2013 WI 56

SUPREME COURT OF WISCONSIN

CASE NO.: 2011AP788

COMPLETE TITLE: Christopher T. Beidel,

Plaintiff-Appellant,

v.

Sideline Software, Inc.,

Defendant-Respondent-Petitioner,

Michael C. Hall and Kevin C. Austin,

Defendants.

REVIEW OF A DECISION OF THE COURT OF APPEALS

Reported at 340 Wis. 2d 433, 811 N.W.2d 856

(Ct. App. 2012 – Published)

PDC NO: 2012 WI App 36

OPINION FILED: July 2, 2013

SUBMITTED ON BRIEFS:

ORAL ARGUMENT: January 9, 2013

SOURCE OF APPEAL:

COURT: Circuit

COUNTY: Milwaukee

JUDGE: William W. Brash III

JUSTICES:

CONCURRED: ZIEGLER, ROGGENSACK, J.J., concur. (Opinion

filed.)

DISSENTED: GABLEMAN, J., dissent.(Opinion filed.)

NOT PARTICIPATING: PROSSER, J., did not participate.

ATTORNEYS:

For the defendant-respondent-petitioner, there were briefs

by Kim Grimmer and Travis J. West and Solheim Billing & Grimmer,

S.C., Madison, with oral argument by Travis J. West.

For the plaintfiff-appellant, there was a brief filed by

Michael J. Aprahamian, Michael A. Bowen, Brian P. Keenan, and

Foley & Lardner LLP, Milwaukee, with oral argument by Michael J.

Aprahamian.
2013 WI 56

NOTICE

This opinion is subject to further

editing and modification. The final

version will appear in the bound

volume of the official reports.

No. 2011AP788

(L.C. No. 2009CV5862)

STATE OF WISCONSIN : IN SUPREME COURT

Christopher T. Beidel,

Plaintiff-Appellant

v.

Sideline Software, Inc.,

Defendant-Respondent-Petitioner,

Michael C. Hall and Kevin C. Austin,

Defendants.

FILED

JUL 2, 2013

Diane M. Fremgen

Clerk of Supreme Court

REVIEW of a decision of the Court of Appeals. Affirmed.

¶1 N. PATRICK CROOKS, J. We review a published court of

appeals decision

1 involving a dispute over the amount of money

due to a shareholder for his shares in Sideline Software, Inc.

(Sideline), a company that serves the fantasy football league

market with an online league-management program. Because we

agree that the balancing of the equities required in a specific

performance claim did not occur and summary judgment was

1 Beidel v. Sideline Software, Inc., 2012 WI App 36, 340

Wis. 2d 433, 811 N.W.2d 856.
No. 2011AP788

2

improperly granted, we affirm the court of appeals' decision to

reverse and remand for the circuit court to evaluate the claim

under the principles governing specific performance, determining

1) whether specific performance is available as a remedy, 2)

whether there was a substantial enough breach to warrant

specific performance, 3) whether the equities lie on the

plaintiff's or defendant's side, and 4) whether anything would

make an order of specific performance unfair, unreasonable or

impossible.

¶2 The minority shareholder, Christopher Beidel, sought

specific performance of the Stock Repurchase Agreement

2 that he

and Michael Hall, the majority shareholder, had signed.

Beidel's claim rests on two provisions of the Agreement. One

provision sets a stipulated price per share that is in effect

for two years; if that price expires without a new stipulation,

the share value is to be determined by an appraiser selected by

Sideline. The other provision gives a shareholder whose

employment is terminated without cause while a stipulated price

is in effect the right to exercise a put option

3 to sell his

2 In the Agreement, the parties stipulated that "[i]f a

controversy arises concerning the right or obligation to

purchase or sell any of the shares of Stock, such right or

obligation shall be enforceable in a court of equity by a decree

of specific performance." "When a contract specifies remedies

available for breach of contract, the intention of the parties

generally governs." Ash Park, LLC v. Alexander & Bishop, Ltd.,

2010 WI 44, ¶37, 324 Wis. 2d 703, 783 N.W.2d 294.

3 A put option is "[a]n option to sell something (esp.

securities) at a fixed price even if the market declines; the

right to require another to buy." Black's Law Dictionary 1121

(7th ed. 1999).
No. 2011AP788

3

shares at the stipulated price. The dispute: Sideline thinks it

must pay only the appraised value for Beidel's shares, and

Beidel thinks Sideline must pay the stipulated share price,

which is some six times more.

4

¶3 After it became clear that Sideline was planning to

terminate him and was transitioning his duties to others while

delaying the termination until the stipulated price expired,

Beidel gave written notice that he was exercising his put option

and demanding that 2,490 of his shares be purchased at the

stipulated price of $1,600 per share, which had not yet expired.

When Sideline refused to purchase Beidel's shares, Beidel

brought a claim for specific performance, seeking to have the

court order Sideline to purchase the shares at the stipulated

price, for a total of nearly four million dollars.

¶4 At the heart of the equitable claim this case presents

is the question of whether it was fair for Sideline to time a

planned termination without cause to avoid paying Beidel $1,600

per share and instead choose to let the stipulated price expire

before terminating him so that Sideline could instead pay only

the fair market value of the shares. Beidel contends that Hall

had explicitly told him in 2008 Sideline would terminate Beidel

as soon as the stipulated purchase price expired; Beidel

contends that Sideline essentially terminated him in 2008,

4 The record does not disclose the precise difference

between the two prices, but there is evidence that the

difference is substantial; a purchase offer made to Sideline in

early 2009 was for an amount that would have bought out the

shareholders at $260 per share.
No. 2011AP788

4

transitioning his duties to others and unfairly delaying the

formal termination solely to avoid paying the stipulated

purchase price then in effect.

¶5 Sideline does not dispute that the delay was due to a

desire to avoid the stipulated share price; rather, it asserts

that it was free to time the termination as it saw fit. Under

Sideline's interpretation of the contract, refusing to pay

Beidel the stipulated share price was not a breach of the

Agreement because Beidel's option to sell the shares for that

price was never triggered: no termination actually occurred

until September 17, 2009. Sideline says Beidel is therefore

entitled, under the applicable provision of the Agreement, only

to "the fair market value of the [s]tock as determined by an

appraiser selected by Sideline."

¶6 The court of appeals decision we review reversed a

grant of summary judgment for Sideline on the grounds that

"[t]he circuit court did not . . . consider the balancing of

equities required in a case where a party seeks specific

performance of a contract." Beidel v. Sideline Software, Inc.,

2012 WI App 36, ¶16, 340 Wis. 2d 433, 811 N.W.2d 856. The court

of appeals considered the fact that Beidel had sought specific

performance and focused on "the special implications of that

request for relief." Id., ¶14. The court of appeals concluded

that although the circuit court's analysis correctly disposed of

one aspect of Beidel's argument, "there is more" to evaluating a

claim seeking specific performance. Id., ¶13.
No. 2011AP788

5

¶7 The circuit court had granted Sideline's motion for

summary judgment on the claim of specific performance, basing

its holding on the conclusion that the claim could not rest on

an allegation that Sideline had constructively terminated Beidel

because a required element of constructive termination was

undisputedly absent.

5 That is a correct statement of Wisconsin

law concerning the test for constructive termination. This was

not, however, a claim for wrongful termination, and, as the

court of appeals rightly recognized, the claim that was made was

never properly addressed.

¶8 The record indicates, too, that the circuit court

voiced observations that would be relevant to the task of

balancing the equities. As the court of appeals noted, the

circuit court appeared somewhat reluctant to dismiss Beidel's

claim on these facts; the circuit court stated that "[a] strong

argument can be made that this scenario is so strong [that it

resembles constructive termination]."

¶9 Besides that, it is potentially relevant to consider

the circuit court's disposition of two other counts that were a

part of this multi-count lawsuit,

6 claims that were against Hall

5 At several points in the transcript, the circuit court

appears to make reference to equitable considerations, but the

basis for its ruling is clearly stated in terms of a

constructive termination analysis.

6 The amended complaint in this case, 09CV5862, lists three

claims, characterized as follows: Count I: Specific Performance

(as to Sideline Software, Inc.), Count II: Breach of Fiduciary

Duty (as to Michael C. Hall) and Count III: Breach of Fiduciary

Duty (as to Kevin C. Austin).
No. 2011AP788

6

and another individual and arose from the same underlying facts.

When those counts were before the circuit court for summary

judgment disposition along with this one, the court declined to

grant the defendants summary judgment for a notable reason: it

found that "there are questions of fact with respect to

[whether] they act[ed] in good faith" and whether they were

acting in the best interest of the company or were "out to get

Mr. Beidel." Those counts remained after this count was

dismissed, and they proceeded to a jury trial after this count

was dismissed.

7 While this appeal does not concern those claims,

the motion hearing transcript in which the circuit court

addressed all three counts clearly reflects the circuit court's

conclusion that summary judgment was precluded as to Counts 2

and 3 by genuine issues of material fact that related to good

faith among the parties and their dealings with each other.

There is no evidence in the record that those concerns were

addressed in the context of the specific performance claim, a

claim that by definition turns on equitable considerations.

