Title: Wisconsin Mall Properties, LLC v. Younkers, Inc.

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2006 WI 95 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2005AP323 
 
 
COMPLETE TITLE: 
 
 
Wisconsin Mall Properties, LLC, a Delaware 
Limited Liability Company, 
          Plaintiff-Appellant-Petitioner, 
     v. 
Younkers, Inc., Saks, Inc. and Parisian, Inc., 
          Defendants-Respondents, 
City of Green Bay and City of Green Bay 
Redevelopment Authority, 
          Intervenors-Respondents. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2005 WI App 261 
Reported at: ___ Wis. 2d ___, 707 N.W.2d 886 
(Ct. App. 2005-Published) 
 
 
OPINION FILED: 
July 11, 2006   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
April 27, 2006   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Brown   
 
JUDGE: 
William M. Atkinson 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the plaintiff-appellant-petitioner, there were briefs 
by Gregory B. Conway and Liebmann, Conway, Olejniczak & Jerry, 
S.C., Green Bay; Katherine Stadler, Jennifer L. Peterson, Brady 
C. Williamson, and LaFollette Godfrey & Kahn, Madison, and oral 
argument by Katherine Stadler and Gregory B. Conway. 
 
For the defendants-respondents, there was a brief by Alan 
H. Marcuvitz, Amy V. Kossoris, and Michael Best & Friedrich LLP, 
Milwaukee; Gerald L. Angst, and Sidley Austin LLP, Chicago, IL, 
and oral argument by Alan H. Marcuvitz. 
 
For the intervenors-respondents, there was a brief by 
Allison C. Swanson and Green Bay City Attorneys Office; Benjamin 
 
 
2
Southwick and Benjamin Southwick Law Office, Richland Center, 
and oral argument by Benjamin Southwick. 
 
 
 
 
2006 WI 95
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2005AP323  
(L.C. No. 
2003CV1865) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Wisconsin Mall Properties, LLC, a Delaware 
Limited Liability Company, 
 
          Plaintiff-Appellant-Petitioner, 
 
     v. 
 
Younkers, Inc., Saks, Inc. and Parisian, Inc., 
 
          Defendants-Respondents, 
 
City of Green Bay and City of Green Bay 
Redevelopment Authority, 
 
          Intervenors-Respondents. 
 
 
 
FILED 
 
JUL 11, 2006 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed and 
cause remanded.   
 
¶1 
ANN WALSH BRADLEY, J.    Petitioner Wisconsin Mall 
Properties, LLC, seeks review of a published court of appeals' 
decision affirming the circuit court order that dismissed on 
summary 
judgment 
its 
breach 
of 
contract 
claim 
against 
No. 
2005AP323   
 
2 
 
respondents Younkers, Inc., Saks, Inc., and Parisian, Inc.1  The 
City of Green Bay and the City of Green Bay Redevelopment 
Authority, intervenors, condemned property owned by Wisconsin 
Mall that was the subject of a lease between Wisconsin Mall and 
Saks. 
¶2 
The 
dispute centers 
on 
whether Wisconsin 
Mall's 
remedies 
for 
the 
damages 
it 
seeks 
must 
be 
had 
in 
Wis. Stat. ch. 32 (2003-04) condemnation proceedings or whether 
it may seek a remedy against Saks via the contract action before 
us.2  Wisconsin Mall asserts that the circuit court erred in 
concluding 
that the existence of 
condemnation 
proceedings 
precludes it from maintaining a breach of contract claim.  
¶3 
We determine that Wisconsin Mall is not necessarily 
precluded from seeking a remedy against Saks in this breach of 
contract action.  Whether Wisconsin Mall may seek a remedy 
against Saks here will depend on the terms of the lease as 
interpreted and applied to the facts of this case.  It will also 
depend on whether Saks in fact breached the lease and on what 
damages would be due Wisconsin Mall under the lease for such a 
breach. 
                                                 
1 See Wisconsin Mall Props., LLC v. Younkers, Inc., 2005 WI 
App 261, ___ Wis. 2d ___, 707 N.W.2d 886 (affirming an order of 
the circuit court for Brown County, William M. Atkinson, Judge). 
When referring to one or more of the respondents, we refer 
to them simply as "Saks." 
2 All references to the Wisconsin Statutes are to the 2003-
04 version. 
No. 
2005AP323   
 
