Conference, and then to the Tournament.... No other party is obligated to accept such
ticket.... The tickets may be offered
for sale and sold only at the established prices thereof.
c. The parties agree not to place any excess
tickets on general public sale (i.e., other than to its season ticket holders,
alumni, faculty, students, and the like) without the prior consent of the [Rose
Bowl Management Committee]. The RBMC
may, rather than allowing such public sale, either take the tickets on
consignment from the offering institution or acquire the tickets itself.
Paragraph
36 of the Agreement provides that the PAC-10, the Big Ten and the Tournament
agree to indemnify each other in the event of breach. Paragraph 37 of the Agreement provides that disputes which cannot
be resolved by the RBMC shall be resolved by arbitration.
It is
the policy of the Tournament to prohibit resale of its tickets by its members
to the general public. This policy
protects the public from scalpers who sell tickets at inflated prices. The Tournament does not condone the sale of
tickets at more than face value; sale to ticket brokers; nor purchase of
packages that purport to include tickets to the Rose Bowl game.
UCLA
was allotted 40,000 tickets while the University of Wisconsin was allotted
19,000. The full face value of these
tickets was $46.00. UCLA
"sold" 4,000 of its tickets to an anonymous donor on December 15,
1993, after having refused to transfer part of its ticket allotment to the
University of Wisconsin on December 10, 1993.
UCLA also sold 1,223 tickets to non-season ticket holders for face value
on the condition that they would buy UCLA 1994 football season's tickets. As a consequence of these transactions, UCLA
sold tickets at higher than face value.
As a result of UCLA's actions, it is alleged that a
substantial number of tickets were placed in the hands of scalpers. Accordingly, the plaintiffs allege that
they: (1) suffered annoyance,
inconvenience, and emotional suffering; (2) were deprived of the value of their
tour package by virtue of not seeing the game; and (3) paid excessive prices
for their tickets. The plaintiffs seek
damages, including punitive damages, based on claims of breach of contract,
conspiracy and negligence.
II. TRIAL COURT'S DECISION
UCLA
moved to dismiss the complaint for failure to state a claim. The trial court concluded that California
law applies to plaintiffs' claim for breach of contract. Although UCLA is not a named party to the
contract, the trial court concluded that it is a party to the Agreement. The court rejected the plaintiffs' claim
that they were third-party beneficiaries of the Agreement, and the court
therefore held they lack standing to sue for its breach. So far as is material to this appeal, the
court held that the plaintiffs' conspiracy claim fails because plaintiffs did
not allege or identify the person or persons with whom UCLA conspired. Because the court had already held the
plaintiffs lacked standing to sue on the contract, the court concluded they
lacked standing to sue for intentional interference with their contract. The court held that the plaintiffs failed to
state a claim for negligence because plaintiffs failed to allege that UCLA has
a duty to the plaintiffs to make tickets available to their travel agents.
Having
found that the complaint fails to state a claim against UCLA, the trial court
granted the motion to dismiss.
III. STANDARD OF REVIEW
A
motion to dismiss for failure to state a claim tests the legal sufficiency of
the complaint. Bartley v.
Thompson, 198 Wis.2d 323, 331, 542 N.W.2d 227, 230 (Ct. App. 1995), cert.
denied, 116 S. Ct. 1829 (1996). The
motion raises a question of law which we review de novo. Id. We liberally construe the pleading in favor of its stating a
claim, if reasonably possible. Jenkins
v. Sabourin, 104 Wis.2d 309, 313, 311 N.W.2d 600, 602 (1981). We accept as true all facts the plaintiff
properly pleaded and reasonable inferences from those facts, and we will
dismiss the complaint only if the plaintiff cannot recover under any
circumstances. Bartley,
198 Wis.2d at 332, 542 N.W.2d at 230.
We may affirm for reasons the trial court did not consider.