7 Beidel moved the court of appeals to take judicial notice

of the special verdict form from the jury trial. The court of

appeals denied the motion, stating that "the verdict does not

affect either the result of this appeal or the analysis of this

opinion." Beidel, 340 Wis. 2d 433, ¶16 n.5. While reference was

made in the briefs to this verdict, we are limited to the

information in the record, which includes the summary judgment

motion hearing transcript referenced above but not the jury

verdict. See Jenkins v. Sabourin, 104 Wis. 2d 309, 313, 311

N.W.2d 600 (1981) (materials that are not a part of the record

cannot be considered).
No. 2011AP788

7

Such a claim should not be disposed of on summary judgment

without addressing them.

¶10 Further, as the court of appeals observed, "[t]he rule

that parties to a contract act in good faith is universal."

8

We have held that "[e]very contract implies good faith and fair

dealing between the parties to it," and that mere "compliance in

form, not in substance" is a breach of "the covenant of good

faith that accompanies every contract."

9

¶11 We therefore agree with the court of appeals that

summary judgment was improperly granted in this case without the

required balancing of the equities that are due to a specific

performance claim and without a consideration of the potential

application of the covenant of good faith and fair dealing. In

order to make a prima facie case that Sideline was entitled to

summary judgment, its motion would need to show a defense that

would defeat Beidel's claim. That is, it must successfully

attack the requirements for obtaining specific performance:

- that specific performance is available as a remedy

10;

8 Beidel, 340 Wis. 2d 433, ¶15 (citing Restatement (Second)

of Contracts § 205 (1981)).

9 Chayka v. Santini, 47 Wis. 2d 102, 107 & n.7, 176 N.W.2d

561 (1970).

10 Ash Park, 324 Wis. 2d 703, ¶37 (when a contract specifies

remedies available for breach of contract, the intention of the

parties generally governs). Otherwise "the primary criterion for

the availability of specific performance has been the inadequacy

of the legal remedy." 12 Joseph M. Perillo, Corbin on Contracts

§ 63.1 (rev. ed. 2012).
No. 2011AP788

8

- that there has been a substantial enough breach to

warrant specific performance

11; and

- that the equities lie on [the plaintiff's] side,

12 and

that nothing would make an order of specific performance

unfair, unreasonable or impossible.

13

In determining whether the requirements for specific performance

have been met in this case, it will be necessary for the court

to interpret and apply the provisions of the Stock Repurchase

Agreement, with special reference to Section 6, Termination of

Employment without Cause, as well as Sections 8(b) and (c),

which relate to valuation. In this case the analysis

necessarily involves interpreting the contract and determining

whether the undefined term "termination" is ambiguous, and if

so, what the parties intended the term to mean. Extrinsic

evidence may be needed in order to make the determination of the

parties' intent.

¶12 Sideline's motion for summary judgment does not set

forth such a defense, and therefore fails to make a prima facie

11 Huntoon v. Capozza, 57 Wis. 2d 447, 452, 204 N.W.2d 649

(1973).

12 Venisek v. Draski, 35 Wis. 2d 38, 51, 150 N.W.2d 347

(1967); Gaugert v. Duve, 2001 WI 83, ¶46, 244 Wis. 2d 691, 628

N.W.2d 861 (describing the circuit court's balancing process in

that case thus: "The circuit court also concluded that as

between the [plaintiffs] and the defendants the equities were

perhaps equal due to the uniqueness of the property and the

competing interests at stake" and explaining that the circuit

court had concluded that one party's failure to take steps to

preserve a remedy tipped the scales).

13 Gaugert, 244 Wis. 2d 691, ¶47.
No. 2011AP788

9

case.

14 Accordingly, we affirm the court of appeals and remand

for "the circuit court's determination where the bulk of the

equities lie, including an evaluation of what the parties

intended when they agreed to the stock re-purchase agreement,

and whether it should grant specific performance as Beidel

requested." Beidel, 340 Wis. 2d 433, ¶16. A circuit court may

grant summary judgment to a party on remand as warranted after

the equities have been balanced, recognizing the implications of

the nature of a claim for specific performance and the wellestablished obligation of good faith and fair dealing.

15

I. BACKGROUND

¶13 The case arises in the context of a deteriorating

relationship between a majority shareholder and a minority

shareholder. We briefly set forth a description of the parties,

their relationship and the terms of the contract at the center

of this dispute.

¶14 Sideline began by selling a computer program for

fantasy football league management; it later moved to online

14 See Swatek v. County of Dane, 192 Wis. 2d 47, 61-62, 531

N.W.2d 45 (1995) (describing the summary judgment methodology of

examining first whether a claim has been stated, then turning to

whether a prima facie case was made by the movant, and if so,

examining the opposing party's materials). The validity of the

claim in this case, the first step of the summary judgment

analysis, is not at issue.

15 Super Valu Stores, Inc. v. D-Mart Food Stores, Inc., 146

Wis. 2d 568, 577, 431 N.W.2d 721 (Ct. App. 1988) (Wisconsin law

does recognize that "[e]very contract implies good faith and

fair dealing between the parties to it, and a duty of

cooperation on the part of both parties.") (citation omitted).
No. 2011AP788

10

products for that same purpose. It was incorporated in 1998 by

Hall and Beidel, who had been college friends. Though the

distribution of the shares changed over the years, Hall was from

the beginning the majority shareholder, and at the relevant

time, Hall owned 2,505 shares (slightly over half) and Beidel

owned 2,495 shares. In the course of expanding the business,

the company purchased in 2001 a small company that had developed

an online product. Its owner, Kevin Austin, possessed the kind

of programming skills that such online products required; he was

initially engaged as a consultant and ultimately was hired and

granted options to purchase outstanding shares of the company.

Austin and Beidel did not have a good relationship; the

deterioration of that relationship appears to have played a

significant role in Beidel's eventual departure from the

company.

¶15 In 2004, Beidel and Hall signed a Stock Repurchase

Agreement that was intended to "provide a means of assuring a

market for the sale of their Stock in certain specified events."

As relevant to this appeal, the Agreement contained the

following provisions. It contained a stipulation that specific

performance is the appropriate remedy for breach.

16 It contained

a provision that if a shareholder (that is, Hall or Beidel) were

fired without cause, Sideline would buy that shareholder’s stock

16 In the Agreement, the parties stipulated that "[i]f a

controversy arises concerning the right or obligation to

purchase or sell any of the shares of Stock, such right or

obligation shall be enforceable in a court of equity by a decree

of specific performance."
No. 2011AP788

11

at an agreed price. The clause, section 6 of the Agreement,

reads:

Termination of Employment Without Cause; Shareholder's

Put Option. Upon the termination of a Shareholder's

employment with Sideline without cause (as defined in

section 7(b) below), the terminated Shareholder shall

have a continuing option to sell all or any part of

the Stock owned by him, and upon exercise of such

option, Sideline shall have the obligation to purchase

all of Shareholder's Stock so elected for sale by such

Shareholder, at the price and on the terms provided in

sections 8 and 9 below. Provided, however, that such

purchase and sale shall be subject to the restrictions

and limitations set forth in section 11 hereof. The

terminated Shareholder shall exercise such option by

providing 30 day[s'] prior written notice to Sideline

of his decision to sell his Stock.

(Emphasis added.) The referenced sections relevant here,

sections 8(b) and 8(c), provided for a two-year expiration

date and an alternative valuation:

If no review of the Purchase Price is undertaken, the

Purchase Price set forth in the prior year(s) shall

continue in effect unless a period of 24 months

expires from the last time in which the Shareholders

and Sideline stipulated a Purchase Price.

If the Purchase Price has not been stipulated within

the 24 months prior to a Purchase Event, and a

Purchase Event occurs, the Purchase Price shall be the

fair market value of the Stock as determined by an

appraiser selected by Sideline.

¶16 Pursuant to the Agreement, Beidel and Hall set the

stock price over the years between 2004 and 2007. As the court

of appeals explained:

The last stipulated price was agreed to in a document

signed by both Hall and Beidel, dated March 6, 2007.

It provided for a per-share valuation of $1,600, and
No. 2011AP788

12

thus expired twenty-four months later because Hall and

Beidel never agreed on a new valuation.

Beidel, 340 Wis. 2d 433, ¶4.

¶17 Because there was no new agreed-upon valuation, the

price stipulated to on March 6, 2007, was set to expire on March

6, 2009. In October 2008, Hall told Beidel of his intention to

terminate Beidel. In December of 2008, the two met to discuss

the transitioning of Beidel's duties prior to April of the

following year. Following that meeting, the process of

transitioning duties seemed to be underway in January of 2009.

That month another company interested in purchasing Sideline

made an offer to purchase. The offer contained an employment

agreement and stock options for Hall, but none for Beidel. On

January 20, Beidel submitted written notice to Hall that he was

thereby exercising his put option under the Agreement with

regard to 2,490 shares of Sideline stock. The notice asserted

that he had already been "stripped . . . of [his] job

responsibilities" and his employment had "already been

terminated by Sideline." He demanded that Sideline purchase the

stock at the stipulated price in accordance with the Agreement.