3 
 
¶4 
When 
these 
questions 
are 
answered, 
it 
can 
be 
determined whether Wisconsin Mall is entitled to contract 
damages against Saks that exceed what it has received as just 
compensation under ch. 32.  In other words, it can be determined 
whether Wisconsin Mall is confined to condemnation court, or 
whether it is ultimately entitled to a remedy against Saks in 
this contract action. 
¶5 
Because the circuit court erroneously granted summary 
judgment on the theory that the existence of condemnation 
proceedings precluded Wisconsin Mall from seeking contract 
remedies against Saks, it did not address whether there exist 
any genuine issues of material fact as to breach and damages.  
Accordingly, we reverse the court of appeals' decision that 
affirmed the circuit court, and we remand to the circuit court 
for further proceedings consistent with this opinion.  Upon 
remand, the circuit court will be able to determine whether 
there exist genuine issues of material fact. 
I 
¶6 
In 1993, Saks sold to and leased back from UTFMW 
Limited Partnership eight department stores, including a store 
in downtown Green Bay.  Wisconsin Mall acquired the Green Bay 
store property and the lease in 1994.3  
                                                 
3 Wisconsin Mall explains that the sale and leaseback 
agreement actually served as a financing vehicle.  Throughout 
this opinion, we refer to this agreement as the "lease." 
No. 
2005AP323   
 
4 
 
¶7 
In 2001, Saks began negotiating with the City of Green 
Bay for a possible condemnation of the property.4  According to 
Wisconsin Mall, Saks wanted the City to use its condemnation 
power so that Saks could extricate itself from the lease. 
¶8 
Wisconsin 
Mall was 
involved 
in the 
condemnation 
negotiations until at least the fall of 2001.  In October 2001, 
Wisconsin Mall's managing member sent an email to the City's 
mayor indicating that Wisconsin Mall was willing to consider a 
"friendly condemnation of the building."  At some point after 
that, however, the prospect of a "friendly" condemnation between 
the City and Wisconsin Mall apparently soured. 
¶9 
On April 8, 2003, the City and Saks entered into a 
"retention agreement" under which the City agreed to condemn 
Wisconsin Mall's property and the lease.  The City also agreed 
to indemnify Saks against any claims arising out of the 
condemnation, including claims by Wisconsin Mall for Saks' 
continuing obligations under the lease.  Saks, in turn, agreed 
to convey its interest in another store property to the City and 
to 
contribute 
$2.75 
million 
toward 
the 
City's 
costs 
in 
condemning Wisconsin Mall's property.  
¶10 On August 13, 2003, Wisconsin Mall provided Saks with 
written notice of its belief that Saks was in breach of section 
5.1 of the lease.  This section of the lease provided that 
"Lessee covenants and agrees that it will remain obligated under 
                                                 
4 Whether referring to the City of Green Bay, the City of 
Green Bay Redevelopment Authority, or both, we refer to "the 
City." 
No. 
2005AP323   
 
5 
 
this Lease in accordance with its terms, and that Lessee will 
not take any action to terminate, rescind, or avoid this 
lease . . . ."5   
¶11 Using its eminent domain power under ch. 32, the City 
made a jurisdictional offer of $5.7 million to Wisconsin Mall in 
October 2003.  The offer allocated $2.6 million for "[l]oss of 
land 
including 
improvements 
and 
fixtures 
actually 
taken 
(reversionary interest in real estate)" and $3.1 million for 
"present value of Lessor's interest in Lease."  
¶12 Subsequently, Wisconsin Mall filed this breach of 
contract action against Saks.  It alleged a breach of sections 
5.1(b) and (c) of the lease.  Section 5.1(b) of the lease 
included a so-called "hell or high water" clause, which 
indicated that, except as otherwise provided in the lease, the 
lessee's obligations under the lease would not be affected by a 
condemnation: 
                                                 
5 More specifically, section 5.1(c) of the lease provides as 
follows:   
Lessee covenants and agrees that it will remain 
obligated under this Lease in accordance with its 
terms, and that Lessee will not take any action to 
terminate, 
rescind, 
or 
avoid 
this 
lease, 
notwithstanding 
the 
bankruptcy, 
insolvency, 
reorganization, 
composition, 
readjustment, 
liquidation, 
dissolution, 
winding-up 
or 
other 
proceeding affecting Lessor or any assignee of Lessor 
in any such proceeding and notwithstanding any action 
with respect to this Lease which may be taken by any 
trustee or receiver of Lessor or of any assignee of 
Lessor in any such proceeding or by any court in any 
such proceeding. 
No. 
2005AP323   
 