IV. BREACH OF CONTRACT
A. California Law Governs the Contract
Issues
The Agreement provides
in part, "This Agreement shall be governed by the laws of the State of
California." Under Wisconsin law,
the parties to a contract may agree that the law of a particular jurisdiction
controls their contractual relations. First
Wis. Nat'l Bank v. Nicolaou, 85 Wis.2d 393, 397 n.1, 270 N.W.2d 582,
584 (Ct. App. 1978). We therefore look
to California law to determine the contractual relationship, if any, between
the parties.
B. UCLA as a Party to the Agreement
Plaintiffs
contend that UCLA is a party to the Agreement.
UCLA contends this cannot be, since UCLA is not referred to in the
Agreement as a party. The Rose Bowl
Agreement is between three named entities:
the Big Ten, the PAC-10 and the Tournament. Under California law, one who is not a party
to a contract cannot be sued for its breach.
Fruitvale Canning Co. v. Cotton, 252 P.2d 953, 955 (Cal.
Ct. App. 1953), overruled on other grounds, Lucas v. Hamm,
364 P.2d 685, 689 (1961).
The
Agreement provides that PAC-10 consists of ten western universities, including
the University of California, Los Angeles.
In § 44(a) of the Agreement, PAC-10 warranted it is authorized to
enter the Agreement, and
that all required consents and authorizations by all
bodies of the PAC-10 member institutions have been obtained and that the PAC-10
is authorized to sign this Agreement on the PAC-10's behalf, subject to final
ratification of the signed Agreement by the chief executive officer of each
institution of the PAC-10.
Although
nothing in the record discloses whether the chief executive officer of UCLA
ratified the Agreement, it is beyond dispute that UCLA accepted benefits
derived from it. Acceptance of benefits
under a contract is the equivalent of a consent to the obligations arising from
it. California Civil Code § 1589; Thompson
v. Swiryn, 213 P.2d 740, 747 (Cal. Ct. App. 1950). We conclude that UCLA is a party to the
Agreement.
C. Plaintiffs as Third-Party Beneficiaries
Plaintiffs
contend that the contract provisions governing ticket sales and prohibiting
ticket "scalping" primarily benefited prospective ticket holders by
limiting the sale price of each ticket to its face value, $46. As prospective ticket purchasers, they
contend that they are therefore third-party beneficiaries of the Agreement.
California
Civil Code § 1559 provides, "A contract, made expressly for the
benefit of a third person, may be enforced by him at any time before the
parties thereto rescind it." A
third party need not be specifically named as a beneficiary. Marina Tenants Ass'n v. Deauville
Marina Dev. Co., 226 Cal. Rptr. 321, 324 (Ct. App. 1986). "Expressly" in § 1559 means
an express manner, in direct or unmistakable terms, explicitly, definitely or
directly. City and County of San
Francisco v. Western Airlines, Inc., 22 Cal. Rptr. 216, 225 (Ct. App.
1962), cert. denied, 371 U.S. 953 (1963).
A
person not specifically identified in the contract as a beneficiary may recover
on it if he or she belongs to a class of persons for whose benefit the contract
is made. Marina Tenants,
226 Cal. Rptr. at 324. If its terms
necessarily confer a benefit upon a third person which only that person can
enjoy, the person is a third- party beneficiary. Id. at 326 (citing Zigas v. Superior Court,
174 Cal. Rptr. 806, 810 (Ct. App. 1981), cert. denied, 455 U.S. 943
(1982)) ("[The] requirement of HUD approval of rent increases could only
benefit the tenants."). The intent
to benefit the third person must be evident from reading the contract as a
whole in light of the circumstances under which it was entered. Outdoor Servs., Inc. v. Pabagold, Inc.,
230 Cal. Rptr. 73, 77 (Cal. Ct. App. 1986).
Reading
the contract as a whole, it is unreasonable to conclude that it was intended
solely to benefit potential purchasers of tickets. The plaintiffs do not allege that the Agreement itself was made
primarily for their benefit, nor can they.
The Agreement was entered to govern a sports event played by some 100
students, and to be attended by thousands of fans and watched by millions. It governs which teams may play, the color
of the uniforms they may wear, when bands may play and even the type of
football which will be used during the game.