¶18 When Sideline refused, Beidel filed a claim against

Sideline for specific performance.

17 Sideline moved for summary

judgment. Sideline claimed that it was entitled to summary

judgment because "Beidel was motivated to claim he was

constructively discharged in order to increase his buy-out,"

17 He also filed related claims against Hall and Austin

individually.
No. 2011AP788

13

because "there was no termination of Beidel prior to March 6,

2009," and because "Beidel cannot establish a single element of

constructive discharge" to establish that events prior to March

6, 2009, constituted termination. The summary judgment motion

described "Hall's right to postpone the termination, in order to

avoid the stipulated price," as "a significant contract right

that Hall and Sideline had under the Agreement." It

acknowledges that Hall "was not motivated to coerce Beidel into

resigning in advance of March 2009" and that Hall "was

motivated" to keep him employed "until at least after the

stipulated price expired." It states that "Hall had

specifically represented to Beidel that he would have a job

until at least then . . . ." It also acknowledges that Beidel's

duties were documented for the purpose of "transitioning them to

others." The motion for summary judgment does not contain any

argument concerning the equitable considerations relevant to a

claim of specific performance.

¶19 The circuit court for Milwaukee County, the Honorable

John J. DiMotto presiding, initially granted partial summary

judgment to Sideline as follows:

The plaintiff may not proceed on the specific

performance claim against Sideline . . . by claiming

that he was constructively discharged. There is no

genuine issue of material fact that one of the

essential elements of a claim of constructive

discharge, actual resignation by the employee, did not

occur in this case. . . . The plaintiff will be

permitted to proceed to trial on Count No. I, but he

will be required to prove that he was actually

discharged by Sideline Software Inc., without cause,

prior to the expiration of the stipulated price.
No. 2011AP788

14

¶20 Following a subsequent hearing, the Honorable William

W. Brash, III, denied Beidel's motion for reconsideration and

dismissed the amended complaint with prejudice as to Sideline,

noting that Beidel did not contend that he was actually

terminated by Sideline prior to March 7, 2009. A subsequent

motion for reconsideration was denied.

¶21 As noted above, the circuit court denied summary

judgment as to related claims because the court found genuine

issues of material fact concerning the good faith dealings of

the parties.

¶22 The court of appeals reversed the grant of summary

judgment; Sideline petitioned for review, and this court granted

review.

II. SPECIFIC PERFORMANCE

¶23 The question presented by the claim is whether Beidel

is entitled to specific performance of the repurchase of his

shares at the stipulated price of $1,600 each after Sideline

refused to honor Beidel's exercise of his put option under the

agreement. We look to our case law on specific performance for

the principles that govern a specific performance claim. There

we see a series of determinations that a court is obligated to

make and the showing a party must make to prevail in such a

claim.

¶24 The threshold question is whether specific performance

is available. In this case, as noted above, the parties agreed

in advance that it would be. In the agreement, the parties

stipulated that "[i]f a controversy arises concerning the right
No. 2011AP788

15

or obligation to purchase or sell any of the shares of Stock,

such right or obligation shall be enforceable in a court of

equity by a decree of specific performance." We have stated

that when a contract specifies remedies available for breach of

contract, the intention of the parties generally governs. Ash

Park, LLC v. Alexander & Bishop, Ltd., 2010 WI 44, ¶37, 324 Wis.

2d 703, 783 N.W.2d 294 (affirming grant of specific

performance). Where there is not such an agreement in advance,

"the primary criterion for the availability of specific

performance has been the inadequacy of the legal remedy." 219

Corbin on Contracts § 63.1. "[T]he general rule defining the

instances where specific performance will be granted may be

stated as follows: where damages are an inadequate remedy and

the nature of the contract is such that specific enforcement of

it will not be impossible or involve too great practical

difficulties . . . equity will grant a decree of specific

performance." 25 Samuel Williston, A Treatise on the Law of

Contracts § 67:1 (4th ed. 2002). "Specific

performance . . . will not be ordered if damages would be

adequate to protect the expectation interest of the injured

party." Restatement (Second) of Contracts § 359(1) (1981). See

also Negus v. Madison Gas & Elec. Co., 112 Wis. 2d 52, 64, 331

N.W.2d 658, 665 (Ct. App. 1983) (holding that specific

performance was unavailable because statute limits plaintiff to

particular remedies: "Because Negus must pursue a statutory

remedy available to him, the trial court erred in concluding
No. 2011AP788

16

that specific performance was an available remedy. The order

granting specific performance therefore must be reversed.").

¶25 After the threshold determination is made that

specific performance is available, the analysis proceeds with a

series of questions.

¶26 First, is there a substantial enough breach to warrant

specific performance? In a case involving a contract, this

necessarily requires the court to interpret the terms of the

contract. The Restatement (Second) of Contracts describes the

relationship of a breach and a claim of specific performance:

"[Specific performance] is seldom granted unless there has been

a breach of contract, either by non-performance or by

repudiation." Restatement (Second) of Contracts § 357 cmt. a

(1981).

18 In the context of a land contract, Huntoon v. Capozza

refined the question further to weigh the significance of the

alleged breach. The court focused its analysis on whether there

were breaches "substantial enough" to warrant specific

performance. Huntoon v. Capozza, 57 Wis. 2d 447, 452, 204

N.W.2d 649 (1973). Huntoon concerned a contract between a

seller and buyer of a bar. The seller filed a claim for

specific performance seeking the full balance of the purchase

price and other costs after the buyer defaulted on the payments

following a fire at the property. In addressing the claim, the

18 It also acknowledges the possibility of seeking specific

performance prior to a breach: "In unusual circumstances,

however, it may be granted where there is merely a threatened

breach." Restatement (Second) of Contracts § 357 cmt. a (1981).
No. 2011AP788

17

court differentiated between various claimed breaches on the

basis of whether they were "substantial enough to justify

equitable relief to the vendors." Id. With respect to one

claim, the failure of the buyer to pay an agreed-upon portion of

the real estate taxes, the court said, "[W]e are not prepared to

state on this record that such breach was material." Id. at

453. The other two claimed breaches, failure to make the

monthly payment on time and failure to maintain the

establishment's tavern license in good standing, were, the court

found, "substantial enough to justify equitable relief to the

vendors." Id. at 452. It is apparent from this distinction that

absent the "substantial enough" breach, equitable relief is not

justified.

¶27 In determining whether a substantial enough breach

occurred, it will be appropriate to consider, as the court of

appeals discussed, the covenant of good faith and fair dealing.

As this court has observed, "Every contract implies good faith

and fair dealing between the parties to it, and a duty of

cooperation on the part of both parties." Chayka v. Santini, 47

Wis. 2d 102, 107 n.7, 176 N.W.2d 561 (1970). The Chayka case

illustrates the common disfavor for following the letter but not

the spirit of an agreement,

19 and in that case, it was deemed a

19 See, e.g., Mendelson v. Del. River & Bay Auth., 56 F.

Supp. 2d 436, 438 (D. Del. 1999) (rejecting a Maryland

jurisdictional challenge that "look[ed] only to the letter of

its contract, ignoring the spirit of the agreement" where the

contract stated that the product would be shipped to Virginia

but the manufacturer knew that the specially manufactured item

was intended for installation in Maryland).
No. 2011AP788

18

violation of the covenant of good faith and fair dealing to do

so. What had happened in Chayka has been concisely summarized

this way:

In Chayka, a husband and wife contracted to execute

joint and reciprocal wills, which, upon one party's

death, would leave all property to the other and, upon

the survivor's death, would leave all property owned

by the survivor to another relative. After the

husband's death, the wife remarried and, shortly

thereafter, conveyed virtually all of her property to

her new husband (or, in some instances, to herself and

her husband in joint tenancy). On the wife's death,

her estate sought to overturn the conveyances.

Resisting the challenge, the second husband argued

that the will contract had been fully performed

because a will with all of the agreed-upon terms had

been executed (and fully performed, in that the wife

did leave the property that remained to the

relative).

20

The Chayka court did not accept the second husband's argument

that the contract had been complied with, as the "property that

remained" had indeed been left to the other relative:

This, as another court has well stated it to be, is "a

mere play upon words." What she in fact has done has

stripped nearly all of the flesh from the bones,

leaving only a skeleton for testamentary disposition

to [the relative who was to receive the property].

This is a compliance in form, not in substance, that

breaches the covenant of good faith that accompanies

every contract, by accomplishing exactly what the

agreement of the parties sought to prevent.

Chayka, 47 Wis. 2d at 107.

20 Foseid v. State Bank of Cross Plains, 197 Wis. 2d 772,

795, 541 N.W.2d 203 (Ct. App. 1995) (citations omitted).
No. 2011AP788

19

¶28 The court of appeals in Foseid acknowledged what was

implicit in Chayka's holding——that "accomplishing exactly what

the agreement of the parties sought to prevent" constituted an

independent breach even if there was no other technical breach

alleged. "[W]e do not consider that reference as a holding that

violation of the implied promise of good-faith dealing may not

be considered independent of any breach (or lack of breach) of

the underlying contract. Indeed, such a holding would run

contrary to the supreme court's decision in [Chayka]." Foseid

v. State Bank of Cross Plains, 197 Wis. 2d 772, 795, 541 N.W.2d

203 (Ct. App. 1995)(citations omitted).