6 
 
Except as otherwise expressly provided in the 
Lease, this Lease shall not terminate, nor shall 
Lessee have any right to terminate this Lease or be 
entitled to the abatement of any rent or any reduction 
thereof, nor shall the obligations hereunder of Lessee 
be otherwise affected, by reason of . . . the taking 
of the demised premises or any portion thereof by 
condemnation or otherwise . . . , or for any other 
cause 
whether 
similar 
or 
dissimilar 
to 
the 
foregoing, . . . it being the intention of the parties 
hereto that the rent and all other charges payable 
hereunder . . . shall continue to be payable in all 
events and the obligations of Lessee hereunder shall 
continue unaffected, unless the requirement to pay or 
perform shall be terminated pursuant to an express 
provision of this Lease. . . .  
(Emphasis added.)   
¶13 Wisconsin Mall also sought costs and attorney's fees 
from Saks.  Section 6.2(a) of the lease provided that "Lessee 
shall pay all of Lessor's reasonable costs and expenses in 
connection with each such [condemnation] proceeding, action, 
negotiation, prosecution and adjustment."6 
¶14 Wisconsin Mall rejected the City's jurisdictional 
offer of $5.7 million.  Thus, pursuant to ch. 32, the City filed 
                                                 
6 The lease in section 5.4 also included a more general 
indemnification clause: 
Lessee 
shall 
defend 
all 
actions 
against 
Lessor . . . and shall pay, protect, indemnify and 
save 
harmless 
the 
Indemnified 
Parties 
from 
and 
against, any and all liabilities, losses, damages, 
costs, 
expenses 
(including, 
without 
limitation, 
reasonable attorneys' fees and expenses), causes of 
action, suits, claims, demands or judgments of any 
nature arising from any . . . damage to or loss of 
property, . . . [or] 
violation 
by 
Lessee 
of 
this 
Lease . . . .  
No. 
2005AP323   
 
7 
 
an award of compensation.  The award was for the same sum of 
$5.7 million contained in the jurisdictional offer.  
¶15 Under the terms of the lease, Wisconsin Mall received 
all of the condemnation proceeds from the award of compensation.  
Specifically, the lease provided in section 6.2(a) that "Lessee 
hereby irrevocably assigns to Lessor any award, compensation or 
insurance payment to which Lessee may become entitled by reason 
of Lessee's interest in the Premises . . . if the use, occupancy 
or title of the Premises or any part thereof is taken . . . by 
or on account of any actual or threatened eminent domain 
proceeding . . . ." 
¶16 In Wisconsin Mall's view, however, it had a shortfall.  
Wisconsin Mall viewed the terms of the lease as entitling it to 
at least $3.8 million more than what it received via the 
condemnation award, based on a provision in section 7.1(g) of 
the lease.  This provision contained a formula for liquidated 
damages in the event of a default, as defined in the lease.  The 
formula depended upon the amount of rent due over the remaining 
term of the lease and on a discount rate of five percent per 
year.7  
                                                 
7 Section 7.1(g) of the lease reads as follows: 
 
At 
any 
time 
after 
any 
such 
expiration 
or 
termination 
of 
the 
Lease 
Term 
or 
reentry 
or 
repossession of the Premises or removal of persons or 
property therefrom by reason of the occurrence of an 
Event of Default, whether or not Lessor shall have 
collected any liquidated and agreed current damages 
pursuant 
to 
subsection 
7.1(f), 
Lessor 
shall 
be 
entitled to recover from Lessee, and Lessee shall pay 
to Lessor on demand, as and for liquidated and agreed 
No. 
2005AP323   
 
8 
 
¶17 Saks moved for summary judgment on Wisconsin Mall's 
contract claim.  The City, which had intervened in the action, 
also moved for summary judgment.  Wisconsin Mall moved for 
partial summary judgment.  Saks asserted that the effect of the 
condemnation was to transfer Wisconsin Mall's rights under the 
lease to the City.  The City similarly argued that the only 
relief available to Wisconsin Mall was an appeal of the award of 
compensation in the condemnation proceedings.  Wisconsin Mall 
argued that the condemnation had no effect on the parties' 
obligations under the lease. 
¶18 The circuit court granted Saks' and the City's 
motions, and it denied Wisconsin Mall's motion.  It ruled that 
the 
existence 
of 
the 
condemnation 
proceedings 
precluded 
Wisconsin Mall from maintaining its contract action against 
Saks.  Wisconsin Mall appealed, and the court of appeals 
affirmed the circuit court.  It concluded that Wisconsin Mall 
                                                                                                                                                             