It incorporates an agreement granting a television network exhibition
rights, and it provides for distribution of Rose Bowl revenues. Whatever duties the named parties to the
Agreement could possibly have undertaken with regard to plaintiffs relate
solely to plaintiffs as potential spectators of the game, and for that the
plaintiffs had to have tickets.
Plaintiffs
allege that their interests as potential ticket holders advance their interests
to those of third-party beneficiaries.
They rely on section 23 of the Agreement to support their contention
that they, as prospective ticket holders, are primarily benefited by the
limitation in the Agreement fixing the sale price of each ticket to its face
value, $46. We reject plaintiffs'
analysis of section 23.
The
first sentence in section 23(e) provides in relevant part, "[A]ll game
tickets shall be sold at full face value and shall be accounted for at full
face value by the persons to whom they are consigned." This provision does not benefit only the
plaintiffs. It imposes both a ceiling
and a floor on ticket prices. The intent
to impose a floor is shown by an exception to the "full face value"
requirement in a later sentence in subparagraph (e). That sentence permits the member institutions to "establish
lower ticket prices for bonafide members of their student bodies." The floor on ticket prices does not benefit
the plaintiffs.
Relying
on Zigas, 174 Cal. Rptr. at 809, plaintiffs assert that, like the
tenants in that case, plaintiffs as prospective ticket purchasers are the
intended beneficiaries of the ticket contract provisions of the Agreement. In Zigas, the landlord had a
contract with Housing and Urban Development (HUD) which governed the landlord's
relationship with his tenants. Id.
at 807. The Zigas court
held that the tenants were third-party beneficiaries of the contract partly
because the purpose of the HUD contract was "narrow and specific: to
provide moderate rental housing for families with children." Id. at 812.
Unlike
the HUD contract construed in Zigas, section 23(e) of the Rose
Bowl Agreement does not have a "narrow and specific" purpose which
would benefit only plaintiffs. The
provision that tickets be sold at full face value confers no benefit upon
plaintiffs that only they may enjoy because it also establishes the minimum
price for tickets.
Moreover,
section 23(e) of the Agreement has a purpose which is unrelated to any possible
benefit to the plaintiffs. The provision
that tickets be sold at full face value is critical to the provision in the
Agreement that if UCLA fails to sell tickets allotted to it, it must make up
the difference in the value of unsold tickets in the accounting between the
parties to the Agreement. The full face value sales provision is, as
the trial court ruled, a ticket accounting mechanism. Whatever benefit plaintiffs as potential ticket purchasers may
enjoy as a result of that provision is only incidental. Persons who enjoy only incidental benefits
resulting from an agreement between other parties are not third-party
beneficiaries of the contract. Restatement (Second) of Contracts
§ 315, cmt. a (1981).
Because
the plaintiffs are not third-party beneficiaries of the Agreement, the trial
court correctly ruled that they lack standing to sue for its breach. We therefore affirm the ruling that the
complaint fails to state a claim for breach of contract.
V. NEGLIGENCE
Plaintiffs
assert that when UCLA sold 4,000 Rose Bowl tickets to one person, the
reasonable inference is that the person acted as or supplied the tickets to a
broker, and that person or the broker therefore had the power to control the
market for Rose Bowl tickets and determine the price of the tickets. This, they assert, disrupted the
"normal market" for Rose Bowl tickets. For that reason, Wisconsin fans were unable to buy tickets at a
reasonable price or were unable to obtain them at all. Plaintiffs were therefore harmed by UCLA's
sale of 4,000 tickets to one person, and it was foreseeable that harm would
result from that sale to potential ticket buyers. For that reason, plaintiffs assert UCLA is liable to them for its
negligence.
When
an alleged tort is related to a contract, a duty must exist independently of
the performance of the contract for a cause of action in tort to exist. Madison Newspapers, Inc. v.
Pinkerton's, Inc., 200 Wis.2d 468, 473, 545 N.W.2d 843, 846 (Ct. App.
1996). We ignore the existence of the
contract when determining whether the alleged conduct is actionable in
tort. Id.