¶29 A party may not, however, employ the good faith and

fair dealing covenant to undo express terms of an agreement.

Reliance on the covenant of good faith and fair dealing did not

avail a franchisee who complained that "even if [the

franchisor's] conduct comported with the terms of the

agreement," the covenant required that the franchisor "not

franchise a second store in [the franchisee's] market area."

Super Valu Stores, Inc. v. D-Mart Food Stores, Inc., 146 Wis. 2d

568, 577, 431 N.W.2d 721 (Ct. App. 1988). In Super Valu Stores,

the franchise agreement "specifically authorized" the franchisor

to act in a manner which could harm the franchisee. The

franchise agreement explicitly stated that the franchise was

non-exclusive and the franchisor had the "sole choice and

discretion" as to whether to enter another franchise agreement

in the same community or any other. Id. at 572. As the court

of appeals said in that case,
No. 2011AP788

20

[W]here, as here, a contracting party complains of

acts of the other party which are specifically

authorized in their agreement, we do not see how there

can be any breach of the covenant of good faith.

Indeed, it would be a contradiction in terms to

characterize an act contemplated by the plain language

of the parties' contract as a "bad faith" breach of

that contract.

Id. at 577. Unlike in Chayka, in Super Valu Stores there was

compliance with both the form and substance of the contract.

¶30 Having determined that specific performance is

available and warranted by a substantial enough breach by a

party, the court arrives at the heart of the matter——the

"balancing of the equities" in which it takes into consideration

all the facts and circumstances and determines whether the

plaintiff is entitled to the equitable relief he seeks. "The

fairness of ordering specific performance depends on the facts

and equities of the individual case before the circuit court and

will vary from case to case." Ash Park, 324 Wis. 2d 703, ¶38.

This balancing has been described as "a judicial discretion":

But this discretion is not one to be exercised at the

mere will and pleasure of the judge. It must be a

judicial discretion, controlled and governed by the

principles and rules of equity. Its exercise therefore

depends upon the existence of a multitude of facts,

events, and incidents surrounding the transaction

. . . .

Mulligan v. Albertz, 103 Wis. 140, 144, 78 N.W. 1093 (1899).

"Accordingly, specific performance will be granted when it is

apparent from a view of all the circumstances of the particular

case that it will serve the ends of justice." 81A C.J.S.

Specific Performance § 4 (2004). Indeed, as one treatise has

stated, "[I]n determining the question [of whether to grant or
No. 2011AP788

21

refuse a decree of specific performance], a greater variety of

facts is to be taken into consideration than is the case in an

action for damages for breach of contract." 12 Joseph M.

Perillo, Corbin on Contracts § 63.1 (rev. ed. 2012).

¶31 As a part of its equitable balancing, the court must

consider countervailing concerns: Are there any factual

considerations that would make specific performance unfair,

unreasonable, impossible, oppressive, harsh or unjust? See

Gaugert v. Duve, 2001 WI 83, ¶47, 244 Wis. 2d 691, 628 N.W.2d

861 (stating, "The circuit court's analysis did not reveal any

factual considerations that would make specific performance

unfair, unreasonable, or impossible." (citing Anderson v.

Onsager, 155 Wis. 2d 504 at 512-13, 455 N.W.2d 885 (1990))).

This determination has been phrased in various ways: "The court

will not grant the relief unless satisfied that the claim is

fair and the contract equal and founded on consideration, that

it is not opposed to public policy, that the plaintiff is guilty

of no inequitable conduct or of delay constituting laches, and

that the result will not be oppressive, harsh or unjust." 9 Jay

Grenig, Wisconsin Pleading and Practice § 81:2 (5th ed. 2012)

(citing cases).

¶32 Consistent with the latitude the circuit court has to

consider many factors is the latitude the circuit court has to

fashion a remedy. Wisconsin cases have recognized that once a

court has determined that equitable relief is appropriate, it

has wide latitude to fashion the remedy based on the equities of

the case. "This being an action for specific performance the
No. 2011AP788

22

circuit court sits as a court of equity and should be able to

fashion relief which will be equitable to both plaintiffs and

defendants." Venisek v. Draski, 35 Wis. 2d 38, 51, 150 N.W.2d

347 (1967). See also Town of Fond du Lac v. City of Fond du

Lac, 22 Wis. 2d 525, 531–32, 126 N.W.2d 206 (1964) ("A court of

equity has inherent power to fashion a remedy to the particular

facts. Continued failure to do so would render equity . . .

sterile and . . . arbitrary in its relief . . . ."); Am. Med.

Servs., Inc. v. Mut. Fed. Sav. & Loan Ass'n, 52 Wis. 2d 198,

205, 188 N.W.2d 529 (1971) ("The court of equity has always had

a traditional power to adapt its remedies to the exigencies and

the needs of the case; that was one of the great virtues and

reasons for the existence of courts of equity."); Ash Park, 324

Wis. 2d 703, ¶73 ("[T]he court of equity has the power of

devising its remedy and shaping it so as to fit the changing

circumstances of every case and the complex relations of all the

parties." (quoting 1 John Norton Pomeroy, A Treatise on Equity

Jurisprudence § 109 (5th ed. 1941)).

¶33 Finally, we note that this case arises in the posture

of a summary judgment motion. We review a summary decision de

novo, applying the same methodology as the circuit court. Green

Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d 816

(1987). "Under [Wis. Stat. § 802.08], summary judgment must be

entered 'if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to a
No. 2011AP788

23

judgment as a matter of law.'" Swatek v. County of Dane, 192

Wis. 2d 47, 61, 531 N.W.2d 45 (1995). The methodology is

straightforward——evaluate the claim first, then see if the

moving party has presented a prima facie case for summary

judgment, and if so, examine the opposing party's proof:

Our first step is to discern whether the pleadings set

forth a claim for relief as well as a material issue

of fact. If the pleadings meet this initial test, our

inquiry shifts to the moving party's affidavits or

other proof to determine whether a prima facie case

for summary judgment has been presented. If the moving

party has made a prima facie case for summary

judgment, we then examine the affidavits and other

proof of the opposing party to discern whether there

exist disputed material facts, or undisputed material

facts from which reasonable alternative inferences may

be drawn, sufficient to entitle the opposing party to

a trial.

Id. at 61-62.

III. DISCUSSION

¶34 Having set out the analytical framework that applies

to a specific performance case, we now turn to the task of

applying it to the case at hand. We apply the methodology as

described by Swatek. There is no dispute, as to the initial

question, that the pleadings set forth a claim for relief,

specifically for equitable relief, pursuant to a contractual

provision, as well as a material issue of fact. The amended

complaint alleges that Sideline failed to pay the stipulated

price after Beidel exercised his put option.

¶35 The next question is whether the moving party, in this

case Sideline, has made a prima facie case for summary judgment.

"To make a prima facie case for summary judgment, a moving
No. 2011AP788

24

defendant must show a defense which would defeat the plaintiff."

Grams v. Boss, 97 Wis. 2d 332, 338, 294 N.W.2d 473 (1980),

overruled on other grounds by Meyers v. Bayer AG, Bayer Corp.,

2007 WI 99, 303 Wis. 2d 295, 735 N.W.2d 448.

¶36 In order to prevail on his equitable claim, as we have

set forth above, Beidel would have to show that that specific

performance is available to him as a remedy,

21 that there was a

substantial enough breach to warrant specific performance, that

the equities lie on his side, and that nothing would make an

order of specific performance unfair, unreasonable or

impossible. In order to make a prima facie case for summary

judgment, Sideline must therefore show "a defense which would

defeat the plaintiff." Grams, 97 Wis. 2d at 338. In the

context of a specific performance claim, the motion for summary

judgment must address the specific requirements the case law

sets forth for such a claim.

A. The Summary Judgment Motion

¶37 An examination of Sideline's summary judgment motion

shows that while it has shown a defense which would defeat a

constructive termination argument in a wrongful termination

claim, it has not shown a defense which would defeat the claim

21 In the Agreement, the parties stipulated that "[i]f a

controversy arises concerning the right or obligation to

purchase or sell any of the shares of Stock, such right or

obligation shall be enforceable in a court of equity by a decree

of specific performance." When a contract specifies remedies

available for breach of contract, the intention of the parties

generally governs. Ash Park, 324 Wis. 2d 703, ¶37.
No. 2011AP788

25

Beidel actually brought. Not only does the summary judgment

motion fail to address the equitable claim directly, it attempts

to support its position with facts and arguments that could be

construed to support Beidel's position on the equitable claim

(e.g., Sideline claims that it had a "right to postpone the

termination, in order to avoid the stipulated price," that Hall

"was not motivated to coerce Beidel into resigning in advance of

March 2009," and that Hall "was motivated" to keep him employed

"until at least after the stipulated price expired"). None of

these assertions are inconsistent with Beidel's theory that

Sideline unfairly refused to purchase his shares at the

stipulated price after delaying his termination for that express

purpose. Because the summary judgment motion does not show a

defense that would defeat the equitable claim, it does not make

a prima facie case. The analysis ends there, and the motion

fails.