final damages for Lessee's default and in lieu of all 
liquidated and agreed current damages beyond the date 
of such demand (it being agreed that it would be 
impracticable or extremely difficult to fix the actual 
damages), an amount equal to the excess, if any, of 
(a) the aggregate of all Basic Rent, additional rent 
and other sums which would be payable under this 
Lease, in each case from the date of such demand (or, 
if it be earlier, the date to which Lessee shall have 
satisfied in full its obligations under subsection 
7.1(f) to pay liquidated and agreed current damages) 
for what would be the then unexpired Lease Term in the 
absence of such expiration, termination, reentry, 
repossession or removal, discounted at the rate of 5% 
per annum, over (b) the then fair rental value of the 
Premises, discounted at the rate of 5% per annum for 
the same period. . . . 
No. 
2005AP323   
 
9 
 
could not sustain a breach of contract claim under a condemned 
contract.  In the view of both the circuit court and the court 
of appeals, Wisconsin Mall's remedies were confined to pursuing 
an adjustment to the award of compensation via the ch. 32 
condemnation proceedings. 
II 
¶19 We review the grant or denial of summary judgment 
independently, using the same methodology as the circuit court.  
Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d 
816 (1987).  If there is a genuine dispute as to one or more 
material facts, summary judgment should not be granted.  Tomlin 
v. State Farm Mut. Auto. Liab. Ins. Co., 95 Wis. 2d 215, 218-19, 
290 N.W.2d 285 (1980); see also Wis. Stat. § 802.08(2). 
III 
A 
¶20 Wisconsin Mall concedes that it is not entitled to a 
double recovery.  In other words, all agree that Wisconsin Mall 
cannot recover for the same damages in both its contract action 
against Saks and the condemnation proceedings involving the 
City.  Rather, the dispute in this case centers on whether 
Wisconsin Mall's only remedies for the damages it seeks must be 
had in the condemnation proceedings or whether Wisconsin Mall 
may seek a remedy against Saks via the contract action that is 
now before us. 
¶21 Wisconsin Mall argues that its contractual remedies 
against Saks are not precluded by the condemnation of its 
property.  It asserts that its contractual remedies against Saks 
No. 
2005AP323   
 
10 
 
survive under the express terms of the lease.  Wisconsin Mall 
further argues that the condemnation proceedings will not 
provide it with an adequate remedy. 
¶22 Saks and the City argue that Wisconsin Mall has no 
rights under the lease as a result of the condemnation.8  This 
argument is largely based on an assertion that the City 
exercised its eminent domain power to condemn not only the 
property but also the lease.  According to Saks and the City, it 
is as if Wisconsin Mall assigned the lease to the City such that 
the City stepped into Wisconsin Mall's shoes.  Further, Saks and 
the City argue that even if Saks breached the lease, the damages 
for that breach must be had in the condemnation proceedings as 
part of Wisconsin Mall's just compensation for the lease. 
¶23 In addressing the parties' arguments, we start with 
the premise that at least some contract claims relating to 
condemned property may be maintained apart from and despite any 
related condemnation proceedings.  This premise, if not already 
apparent, has been made clear today in Sonday v. Dave Kohel 
Agency, Inc., 2006 WI 92, ¶22, ___ Wis. 2d ___, ___ N.W.2d ___.  
See also Hastings Realty Corp. v. Texas Co., 28 Wis. 2d 305, 
317, 137 N.W.2d 79 (1965); Kilps v. Pawinski, 27 Wis. 2d 467, 
473, 134 N.W.2d 470 (1965). 
¶24 The question thus becomes whether Wisconsin Mall's 
contract claim against Saks may be maintained apart from and 
                                                 
8 Unless otherwise indicated, we have combined the arguments 
of Saks and the City because most of their arguments are 
substantially similar. 
No. 
2005AP323   
 