Plaintiffs'
negligence theory is consistent with Wisconsin law. The duty of a person alleged to have been negligent under
Wisconsin law is stated in A.E. Investment Corp. v. Link Builders, Inc.,
62 Wis.2d 479, 483-84, 214 N.W.2d 764, 766 (1974):
The
duty of any person [alleged to have been negligent] is the obligation of due
care to refrain from any act which will cause foreseeable harm to others even
though the nature of that harm and the identity of the harmed person or harmed
interest is unknown at the time of the act.
This is the view of the minority in Palsgraf v. Long Island R.R.
Co., (1928) 248 N.Y. 339, 162 N.E. 99 ....
A
defendant's duty is established when it can be said that it was foreseeable
that his act or omission to act may cause harm to someone. A party is negligent when he commits an act
when some harm to someone is foreseeable.
Once negligence is established, the defendant is liable for
unforeseeable consequences as well as foreseeable ones. In addition, he is liable to unforeseeable
plaintiffs.
In
this state, a negligent defendant is liable for economic loss. Citizens State Bank v. Timm, Schmidt
& Co., 113 Wis.2d 376, 384-85, 335 N.W.2d 361, 365 (1983); A.E.
Investment Corp. v. Link Builders, Inc., 62 Wis.2d at 490-91, 214
N.W.2d at 770; Hap's Aerial Enters. v. General Aviation, 173
Wis.2d 459, 460, 496 N.W.2d 680, 681 (Ct. App. 1992).
However,
although Wisconsin negligence law makes the tortfeasor totally liable for all
foreseeable and unforeseeable consequences of a negligent act, a court may
limit or preclude that liability for public policy reasons. Timm, 113 Wis.2d at 386, 335
N.W.2d at 366; Morgan v. Pennsylvania Gen. Ins. Co., 87 Wis.2d
723, 737, 275 N.W.2d 660, 667 (1979).
Ordinarily an appellate court will not decide public policy issues
before a full factual resolution of the claims at trial. Coffey v. City of Milwaukee,
74 Wis.2d 526, 542, 247 N.W.2d 132, 140 (1976). But it is not always necessary to have a full trial before
deciding the public policy question. Schuster
v. Altenberg, 144 Wis.2d 223, 241, 424 N.W.2d 159, 166 (1988); Wilson
v. Continental Ins. Co., 87 Wis.2d 310, 324, 274 N.W.2d 679, 686
(1979); Rieck v. Medical Protective Co., 64 Wis.2d 514, 520, 219
N.W.2d 242, 245 (1974).
UCLA
contends that under California law, it owed no duty to plaintiffs with respect
to their negligence claim. Under
California law, "an indispensable factor to liability founded upon
negligence is the existence of a duty of care owed by the alleged wrongdoer to
the person injured, or to a class of which he is a member." Richards v. Stanley, 271 P.2d
23, 25-26 (Cal. 1954) (holding defendant who left car unattended and unlocked
with the ignition key in the lock had no duty to plaintiffs who suffered injury
after thief stole defendant's car and collided with plaintiffs). Because plaintiffs do not dispute the
contention in their reply, we assume plaintiffs cannot recover under California
law. Madison Teachers, Inc. v.
Madison Metro. Sch. Dist., 197 Wis.2d 731, 751, 541 N.W.2d 786, 794
(Ct. App. 1995). If plaintiffs cannot
recover under Wisconsin law, however, no conflict exists between the laws of
the two states. We conclude that for
public policy reasons, plaintiffs cannot recover against UCLA for its negligence.
In
this state, recovery may be denied against a negligent defendant on grounds of
public policy when: (1) the negligence is too remote from the injury; (2) the
injury is wholly out of proportion to the culpability of the negligent
tortfeasor; (3) in retrospect, it appears highly extraordinary that the
negligence should have led to the harm; (4) allowance of recovery would place
an unreasonable burden on the negligent tortfeasor; (5) allowance of recovery
would likely open the door to fraudulent claims; or (6) allowance of recovery
would enter a field having no sensible stopping point. Coffey, 74 Wis.2d at 541, 247
N.W.2d at 140.