¶38 We turn next to the two legal concepts that are likely

to arise again when the case is remanded: the doctrine of

constructive termination and the covenant of good faith and fair

dealing. We examine each of the issues in order to acknowledge

and respond to the parties' arguments.

B. Constructive Termination

¶39 As noted above, Beidel was formally terminated by the

board of Sideline in September 2009. He has asserted that he

was, in reality, terminated long before that. The significance

of the timing is that if the termination took place while the

stipulated price was still in effect, Beidel's shares are worth
No. 2011AP788

26

$1,600 each. If the termination took place after the expiration

of the stipulated price, his shares are worth many times less.

¶40 The constructive discharge doctrine "recognizes that

some resignations are coerced, tantamount to a termination."

Strozinsky v. Sch. Dist. of Brown Deer, 2000 WI 97, ¶68, 237

Wis. 2d 19, 614 N.W.2d 443. We addressed this scenario in

Strozinsky and described the purpose of the doctrine this way:

Actual discharge carries significant legal

consequences for employers, including possible

liability for wrongful discharge. In an attempt to

avoid liability, an employer may refrain from actually

firing an employee, preferring instead to engage in

conduct causing him or her to quit. The doctrine of

constructive discharge addresses such employerattempted 'end runs' around wrongful discharge and

other claims requiring employer-initiated terminations

of employment.

Strozinsky, 237 Wis. 2d 19, ¶68.

¶41 The court stated that the significance of the holding

was that "employers cannot escape liability by coercing a

resignation instead of formally uttering the words 'you're

fired.'" Id., ¶83. It then stated what a plaintiff seeking to

establish that a resignation was coerced must show: "The

plaintiff must prevail under an objective standard, establishing

that conditions were so intolerable that a reasonable person

confronted with same circumstances would have been compelled to

resign." Id.

¶42 Beidel asserts that the situation here is governed by

the principle underlying the constructive discharge doctrine—
No. 2011AP788

27

that substance is more important than form. Essentially, he

seeks, at least in the context of an equitable claim, an

interpretation of the constructive discharge test under which

the meaning of being "substantially terminated" would encompass

situations where an employer does not formally terminate an

employee, and the employee does not resign. He has not,

however, brought to our attention any cases in which a court

found constructive termination had occurred where the employee

had not resigned. Sideline agrees that the doctrine is key in

this case; indeed, it asserts that the dispositive question in

this case is whether Beidel can show that he was constructively

discharged prior to the expiration of the stipulated price of

the shares. Sideline argues that Beidel concedes that his

formal termination happened later, and he cannot show that he

resigned, as required by the Strozinsky elements. Sideline

asserts that those facts are fatal to his claim that the put

option was triggered before the stipulated price expired.

¶43 We disagree in key respects with both approaches.

Beidel is wrong because he thinks in an equitable case, the test

for constructive discharge can be applied in a less formalistic

way such that constructive discharge can be found to occur even

where there is not a resignation by an employee. Even though the

rationale underlying the constructive discharge doctrine is, as

Beidel points out, one of making sure that "substance prevails
No. 2011AP788

28

over form," courts have established the test for a constructive

termination, and every Wisconsin case we have found that meets

that test involves a resignation. See Strozinsky, 237 Wis. 2d

19, ¶68. The fact that the test was developed in order to help

courts do justice does not mean that it is to be applied without

regard to the required elements. We see no need to alter the

Strozinsky approach to testing constructive discharge claims.

We recognize that this case is unusual in that it involves an

employee who is also a shareholder and director, who is arguably

compelled by his own self-interest to help keep the company

functioning and profitable and therefore prevented from

resigning as might an employee without those additional roles.

We do not think it wise to alter an established and workable

test to fit the unusual situation presented here.

¶44 However, we cannot agree that this conclusion——that

the constructive termination test is not satisfied——disposes of

Beidel's equitable claim. Sideline argues that specific

performance of the contract is precluded because the

constructive termination elements cannot be shown. But that

argument is based on a fundamental misapprehension of the claim

for specific performance: Beidel was not pursuing a claim for

wrongful termination and does not allege that the termination of

his employment, whenever it happened, violated any contract. As

the court of appeals held, the analysis does not end with the
No. 2011AP788

29

disposal of the constructive termination claim. Further, it is

unhelpful and unnecessary to graft the constructive termination

requirements onto the equitable analysis. On that point, we

agree with Beidel that "[t]he court's discretion in deciding

whether to grant specific performance should not be limited by a

test imported from an entirely different legal theory

implicating entirely different concerns."

¶45 There is one further, related consideration, given

that Beidel's claim turns on the timing of the ending of his

employment with Sideline. The foundation for Beidel's specific

performance claim is that his treatment by Sideline triggered

his right to exercise his put option prior to the expiration of

the stipulated share price. The contract, in section 6,

"Termination of Employment Without Cause; Shareholder's Put

Option," cross-references section 7(b) for the definition of

"Cause":

"Cause" means (i) the commission of a felony or a

crime involving moral turpitude or the commission of

any other act or omission involving dishonesty,

disloyalty or fraud with respect to Sideline, (ii)

failure to devote his entire business time to the

business of Sideline (subject to normal vacation leave

or time off, illness or sick leave, or other periods

of permitted absence), (iii) conduct tending to bring

Sideline into substantial public disgrace or

disrepute, (iv) gross negligence or willful misconduct

with respect to Sideline, or (v) any material breach

of this Agreement.
No. 2011AP788

30

However, we observe that the contract does not define

"termination."

22 In the course of weighing the equities in a

specific performance claim based on a contract, a court needs to

of course consider the terms of the contract, and whether

"termination" is ambiguous, and if so, what the parties intended

the term to mean.

23 All of this is appropriate to consider when

the circuit court weighs the equities involved.

C. Covenant of Good Faith and Fair Dealing

¶46 The parties also dispute the application of the

covenant of good faith and fair dealing in the context of a

22 We briefly note again the language in Section 6

concerning what triggers the obligation of Sideline to purchase

the shareholder's stock at the price in effect at the relevant

time:

Termination of Employment Without Cause; Shareholder's

Put Option. Upon the termination of a Shareholder’s

employment with Sideline without cause (as defined in

section 7(b) below), the terminated Shareholder shall

have a continuing option to sell all or any part of

the Stock owned by him, and upon exercise of such

option, Sideline shall have the obligation to purchase

all of Shareholder's Stock so elected for sale by such

Shareholder, at the price and on the terms provided in

sections 8 and 9 below.

23 Capital Investments, Inc. v. Whitehall Packing Co., 91

Wis. 2d 178, 190, 280 N.W.2d 254 (1979) ("After a contract has

been found to be ambiguous, it is the duty of the courts to

determine the intent of the parties at the time the agreement

was entered into. In resolving the ambiguity and determining the

parties' intent, the court may look beyond the face of the

contract and consider extrinsic evidence. Additionally, the

court may rely on the canons of construction which are designed

to ascertain the intentions of the parties entering into a

contract." (Citations omitted.)).
No. 2011AP788

31

specific performance claim, especially one that involves an

employee's termination. We set out above the basic principles

that Wisconsin cases have discussed: that every contract implies

good faith and fair dealing between the parties to it, and a

duty of cooperation on the part of both parties; that a

violation of the implied promise of good-faith dealing may be

considered independent of any breach of the underlying contract;

and that the covenant cannot be used to turn what was

specifically authorized in the agreement into a breach.

24

¶47 Sideline makes several arguments related to this

topic. It argues that Beidel waived the opportunity to have

this doctrine discussed in connection with his claim, and it

appears to take the position that it is not appropriate or

permitted for the court to consider the application of the

covenant of good faith and fair dealing unless Beidel "pled a

second cause of action that is independent and severable from

the claim for breach of contract based upon constructive

24 See discussion at ¶¶27-29, supra. Contrary to the

dissent's claim (Dissent, ¶5), we do not conclude that the

covenant of good faith and fair dealing can "be used to vitiate

clear contractual language."
No. 2011AP788

32

discharge."

25 Sideline also argues that there is no application

of the covenant of good faith and fair dealing because the

covenant is employed as a "gap-filler," to be applied to

circumstances that are not contemplated by the language of the

parties' contract. In this case, Sideline asserts, the contract

has no gaps to fill because the Stock Repurchase Agreement

contemplated that Sideline "might [choose] to make the

termination effective after the stipulated price expired because

of changes in market conditions or other uncertainties impacting

the accuracy of the stipulated price." Finally, it asserts that

to the extent that the covenant of good faith and fair dealing

comes into play here, it was Beidel who breached the duty of

good faith by seeking to obtain a premium for his shares to

which he was not entitled under the terms of the contract.

Beidel argues that the covenant of good faith and fair dealing

is applicable in the analysis of an equitable claim and asserts

that because it is a part of all contracts, there has been no

waiver of its application here.