11 
 
despite the pending condemnation proceedings that relate to the 
Green Bay store property.  In seeking to answer this question, 
we begin our analysis with two general rules of eminent domain 
and contract law, then turn to the terms of the parties' lease.  
We also reject arguments by Saks and the City that Wisconsin 
Mall's remedies in the condemnation proceedings will necessarily 
be adequate. 
¶25 Based on the two general rules and the terms of the 
lease, we determine that whether Wisconsin Mall may seek a 
remedy against Saks via its contract claim will depend on the 
terms of the lease as interpreted and applied to the facts of 
this case.  More specifically, it will depend on whether Saks in 
fact breached the lease and on what damages would be due 
Wisconsin Mall under the lease for such a breach.  
B 
¶26 We begin with the two general rules:  (1) complete 
condemnation of a property terminates a lease attached to that 
property; and (2) the parties to a lease may contract for their 
rights and obligations in the event of condemnation. 
¶27 General rule #1:  Complete condemnation of a property 
terminates 
a 
lease 
attached 
to 
that 
property. 
 
Leading 
authorities appear to agree that this is the general rule.  
According to Nichols on Eminent Domain, "[L]eases are terminated 
when all the leased property is taken."  Julius L. Sackman, 4 
Nichols on Eminent Domain § 12D.01[3][l][ii] (3d ed. 2005).  
Similarly, the Restatement provides:  "If there is a taking by 
eminent domain of all of the leased property for all of the 
No. 
2005AP323   
 
12 
 
lease term, the lease is terminated."  Restatement (2d) of 
Property § 8.1(1) (1977).9  The comments to the Restatement 
explain that "[a] taking by eminent domain of all of the leased 
property for all of the term necessarily terminates the lease 
because there is no leased property left."  Restatement (2d) of 
Property § 8.1, cmt. a (1977); see also Milton R. Friedman, 2 
Friedman on Leases, § 13.1, at 784 (4th ed. 1997) ("Complete 
condemnation terminates a lease because there is nothing left 
from which the lease may hang.") (footnotes omitted). 
¶28 General rule #2:  The parties to a lease may contract 
for their rights and obligations in the event of a condemnation.  
For example, a lessor and lessee have the right to contract with 
respect to how condemnation proceeds should be allocated between 
them.  See, e.g., Maxey v. Redevelopment Auth., 94 Wis. 2d 375, 
400, 288 N.W.2d 794 (1980); Patrick J. Rohan & Melvin A. Reskin, 
7A Nichols on Eminent Domain § 11.06[1][a] (3d ed. 2005).10 
                                                 
9 This 
court 
has 
previously 
cited 
favorably 
to 
the 
Restatement rule.  Maxey v. Redevelopment Auth., 94 Wis. 2d 375, 
405, 288 N.W.2d 794 (1980) (quoting Restatement (2d) of Property 
(Tent. Draft No. 2) § 7.1(1)). 
10 According to Nichols on Eminent Domain, the law does not 
look with favor on clauses causing forfeiture of the tenant's 
interest upon condemnation, and a lease provision will thus be 
construed not to have this effect if it can be avoided under the 
circumstances.  Patrick J. Rohan & Melvin A. Reskin, 7A Nichols 
on Eminent Domain § 11.06[2] (3d ed. 2005). 
However, "by a properly drawn lease provision, a lessee may 
be barred from sharing in the proceeds."  Maxey, 94 Wis. 2d at 
401.  Such was apparently the case here.  The parties are not 
disputing the validity of the lease clause allocating all 
condemnation proceeds to Wisconsin Mall, thus we need not 
address it. 
No. 
2005AP323   
 
13 
 
¶29 As another example, which implicates the first general 
rule we have cited, the Restatement explains that "parties may 
agree to continue the obligation of the tenant in [a taking by 
eminent domain of all of the leased property] to pay a money sum 
equivalent to the rent but the lease itself cannot continue."  
Restatement (2d) of Property, § 8.1, cmt. a (emphasis added). 
Even though there is no subject matter left to which 
the lease could apply, so that the lease could not 
continue, the parties could agree that the obligation 
of the tenant to pay a sum equal to the rent would 
continue.  An agreement otherwise as to the effect on 
a lease, or the continuation of obligations under the 
lease, of a taking by eminent domain is valid unless 
it is unconscionable. 
Id., cmt. e (emphasis added). 
¶30 The ability of parties to a lease to contract for 
their respective rights and obligations upon condemnation is 
thus not limited to the two examples given.  Nichols on Eminent 
Domain explains that "[m]ost conflicts that condemnation imposes 
on the landlord and tenant can be avoided by proper planning.  
In this regard, the most important tool is educated negotiation 
and drafting of the lease contract."  7A Nichols on Eminent 
Domain § 11.06[1][a].11 
                                                 