Because
the demand for Rose Bowl tickets exceeded the number of available tickets, UCLA
could not have prevented harm to at least some potential buyers, no matter what
it did and no matter what the price at which it sold the tickets and no matter
what the sale mechanics. If we were to
allow plaintiffs to recover in negligence against UCLA, no rational stopping
point would exist.
To
allow recovery would place an unreasonable burden on UCLA. Unless bound by statute or contract, a
seller may generally rely upon supply and demand to fix the price to allocate a
scarce commodity among consumers. For
us to allow recovery here would tell sellers that they cannot rely upon supply
and demand for that purpose. Plaintiffs
do not suggest an alternative method of allocation. We have already held that UCLA had no contractual duty to
plaintiffs and no statute has been shown to apply. Perhaps allocation could have been achieved by a lottery, but the
impracticability of that method needs no further comment.
Because
we conclude that plaintiffs in this case cannot recover under Wisconsin law,
and because it is agreed they cannot recover under California law, we conclude
that, regardless which state's law applies, plaintiffs cannot recover against
UCLA on their negligence claim.
VI. CONSPIRACY
No
difference between the California and Wisconsin law of conspiracy has been
brought to our attention. We therefore
apply Wisconsin law.
Wisconsin
defines a civil conspiracy as "`a combination of two or more persons by
some concerted action to accomplish some unlawful purpose or to accomplish by
unlawful means some purpose not in itself unlawful.'" Cranston v. Bluhm, 33 Wis.2d
192, 198, 147 N.W.2d 337, 340 (1967) (quoted source omitted). To state a cause of action for civil
conspiracy, the complaint must set forth the formation and operation of the
conspiracy, the wrongful act or acts done pursuant to the conspiracy and the
resultant damage from such acts. Onderdonk
v. Lamb, 79 Wis.2d 241, 247, 255 N.W.2d 507, 510 (1977).
The
only allegation in the complaint expressly referring to a conspiracy is that
UCLA "engaged in combinations and conspiracies to violate the Rose Bowl
Agreement and which were otherwise unlawful in act or purpose."
UCLA
cannot conspire with itself. No
co-conspirator is named or described in the complaint. The allegation that UCLA put tickets in the
hands of scalpers does not establish that UCLA conspired with them. Similarly, the allegation that UCLA sold
4,000 tickets to an individual when it knew or should have known the tickets
would be sold at a price greater than face value fails to show that UCLA
conspired with that person. The acts of
UCLA, the scalpers and the individual buyer are not alleged to have a nexus
other than UCLA's sales to them. Thus,
no concerted action is alleged. We need
not pursue our analysis further.
We
conclude the trial court properly dismissed plaintiffs' conspiracy charge
against UCLA for failure to state a claim.
VII. INTERFERENCE WITH CONTRACT
The
parties appear to agree that no choice of law problem exists with regard to
plaintiffs' claim that UCLA has interfered with their contractual relations
with their tour operators who arranged travel packages for the plaintiffs. Both Wisconsin and California recognize the
tort of interference with prospective economic relations. Della Penna v. Toyota Motor Sales,
U.S.A. Inc., 902 P.2d 740, 741 (Cal. 1995); Cudd v. Crownhart,
122 Wis.2d 656, 658-59, 364 N.W.2d 158, 160 (Ct. App. 1985).
The
elements of the tort are: a prospective contractual relationship on behalf of
the plaintiff, knowledge by the defendant of the existence of the relationship,
intentional acts on the part of the defendant to disrupt the relationship,
actual disruption of the relationship, and damages to the plaintiff caused by
those acts. Compare Della Penna, 902 P.2d at 748 (citing Buckaloo
v. Johnson, 537 P.2d 865, 872 (Cal. Ct. App. 1975))
with Cudd, 122 Wis.2d at 659-60, 364 N.W.2d at 160, and
Restatement (Second) of Torts
§ 766B.