¶48 Sideline's waiver argument is not persuasive. It

would be absurd to remand for the balancing of the equities

25 We would note that Beidel's claim is pled as an equitable

claim. The complaint lists three claims, characterized as

follows: Count I: Specific performance (as to Sideline Software,

Inc.), Count II: Breach of fiduciary duty (as to Michael C.

Hall) and Count III: Breach of fiduciary duty (as to Kevin C.

Austin).
No. 2011AP788

33

where a party seeks specific performance and to do so on the

condition that the circuit court ignore breaches of good faith

and fair dealing by the parties. While the covenant of good

faith and fair dealing is implicit in all contracts and thus

relevant to all types of contract claims, it is most relevant in

an equitable case, which by its nature deals with the ideal of

fairness. There is no requirement that a claim be pled as a

breach of the covenant of good faith and fair dealing in order

for the doctrine to play a part in the analysis of the case. As

discussed above at paragraph 29, the situation in Super Valu

Stores was one in which the franchisee countersued the

franchisor on the grounds that the franchisor's decision to

grant another franchise in the same city violated the duty of

good faith and fair dealing "even if [the franchisor's] conduct

comported with the terms of the agreement." Super Valu Stores,

146 Wis. 2d at 577. In that case, the contract explicitly

permitted the franchisor to act to the detriment of the

franchisee: The franchise agreement explicitly stated that the

franchise was non-exclusive and gave the franchisor "the

right . . . to enter into . . . Retailer Agreements with other

parties at [its] sole choice and discretion." Id. at 572.

Entering into retailer agreements with other parties, therefore,

did not constitute a lack of good faith and fair dealing because

the franchisee had consented to it in the contract. Whether
No. 2011AP788

34

Sideline's alleged action was "contemplated by the plain

language of the parties' contract," as the franchisor's right in

Super Valu Stores was, will be a matter for the circuit court to

decide. Sideline's and Beidel's remaining arguments about the

application of good faith and fair dealing may also be

appropriately directed to the circuit court on remand.

26

IV. CONCLUSION

¶49 We reiterate that the case law on specific performance

is abundantly clear that the equities must be weighed. It is

clear from a review of the record that such a balancing has

never happened in this case. The motion for summary judgment

26 The standard jury instruction on the implied duty of good

faith, Wis JI-Civil 3044, may be of assistance. It states in

part:

Under Wisconsin law, the contract between (defendant)

and (plaintiff) requires that each party act in good

faith towards the other party and deal fairly with

that party when (performing) (enforcing) (carrying

out) the expressed terms of the contract. This

requirement to act in good faith is a part of the

contract just as though the contract stated it.

. . . Whether the duty to act in good faith has been

met in this case should be determined by deciding what

the contractual expectations of the parties were.

Therefore, in deciding whether the defendant breached

the duty of good faith by (e.g., terminating the

contract . . . ), you should determine the purpose of

the agreement; that is, the benefits the parties

expected at the time the agreement was made. This

duty of good faith means that each party to a contract

will not do something which will have the effect of

injuring or destroying the (rights) (ability) of the

other party to receive the benefits of the contract.
No. 2011AP788

35

failed to make a prima facie case that Sideline was entitled to

specific performance because it did not show a defense that

would defeat the equitable claim it opposed.

¶50 We therefore agree with the court of appeals that

summary judgment was improperly granted in this case without the

required balancing of the equities that are due to a specific

performance claim and without a consideration of the possibility

of a breach of the covenant of good faith and fair dealing. In

order to make a prima facie case that Sideline was entitled to

summary judgment, its motion would need to show a defense that

would defeat Beidel's claim. That is, it must successfully

attack the requirements for obtaining specific performance:

- that specific performance is available as a remedy;

- that there has been a substantial enough breach to

warrant specific performance; and

- that the equities lie on his side, and that nothing would

make an order of specific performance unfair,

unreasonable or impossible.

In determining whether the requirements for specific performance

have been met in this case, it will be necessary for the court

to interpret and apply the provisions of the Stock Repurchase

Agreement, with special reference to Section 6, Termination of

Employment without Cause, as well as Sections 8(b) and (c),

which relate to valuation. In this case the analysis
No. 2011AP788

36

necessarily involves interpreting the contract and determining

whether the undefined term "termination" is ambiguous, and if

so, what the parties intended the term to mean. Extrinsic

evidence may be needed in order to make the determination of the

parties' intent.

¶51 Sideline's motion for summary judgment does not set

forth such a defense, and therefore fails to make a prima facie

case. Accordingly, we affirm the court of appeals and remand

for "the circuit court's determination where the bulk of the

equities lie, including an evaluation of what the parties

intended when they agreed to the stock re-purchase agreement,

and whether it should grant specific performance as Beidel

requested." Beidel, 340 Wis. 2d 433, ¶16. A circuit court may

grant summary judgment to a party on remand as warranted after

the equities have been balanced, recognizing the implications of

the nature of a claim for specific performance and the wellestablished obligation of good faith and fair dealing.

By the Court.—The decision of the Court of Appeals is

affirmed.

DAVID T. PROSSER, J., did not participate.
No. 2011AP788.akz

1

¶52 ANNETTE KINGSLAND ZIEGLER, J. (concurring). I

concur and join the majority opinion's discussion concerning

termination which is consistent with this concurrence and the

majority's conclusion that the question of when Beidel was

terminated should proceed before the trial court. I agree that

this case should be remanded because the facts need development

as to when a "termination" occurred under the terms of the Stock

Repurchase Agreement such that the proper remedy can be

determined. Here, the remedy hinges upon when the termination

occurred. Based on the record before the court, it is unclear

whether Beidel is entitled to the stipulated price of $1,600 per

share or the lower fair market value price.

¶53 As this case is a matter of contract interpretation, I

repeat the relevant contract language. Section 6 of the Stock

Repurchase Agreement governs when a shareholder who is

terminated without cause is entitled to the stipulated stock

price:

Shareholder's Put Option. Upon the termination of a

Shareholder's employment with Sideline without Cause

(as defined in section 7(b) below), the terminated

Shareholder shall have a continuing option to sell all

or any part of the Stock owned by him, and upon

exercise of such option, Sideline shall have the

obligation to purchase all of Shareholder’s Stock so

elected for sale by such Shareholder, at the price and

on the terms provided in sections 8 and 9

below. . . . The terminated Shareholder shall

exercise such option by providing 30 day[s'] prior

written notice to Sideline of his decision to sell his

Stock.
No. 2011AP788.akz

2

Sideline does not allege that Beidel was terminated for cause.

Its brief states that "Beidel was terminated as an officer and

employee."

¶54 Section 8 of the contract governs the initial per

share price and how the price would be determined thereafter,

including an annual review of the price. "Upon such review, the

Shareholders and Sideline shall either stipulate by an

instrument in writing that there is no change in the price last

stipulated or agree upon a new Purchase Price by an instrument

in writing signed by them and Sideline . . . ." If the parties

did not negotiate a new price, the prior year's price continued

for one more year, such that a stipulated price could stay in

effect for a maximum of two years. If the parties still did not

negotiate a price two years after the last stipulated price, the

price of shares that were sold "shall be the fair market value

of the Stock as determined by an appraiser selected by

Sideline." The most recent stipulated price of $1,600 per share

was entered into on March 6, 2007, and it was set to expire on

March 6, 2009.

¶55 The threshold question that the circuit court must

consider is whether Beidel was "terminated" before March 6,

2009, as that term is used in the contract. If he was, then he

is entitled to the stipulated price of $1,600 per share. If he

was not, then he is entitled to a per share price determined by

the fair market value.

1

1 The majority opinion agrees this is a question to be

resolved on remand. See majority op., ¶¶44, 45, 46 n.24.
No. 2011AP788.akz

3

¶56 The goal of contract interpretation is to ascertain

the intent of the parties. Kernz v. J.L. French Corp., 2003 WI

App 140, ¶9, 266 Wis. 2d 124, 667 N.W.2d 751. When the contract

is plain and unambiguous, "we will construe the contract as it

stands." Id. (citation omitted). Under the contract language

and its call for specific performance as the remedy, when Beidel

was terminated is the central issue.

¶57 The Stock Repurchase Agreement does not define

"termination." Black's Law Dictionary defines "termination" as

"[t]he act of ending something." Black's Law Dictionary 1482

(7th ed. 1999). Another dictionary defines "termination" as

"[t]he act of terminating or the condition of being terminated."

The American Heritage Dictionary of the English Language 1852

(3d ed. 1992).

¶58 Sideline argues that Beidel was formally terminated by

the board of directors on September 17, 2009. Beidel argues

that he was terminated before the March 6, 2009, expiration of

the stipulated price. He points to the fact that in October

2008, Sideline informed him that it intended to fire him and in

January 2009, transitioned his duties to other employees. See

majority op., ¶17. On January 20, 2009, pursuant to Section 6

of the contract, Beidel submitted written notice purportedly to

exercise his put option. Id.

¶59 One reasonable interpretation of the word

"termination" in the Stock Repurchase Agreement is a complete

separation or a complete end to the shareholder's employment.