11 In fact, the Nichols treatise seems to suggest that the 
ability of lessor and lessee to contract for their rights and 
obligations in the event of condemnation may even supercede the 
general rule that complete condemnation of property necessarily 
terminates an attached lease.  The treatise states in one 
section that "[i]n the absence of a lease provision to the 
contrary, it is generally held that condemnation terminates the 
lease as to the property condemned."  7A Nichols on Eminent 
Domain, 11.05[2] (emphasis added). 
No. 
2005AP323   
 
14 
 
 ¶31 In 
light 
of 
these 
general 
rules, 
we 
make 
two 
observations.  First, it is not correct to assume that the 
condemnation here operated as an assignment of the lease, 
placing the City directly into the shoes of Wisconsin Mall as 
the lessor under the lease.  Rather, the condemnation of 
Wisconsin Mall's property terminated the lease, except to the 
extent that the parties agreed otherwise with respect to their 
rights and obligations in the event of a condemnation.  Second, 
it is also not correct to assume, as do Saks and the City, that 
Wisconsin Mall is necessarily precluded from enforcing against 
Saks any right that arose under the lease. 
¶32 Making the indicated assumptions on the facts of this 
case would seem to contravene at least one if not both of the 
general rules that we have cited.  Here, such assumptions would 
not only suggest that the lease may have survived condemnation 
intact, with the City as the new lessor, but also would nullify 
the ability of lessor and lessee to contract for their rights 
and obligations in the event of condemnation.12 
¶33 To this we add a third observation.  Wisconsin Mall's 
contract claim against Saks appears primarily based on an 
                                                 
12  The court of appeals in this case observed that "[t]he 
fact pattern before us is novel" and considered this case 
"[u]nique[]" in that "the City condemned not only the property 
but also the lease, and the Mall attempted to pursue a breach of 
contract action under the condemned lease."  Wisconsin Mall, ___ 
Wis. 2d ___, ¶6.  To the court of appeals' observations, we add 
that this case involves a lease in which the parties to that 
lease expressly contracted for their respective rights and 
obligations in the event of condemnation.  Thus, we need not 
address situations in which the parties have not so contracted. 
No. 
2005AP323   
 
15 
 
alleged breach of the lease that occurred before its property 
was condemned.  The primary breach that Wisconsin Mall alleges 
is of section 5.1(c) of the lease.  Specifically, Wisconsin Mall 
asserts that Saks took actions to avoid the lease by colluding 
with the City to effectuate a condemnation that would allow Saks 
to escape its obligations to Wisconsin Mall under the lease.13 
¶34  The termination of a lease would not ordinarily be 
expected to extinguish an existing cause of action for a breach 
of the lease.  For example, suppose Landlord A rents premises to 
Tenant B for a term of one year, beginning January 1, 2007, with 
rent payable once per month.  Tenant B then fails to pay rent 
for the month of December, and the lease terminates on December 
31, 2007.  Landlord A has a breach of the lease claim against 
Tenant B, and that claim would normally be expected to survive 
the December 31, 2007 termination of the lease, absent some 
express provision to the contrary.14 
                                                 
13  Wisconsin Mall's arguments before this court ultimately 
focused on a breach of section 5.1(c) of the lease based on 
collusion.  The complaint Wisconsin Mall filed, however, may be 
interpreted to encompass other pre-condemnation breaches.  It 
incorporates the lease as an exhibit, sets forth several 
specific lease provisions, and includes a general allegation 
that "Defendants have breached the above-referenced Lease."  
Thus, Wisconsin Mall is not foreclosed on remand from asserting 
that there were other pre-condemnation breaches of the lease.  
14 Our focus in this case on a breach that occurred pre-
condemnation is not intended to foreclose the possibility that 
there could be a post-condemnation breach of a lease.  Rather, 
given the facts presented, we do not address the possibility of 
post-condemnation breaches of a lease in this opinion. 
No. 
2005AP323   
 