Plaintiffs'
theory expressed in their brief is that they had prospective and existing
contractual relationships with the tour operators consisting of the plaintiffs'
purchases and prospective purchases of tickets as part of travel packages for
the Rose Bowl game. The theory
continues as follows: UCLA knew of the existence of the demand for tickets by
Wisconsin fans and the shortage of those tickets; UCLA "engaged in
intentional acts to disrupt the purchase of tickets by Wisconsin fans as part
of the travel packages by disrupting the market for tickets"; plaintiffs'
relationships with tour operators were disrupted; and damages resulted to the
plaintiffs.
However,
the closest the complaint comes to alleging an intentional interference by UCLA
with a contractual or prospective contractual relationship between the
plaintiffs and tour operators is the following:
The reason that [Rose Bowl] tickets were unavailable to
the class was that substantial numbers of tickets were placed in the hands of
scalpers who inflated the ticket prices to the extent that the tours were
unable to purchase tickets at the price previously represented to the tour
operators and thus prevented the operators from providing the tickets to the
Class as represented.
The complaint alleges that UCLA was "directly
responsible for placing the tickets in the hands of scalpers" by described
action. Nothing in the complaint,
however, alleges that UCLA took those actions for the purpose of interfering
with contracts between the plaintiffs and the tour operators.
We
conclude the complaint fails to state a claim for interference in plaintiffs'
contractual relations with the tour operators.
VIII. CONCLUSION
Because we conclude that
the complaint fails to state a claim, we affirm. UCLA has moved for costs and attorney's fees under Rule 809.25(3), Stats., on the grounds that this appeal is frivolous. We deny the motion.
By
the Court.—Order affirmed.
No. 95-0436(D)
SUNDBY,
J. (dissenting). University of Wisconsin football
fans are among the most dedicated in the country. There was a rumor that when they arrived in Pasadena and were
denied admission to the Rose Bowl, there was strong sentiment to storm the
"Bastille." We now deny them
redress against the culpable party, UCLA.
We say that UCLA owed no duty to the University of Wisconsin and Badger
fans to live up to its commitment under the agreement between the Big Ten
Conference and the PAC-10 Conference.
We say the contract may not be enforced for their benefit. I disagree and dissent.
The
"fans" make a good point: If
not them, then who? The Big Ten could
sue UCLA for breach of the contract.
But what would be its damages?
The parties damaged would be the fans who lost access to the tickets
which should have been allocated to Wisconsin but were allocated by UCLA to
others to further ends having nothing to do with the sporting event. For example, UCLA "sold" 4,000
tickets to a deep-pockets donor and 1,233 tickets to persons on condition that
they buy UCLA 1994 season tickets.
These shenanigans denied Wisconsin fans an opportunity to purchase
tickets or obtain the tickets they believed they had purchased.
California law governs
the contract issue. Section 1559 of the
California Civil Code provides:
"WHEN CONTRACT FOR BENEFIT OF THIRD PERSON MAY BE ENFORCED. A contract, made expressly for the
benefit of a third person, may be enforced by him at any time before the
parties thereto rescind it."
(Emphasis added.) Corbin says:
There
is a code provision in California and some other western states that a third
person may enforce a contract if it was "made expressly for his
benefit." This provision should
not be held to require "express" words, either written or oral, that
the promisee is motivated by a desire to confer a benefit upon the third
person. The code provision is merely a
provision attempting to express the modern common law empowering contractors to
confer rights on third persons. It does
not exclude creditor beneficiaries or attempt to state a formal line of
distinction between intended beneficiaries and incidental ones.
4 Corbin on
Contracts § 776, at 23-24 (1951).
Applying
an identical provision in North Dakota law, the federal district court, citing
Corbin, stated: "[T]he North Dakota decisions construing the statute have
done so resorting to the traditional formula, i.e., determining whether one is
an intended beneficiary who can sue on the contract as opposed to an incidental
beneficiary who may not." United
States v. Dairyland Ins. Co., 513 F. Supp. 1017, 1018 (D.N.D. 1981), rev'd
on other grounds, 674 F.2d 750 (8th Cir. 1982). The court further stated:
The primary test in determining whether a party may sue
as a third-party beneficiary is the "intent to benefit" test. If in reading the contract in light of all
the surrounding circumstances, an intent to benefit a third party is shown, the
beneficiary is an intended beneficiary.