Another reasonable interpretation of "termination" is an act
No. 2011AP788.akz

4

evidencing an employer's intent to end the shareholder's

employment. In this case, Sideline reduced Beidel's employment

duties significantly and admitted to running out the clock on

the stipulated price. Whether that reduction in duties

constitutes a termination under the terms of the agreement is a

question of fact that is not resolved by the language of the

contract or by the record before the court. Cf. Loos v. George

Walter Brewing Co., 145 Wis. 1, 4, 129 N.W. 645 (1911) (stating

that when employer does not permit employee to perform "the

substantial or principal service he agreed to perform" and

directs the employee to perform other tasks, an employee who

refuses to complete new tasks "may treat such refusal and

direction as a discharge"); 1A Steven Plitt, Daniel Maldonada &

Joshua D. Rogers, Couch on Insurance § 8:68 (3d ed. 2010) ("The

employee's performance of administrative functions in relation

to the insured does not conclusively extend the employment.").

The word "termination" in the Stock Repurchase Agreement is

subject to more than one reasonable interpretation and the facts

in the record do not conclusively answer what the parties

intended by "termination." Justice Gableman asserts that the

parties stipulated to the time period of the termination. See

dissent, ¶67 n.2. The record in that regard is not crystal

clear because the record does not contain a copy of the actual

stipulation.

2 Therefore, I would remand this case for a hearing

2 Not only does the record not contain a firsthand copy of

the actual stipulation, but the secondhand information we do

have in the record is unclear as to the nature of the

stipulation. The attorneys give two different portrayals of

what was stipulated. Sideline's attorney stated that "we've had
No. 2011AP788.akz

5

before the circuit court to determine when the termination

occurred.

¶60 The majority opinion remands this case for "the

circuit court's determination where the bulk of the equities

lie, including an evaluation of what the parties intended when

they agreed to the stock re-purchase agreement, and whether it

should grant specific performance as Beidel requested."

Majority op., ¶51. The majority's approach of balancing the

equities should not be read to preclude summary judgment when

applying the terms of the contract.

¶61 I agree that unnecessarily injecting good faith and

fair dealing into a contract, especially when the terms of the

contract are clear, is improper. See dissent, ¶69. Indeed, the

Seventh Circuit is rightly wary of using the doctrine of good

faith and fair dealing to overcome the rights and

responsibilities set forth in a contract. See id., ¶72 (quoting

Mkt. St. Assocs. Ltd. P'ship v. Frey, 941 F.2d 588, 593, 595

(7th Cir. 1991) ("[I]t is unlikely that Wisconsin wishes, in the

name of good faith, to make every contract signatory his

brother's keeper. . . . It would be quixotic as well as

presumptuous for judges to undertake through contract law to

raise the ethical standards of the nation's business people.")).

a concession by the plaintiff that there was no actual

termination." Beidel's attorney stated that "we did agree and

stipulate that we would not pursue that," meaning the actual

termination claim. As I do not believe the record before this

court conclusively resolves whether Beidel was terminated under

the terms of the contract, I would remand.
No. 2011AP788.akz

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¶62 Here, the critical contract term, "termination," is

not fully developed within the facts of this case, the meaning

of which must be determined on remand. Therefore, I would

remand for a circuit court hearing to determine when the

termination occurred. If the fact finder concludes Beidel was

not "terminated" prior to March 6, 2009, he will receive only

the fair market value of his shares. If the fact-finder's

decision is to the contrary, the contract sets the per share

price he is to be paid.

¶63 For the foregoing reasons, I respectfully concur.

¶64 I am authorized to state that Justice PATIENCE DRAKE

ROGGENSACK joins this concurrence.
No. 2011AP788.mjg

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¶65 MICHAEL J. GABLEMAN, J. (dissenting). Today the

court undermines contract rights in the name of good faith and

fair dealing, overturns thirty years of precedent, and inverts

the employer-employee relationship. I respectfully dissent.

I. BEIDEL FORFEITED HIS ARGUMENT CONCERNING THE COVENANT

OF GOOD FAITH AND FAIR DEALING

¶66 Before discussing the majority's legal conclusions, it

is important to first note that Beidel forfeited

1 his argument

that Sideline violated the covenant of good faith and fair

dealing. Beidel never pled a claim related to the covenant of

good faith and fair dealing, nor did he raise the issue before

the court of appeals. The court of appeals, however, assisted

Beidel by plucking the remedy out of thin air and making it the

basis for its decision to remand to the circuit court to

determine "where the bulk of the equities lie." Beidel v.

Sideline Software, Inc., 2012 WI App 36, ¶16, 340 Wis. 2d 433,

811 N.W.2d 856.

¶67 So how does the majority get around the forfeiture

obstacle? By stating that "[i]t would be absurd to remand for

the balancing of the equities where a party seeks specific

performance and to do so on the condition that the circuit court

ignore breaches of good faith and fair dealing by the parties."

1 The majority refers to Beidel "waiving" his argument but

"forfeiture" is the more accurate term. See State v. Ndina,

2009 WI 21, ¶29, 315 Wis. 2d 653, 761 N.W.2d 612 ("Whereas

forfeiture is the failure to make the timely assertion of a

right, waiver is the intentional relinquishment or abandonment

of a known right.") (citation omitted).
No. 2011AP788.mjg

2

Majority op., ¶48. But this puts the cart before the horse.

Given that the majority is holding that the constructive

discharge doctrine does not apply, and that constructive

discharge was the entire justification for Beidel's specific

performance claim, it is unclear why this court is not

dismissing Beidel's complaint and is instead ordering the

circuit court to consider a claim that was never pled.

2

2 The concurrence considers a remand appropriate for further

fact-finding on whether Beidel was actually terminated during

the relevant time period. Concurrence, ¶59 n.2. I read the

record differently. In my view, Beidel conceded that he was not

actually terminated within the relevant period and a hearing on

the issue is therefore unnecessary.

At a telephonic conference regarding Beidel's motion for

reconsideration, Sideline's attorney stated: "I think we've had

a concession by [Beidel] that there was no actual termination of

him by Sideline . . . . [B]ecause of that prior concession by

[Beidel], I would like to prepare the order [dismissing Beidel's

motion for reconsideration]." Beidel's attorney then asked

Sideline's attorney to "send it to me before you send it in.

We'll make sure it's in the right form before we even get it to

the judge." The following month the circuit court signed the

order denying Beidel's motion for reconsideration. The order

contained the following language: "Further, based on an

agreement of the parties placed on the record on January 27,

2011, that Plaintiff [Beidel] does not contend he was actually

terminated by Sideline prior to March 7, 2009, this Order

resolves all claims as to Sideline's alleged liability to

Plaintiff." No party ever objected to this language, and no

party objects to it now.
No. 2011AP788.mjg

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¶68 While I acknowledge that appellate courts have the

inherent authority to consider issues raised for the first time

on appeal, State v. Huebner, 2000 WI 59, ¶¶27-28, 235 Wis. 2d

486, 611 N.W.2d 727, this discretionary power should be used

sparingly. Green v. Hahn, 2004 WI App 214, ¶21, 277 Wis. 2d

473, 689 N.W.2d 657. Moreover, our forfeiture doctrine permits

us to consider issues or arguments not raised; it does not

extend to causes of action that were never pled. Sohns v.

Jensen, 11 Wis. 2d 449, 458, 105 N.W.2d 818 (1960) ("Where an

issue is neither pleaded nor litigated in the trial court, this

court ordinarily will not consider it on appeal . . . .");

Murphy v. Martin, 58 Wis. 276, 280, 16 N.W. 603 (1883) (noting

that it is not the "province of this court" to "form new

issues"). As we recently stated, "The mutual consolation of

forfeiture is that each party can be confident that a right

forfeited by the other will not be relitigated in some

subsequent appeal or proceeding." State v. Soto, 2012 WI 93,

I regard the exchange between the attorneys quoted above as

an oral stipulation, subsequently memorialized in the court's

order, and binding on the litigants. See, e.g., Wyandotte

Chemicals Corp. v. Royal Elec. Mfg. Co., Inc., 66 Wis. 2d 577,

589, 225 N.W.2d 648 (1975) ("Generally then, oral stipulations

made in open court, taken down by the reporter, and acted upon

by the parties and the court are valid and binding.") (citation

omitted). In my opinion, the doctrine of claim preclusion would

thus bar Beidel from making an argument that he was actually

terminated under the hearing envisioned by the concurrence. See

N. States Power Co. v. Bugher, 189 Wis. 2d 541, 551, 525 N.W.2d

723 (1995) (describing the elements of claim preclusion as: "(1)

an identity between the parties or their privies in the prior

and present suits; (2) an identity between the causes of action

in the two suits; and (3) a final judgment on the merits in a

court of competent jurisdiction.").
No. 2011AP788.mjg

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¶36, 343 Wis. 2d 43, 817 N.W.2d 848. Or as Justice Scalia has

put it, the purpose of applying the forfeiture rule is to ensure

that the trial remains "the main event," and not simply a

"tryout on the road to appellate review." Freytag v. Comm'r of

Internal Revenue, 501 U.S. 868, 895 (1991) (Scalia, J.,

concurring). The court today provides no justification for

ignoring the forfeiture rule and giving Beidel——a sophisticated

party who has been ably represented throughout this litigation——

a shot at a second trial. In this respect the majority——much

like the court of appeals before it——serves as advocate rather

than adjudicator.