16 
 
¶35 The lease here contained express provisions referring 
to the parties' rights and obligations in the event of a 
condemnation.  For example, the lease contained a clause 
expressly providing that Wisconsin Mall would receive all of the 
condemnation proceeds from the award of compensation.  It also 
contained a clause providing that Saks would pay all of 
Wisconsin Mall's reasonable costs and expenses in connection 
with a condemnation proceeding. 
¶36 In addition, the lease contained other provisions 
which can at least arguably be interpreted as intended to 
control the parties' rights and obligations in the event of an 
anticipated or actual condemnation.  These provisions include 
the provision prohibiting Saks from seeking to avoid the lease; 
the so-called "hell or high water" clause; the clause under 
which 
Saks 
agreed 
to 
indemnify 
Wisconsin 
Mall; 
and 
the 
liquidated damages clause based on the five percent discount 
rate. 
¶37 Saks and the City nonetheless maintain that Wisconsin 
Mall can be fully compensated in condemnation proceedings under 
ch. 32 for any damages resulting from an alleged breach of the 
lease.  They assert that Wisconsin Mall has an adequate remedy 
available in the condemnation proceedings and that any damages 
Wisconsin Mall suffered as a result of the condemnation are 
compensable as just compensation under ch. 32.  They cite cases 
which, in their view, support this assertion.  See, e.g., Herro 
v. DNR, 67 Wis. 2d 407, 420, 227 N.W.2d 456 (1975) ("Every 
No. 
2005AP323   
 
17 
 
element which affects value and which would influence a prudent 
purchaser should be considered."). 
¶38 We are not persuaded, however, that these cases ensure 
that the damages or other remedies available to Wisconsin Mall 
in a contract cause of action would necessarily be available in 
ch. 32 condemnation proceedings.  At oral argument, at least two 
potential differences came into particularly sharp focus.15 
¶39 First, if Wisconsin Mall is able to show that Saks 
breached the lease in a manner that entitled it to invoke 
section 7.1(g) of the lease, the five percent discount rate set 
forth in the lease to calculate the present value of future rent 
damages may or may not be available as part of Wisconsin Mall's 
just compensation in condemnation proceedings.  When the City 
made the condemnation award to Wisconsin Mall, it apparently 
calculated the award assuming a higher discount rate of 
approximately 13 percent.  According to Wisconsin Mall, if the 
lower five percent discount rate is applied to its contract 
damages against Saks, that would result in $3.8 million more 
than what it received in the condemnation award.   
¶40 Neither Saks nor the City is willing to concede that 
Wisconsin Mall is entitled to the lease's five percent discount 
rate as part of its just compensation in the ch. 32 condemnation 
proceedings even if Wisconsin Mall is able to show a breach that 
triggered that provision in the lease.  At one point during oral 
                                                 
15 In discussing these two potential differences, we do not 
mean to suggest that there may not also be other differences. 
No. 
2005AP323   
 
18 
 
argument, the City argued that each party to the condemnation 
proceedings would have an expert who could proffer an opinion as 
to the proper discount rate to apply, leaving the ultimate 
determination of the applicable rate to the jury.16 
¶41 Second, the litigation expenses (including attorney's 
fees) available to Wisconsin Mall in this contract action 
against Saks may be different from what it could receive in the 
ch. 32 condemnation proceedings.  As already noted, the lease 
contains a clause providing that Saks would pay all of Wisconsin 
Mall's reasonable costs and expenses in connection with the 
condemnation proceedings.  It also contained a more general 
provision under which Saks agreed to indemnify Wisconsin Mall.    
¶42 In contrast, express provisions in Wis. Stat. § 32.28 
dictate that litigation expenses (including attorney's fees), 
are available to a condemnee only if certain conditions are met.  
For example, the condemnee is allowed litigation expenses if a 
jury verdict for the condemnee exceeds the jurisdictional offer 
or the highest written offer prior to the jurisdictional offer 
by at least $700 and at least 15 percent.  See § 32.28(1) and 
(3)(e). 
¶43 The court of appeals summarily determined that any 
attorney's fees due Wisconsin Mall under the lease could be 
considered in the amount of the condemnation award.  However, 
                                                 
16 It is difficult to square this argument with Saks' and 
the City's argument that all the damages that Wisconsin Mall has 
suffered will necessarily be compensable in the condemnation 
proceedings. 
No. 
2005AP323   
 