If no such intent to benefit is shown, the asserted beneficiary is merely
an incidental beneficiary and cannot enforce the contract.
Id. at 1018-19 (citations omitted).
Corbin
is cited in Permian Basin Investment Corp. v. Lloyd, 312 P.2d
533, 537 (N.M. 1957), where the court stated:
The
principle upon which intervenors must be denied recovery is implicit in Corbin's
general statement and in all of the third party beneficiary decisions which
have been rendered by this court; that the promisor should not be held liable
in damages for breach of his contract with the promisee by one whose detriment
by its nonperformance could not reasonably have been foreseen by the promisor
and by one whose existence (whether specific or general) and interest in the
contracted-for performance (whether contingent or direct) was not within the
reasonable contemplation of the promisor when the promise was made.
UCLA
appears to argue that the California statute requires that it be stated in the
contract that the contract is made "expressly" to benefit a third
party. However, in Lucas v. Hamm,
364 P.2d 685 (Cal. 1961), cert. denied, 368 U.S. 987 (1962), Corbin says
that the court held as follows:
It is not necessary for the contract to contain any
express words describing the third party as a beneficiary. The language of prior cases seeming to make
such a requirement is called "unfortunate." The court said:
"Insofar as intent to benefit a third person is important in
determining his right to bring an action under a contract, it is sufficient
that the promisor must have understood that the promisee had such intent."
4 Corbin on
Contracts § 776 n.27, at 30 (Supp. 1996) (quoting Lucas,
364 P.2d at 689).
An
article in the California Law Review states:
...
[I]t may be mentioned that the word "expressly" in Civil Code section
1559 does not require the beneficiary to be designated by name; it is
sufficient that he be a member of a class to whom performance is to be
rendered. Nor is it even essential that
the beneficiary be in existence when the contract is made. It is also immaterial that the promise calls
for performance to the promisee himself as well as to his creditors. It would appear to be a question of
construction only whether the contract calls for performance to the alleged
beneficiary and that the word "expressly" was intended simply to
negative "incidently."
Stephen I. Langmaid, Contracts for the Benefit of
Third Persons in California, 27 Cal.
L. Rev. 497, 510-11 (1939) (footnotes omitted).
When
I went into oral argument, I was persuaded by the argument that California's
statute required an "express" declaration of intent of the parties to
benefit a third person. Clearly, that
is incorrect, so we are back to analyzing whether prospective fans and ticket
purchasers are third-party beneficiaries of the contract between the two
conferences and the management committee.
I conclude that they are.
Another
issue in this case which we have not reached is whether plaintiffs can maintain
a cause of action against UCLA or must first resort to arbitration. This issue was raised at oral argument but
has not been briefed. The Big
Ten/PAC-10 contract requires arbitration.
The law is so well established that a contract which requires
arbitration must be honored that a request for additional briefing would be a
waste of judicial resources. The cases
seem to be unanimous in holding that a third-party beneficiary is subject to
the same terms of the contract as the promisee. See, e.g., Mayflower Ins. Co. v. Pellegrino,
261 Cal. Rptr. 224, 226-27 (Ct. App. 1989); Harris v. Superior Court,
233 Cal. Rptr. 186, 188 (Ct. App. 1986); Raffa Assocs., Inc. v. Boca
Raton Resort & Club, 616 So. 2d 1096, 1097 (Fla. Dist. Ct. App.
1993); Zac Smith & Co. v. Moonspinner Condominium Ass'n, 472
So. 2d 1324, 1324-25 (Fla. Dist. Ct. App. 1985); District Moving &
Storage Co. v. Gardiner & Gardiner, Inc., 492 A.2d 319, 322-23 (Md.
Ct. Spec. App. 1985), aff'd, 508 A.2d 487 (Md. 1986).