II. THE COVENANT CANNOT OVERRIDE EXPRESS TERMS OF A

CONTRACT

¶69 The most important fact in this case is that Sideline

acted completely in accordance with its contractual rights.

While it is true that the covenant of good faith and fair

dealing inheres in every contract, this equitable doctrine

cannot, contra the majority, be used to vitiate clear

contractual language. Instead, the notion of good faith is

meant to serve as a gap-filler where a contract is silent.

United States v. Basin Elec. Power Coop., 248 F.3d 781, 796 (8th

Cir. 2001). It may not "block use of terms that actually appear

in the contract," and it has "nothing to do with the enforcement

of terms actually negotiated." Continental Bank, N.A. v.

Everett, 964 F.2d 701, 705 (7th Cir. 1992) (Easterbrook, J.)

(citation omitted). Indeed, in a recent decision the United

States Supreme Court unanimously held that equitable remedies
No. 2011AP788.mjg

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cannot trump the plain terms of a contract and may be used only

to fill contractual gaps. US Airways, Inc. v. McCutchen, 569

U.S. __, 133 S. Ct. 1537, 1546-47, 1549-50 (2013). Here, there

are simply no gaps to be filled.

¶70 The majority seems to recognize these principles when

it states that "[a] party may not, however, employ the good

faith and fair dealing covenant to undo express terms of an

agreement." Majority op., ¶29. In fact, the majority quotes

(but then ignores) the following language from a court of

appeals opinion:

[When] a contracting party complains of acts of the

other party which are specifically authorized in their

agreement, we do not see how there can be any breach

of the covenant of good faith. Indeed, it would be a

contradiction in terms to characterize an act

contemplated by the plain language of the parties'

contract as a "bad faith" breach of that contract.

Super Valu Stores, Inc. v. D-Mart Food Stores, Inc., 146 Wis. 2d

568, 577, 431 N.W.2d 721 (Ct. App. 1988). The majority's

knowing disregard of such a fundamental principle of contract

law is inexplicable. It appears that the majority either thinks

that the concept of good faith and fair dealing is much broader

than it is, or perhaps it wants to expand the doctrine with this

case. In any event, the doctrine of good faith and fair dealing

is plainly inapplicable when a scenario is covered by the terms

of a contract.

¶71 Two of the leading lights of the law and economics

movement, Judges Frank Easterbrook and Richard Posner of the

United States Court of Appeals for the Seventh Circuit, have

sharply criticized the idea——advanced by the majority——that a
No. 2011AP788.mjg

6

party's bargained for contractual rights can be superseded by

the ethereal good faith requirement. As Judge Easterbrook has

said, "Parties to a contract are not each others' fiduciaries;

they are not bound to treat customers with the same

consideration reserved for their families." Kham & Nate's Shoes

No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351, 1357 (7th

Cir. 1990). An individual is "entitled to enforce [a contract]

to the letter," even if this causes "great discomfort" to the

other party. Id. The essence of an at-will contract is that an

"employer may sack its employee for any reason except one

forbidden by law, and it need not show 'good cause.'" Id. at

1358.

¶72 In a similar vein, Judge Posner——in a decision

interpreting Wisconsin law——wrote that "it is unlikely that

Wisconsin wishes, in the name of good faith, to make every

contract signatory his brother's keeper. . . . In fact the law

contemplates that people frequently will take advantage of the

ignorance of those with whom they contract, without thereby

incurring liability." Market Street Assocs. v. Frey, 941 F.2d

588, 593-94 (7th Cir. 1991). What is more, "even after you have

signed a contract, you are not obliged to become an altruist

toward the other party and relax the terms if he gets into

trouble in performing his side of the bargain." Id. at 594.

Judge Posner warned that "[i]t would be quixotic as well as

presumptuous for judges to undertake through contract law to

raise the ethical standards of the nation's business people."

Id. at 595. Living in a free enterprise society means that we
No. 2011AP788.mjg

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must accept that some contracts may "place one party at the

other's mercy." Id.

¶73 When Beidel and Hall entered into the stock repurchase

agreement, both knew (or should have known) that the put option

would be subject to the whims of the marketplace. For some

reason, the majority has decided to immunize Beidel and punish

Hall for the bargain that each struck. In doing so, this court

has just loosed a great deal of uncertainty upon contract law in

the State of Wisconsin, and in the process inverted the

employer-employee relationship by ceding some of a company's

termination authority to its workers. At the very least, an atwill employee can now raise a colorable claim on the meager

basis that he was terminated at a time inconvenient for him and

his stock options. This court would do well to heed the words

of Judge Learned Hand: "[I]n commercial transactions it does not

in the end promote justice to seek strained interpretations in

aid of those who do not protect themselves." James Baird Co. v.

Gimbel Bros., Inc., 64 F.2d 344, 346 (2d Cir. 1933).

III. THE MAJORITY OVERTURNS A THIRTY-YEAR-OLD DECISION OF

THIS COURT

¶74 In deciding that Beidel can present a factual argument

that the timing of his firing was in bad faith, this decision

overturns, sub silentio, Brockmeyer v. Dun & Bradstreet, 113

Wis. 2d 561, 335 N.W.2d 834 (1983), a case not even mentioned by

the majority. There, Brockmeyer was fired for smoking marijuana

in front of his employees, poor job performance, and having an

affair with his secretary. Id. at 565. Despite having no
No. 2011AP788.mjg

8

employment contract, Brockmeyer filed a wrongful discharge

action. Id. at 564-65. The issue in the case was whether an

at-will employee could bring a wrongful discharge action. See

id. at 563.

¶75 We began by recognizing the American common law rule,

which was that an employer may discharge an at-will employee

"for good cause, for no cause, or even for cause morally wrong,

without being thereby guilty of legal wrong." Id. at 567

(citations omitted). We then noted that federal and state

statutes have since modified the concept of an at-will employee

such that certain protected classes cannot be fired for

discriminatory reasons. Id. at 567-68. Consistent with these

statutory trends, state courts across the country developed two

common law causes of action for terminated at-will employees.

Id. at 568. One is the "public policy exception," which allows

a discharged employee to recover if "the termination violates a

well-established and important public policy." Id. at 569. The

other cause of action is broader, and provides that an employer

has an implied duty to terminate an employee only in good faith.

Id. A discharge in bad faith would thus constitute a breach of

contract. Id.

¶76 This court adopted the public policy exception while

expressly rejecting the bad faith termination cause of action.

As we stated, "We refuse to impose a duty to terminate in good

faith into employment contracts. To do so would 'subject each

discharge to judicial incursions into the amorphous concept of

bad faith.' . . . Imposing a good faith duty to terminate would
No. 2011AP788.mjg

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unduly restrict an employer's discretion in managing the

workforce." Id. (citation omitted). That has been the law for

thirty years. With today's decision that Sideline is not

entitled to summary judgment for exercising a clear contractual

right because the timing of Beidel's termination may have been

in bad faith, the majority overrules Brockmeyer and erodes atwill employment contracts.

IV. THE RECORD DOES NOT SUPPORT A FINDING OF BAD FAITH

¶77 Finally, if this court is going to adopt the bad faith

termination cause of action, it is worth pausing to consider

whether Sideline actually acted in bad faith towards Beidel.

Our decision remands this case to the circuit court to determine

which party has a stronger equitable claim. As I have made

clear throughout this dissent, I am unsure when it would ever be

inequitable for a party to exercise a valid contractual right,

so I do not know how the circuit court is supposed to proceed

under the standard crafted by today's opinion. But be that as

it may, I can see nothing that could plausibly be characterized

as bad faith conduct on the part of Sideline.

¶78 In October 2008, Hall informed Beidel that he planned

to fire him the following March, after Sideline's stock could be

revalued from its overinflated price of $1,600 a share. In

doing so, Hall acted not only in his best interests, but in the

best interests of the company as well. Additionally, by

providing notice to Beidel when he did, Hall gave him five

months to prepare for the inevitable. And during the period

leading up to his termination, Beidel continued to receive
No. 2011AP788.mjg

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compensation from Sideline——to the tune of $269,000 in salary

and shareholder distributions in 2008.

¶79 The only options Sideline had, besides the one it

took, were: (1) act contrary to its own interests and terminate

Beidel when the stock was overvalued; or (2) keep mum about

Beidel's impending termination and instead spring the news on

him the day after Sideline's stock was revalued. The first

choice is irrational and the second would seemingly fail the

equitable test laid down by the majority, but if Sideline is not

able to rely on the language of the contract, those were its

only alternatives. The court is remanding this case for the

circuit court to determine "whether the equities lie on the

plaintiff's or defendant's side," majority op., ¶1, but I think

today’s decision has already stacked the deck against Sideline.

¶80 For the foregoing reasons, I respectfully dissent.
No. 2011AP788.mjg

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