19 
 
this determination may present a conflict with the express 
provisions of § 32.28. 
¶44 Based on these and other potential differences between 
the damages or other remedies that may be available to Wisconsin 
Mall in its contract claim against Saks and the damages or other 
remedies 
that 
may 
be 
available 
in 
ch. 
32 
condemnation 
proceedings, we reject Saks' and the City's argument that 
Wisconsin 
Mall's 
remedies 
must 
necessarily 
be 
had 
in 
condemnation court.  Rather, in light of the two general rules 
we previously discussed and the terms of the lease, we remain 
convinced that whether Wisconsin Mall may seek a remedy against 
Saks for a breach of the lease depends on the terms of the lease 
as interpreted and applied to the facts of this case. 
¶45 Whether Wisconsin Mall will ultimately be entitled to 
a remedy against Saks here will also depend on whether Saks 
breached the lease, and what damages exist as a result of such 
breach.  When these questions are answered, it can be determined 
whether Wisconsin Mall is entitled to contract damages against 
Saks that exceed what it has received as just compensation under 
ch. 32.  In other words, it can be determined whether Wisconsin 
Mall is confined to condemnation court, or whether it is 
ultimately entitled to a remedy against Saks in this contract 
action. 
¶46 The circuit court erroneously granted summary judgment 
on the theory that the existence of condemnation proceedings 
precluded Wisconsin Mall from maintaining a breach of contract 
No. 
2005AP323   
 
20 
 
claim against Saks.17  Thus, it did not address whether there 
exist any genuine issues of material fact with respect to the 
existence of a breach and to damages for such a breach.18  
                                                 
17 The circuit court's oral decision on summary judgment was 
brief.  In addition to concluding that condemnation law "trumps" 
contracts, it also determined that Wisconsin Mall was precluded 
from asserting a breach of contract against Saks based on Saks' 
alleged collusion with the City because Wisconsin Mall failed to 
pursue a Wis. Stat. ch. 32 claim that the City's condemnation of 
its property was not for a public purpose. 
We understand that Wisconsin Mall's contract claim against 
Saks 
may 
implicate 
the 
question 
of 
whether 
the 
City's 
condemnation of the property was for a public purpose.  However, 
we do not agree that Wisconsin Mall was required to litigate the 
public purpose question in a ch. 32 proceeding in order to 
preserve its right to assert collusion by Saks in the breach of 
contract action before us.  
18 Wisconsin Mall asserts that the facts reveal that Saks 
induced the City to condemn Wisconsin Mall's property in 
violation of section 5.1(c) of the lease.  It relies on evidence 
submitted as part of the summary judgment materials, including 
the retention agreement between Saks and the City under which 
the City indemnified Saks and Saks conferred certain benefits on 
the City.  According to Wisconsin Mall, this agreement shows 
that Saks "paid" the city to condemn Wisconsin Mall's property.  
Wisconsin Mall further advances that an email message from its 
managing member indicated it was willing to be part of a 
"friendly" condemnation only if the terms of the lease remained 
in force. 
Saks, in contrast, asserts that discussions regarding the 
acquisition of Wisconsin Mall's property were initiated by the 
City's mayor.  It interprets the email from Wisconsin Mall's 
managing member differently to show that Wisconsin Mall was 
aware of the nature of the City's condemnation plans and was 
willing to go along with them.  Saks also suggests that 
Wisconsin 
Mall 
continued 
to 
be 
involved 
in 
condemnation 
negotiations up to and including 2003, when the City made a 
jurisdictional offer.  It points to deposition testimony of 
Wisconsin Mall's managing member, also included in the summary 
judgment materials. 
No. 
2005AP323   
 
21 
 
¶47 Accordingly, we reverse the court of appeals' decision 
that affirmed the circuit court, and we remand to the circuit 
court for further proceedings consistent with this opinion.  
Upon remand, the circuit court will be able to determine whether 
there exist genuine issues of material fact as to breach and 
damages.19 
 By the Court.—The decision of the court of appeals is 
reversed, and the cause is remanded to the circuit court for 
further proceedings consistent with this opinion. 
 
 
 
                                                 
19 It appears that the parties have agreed to stay the 
condemnation proceedings, Brown County Circuit Court Case No. 
2005CV2218.  During the time that Wisconsin Mall's contract 
action remains pending, condemnation proceedings should remain 
stayed. 
The 
City 
asserts 
that, 
even 
in 
the 
condemnation 
proceedings, it should have the right to bring a motion in 
limine 
challenging 
section 
7.1(g) 
of 
the 
lease 
as 
an 
unenforceable penalty clause.  We need not address the question 
of whether such a challenge has merit.  Rather, the City may 
attempt to bring its motion at the appropriate time. 
No. 
2005AP323   
 
 
 
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