In D.L. Anderson’s Lakeside Leisure Co. v. Anderson, the Wisconsin Supreme Court recently upheld an award of damages for violation of a non-compete provision in a sale of business agreement. The facts of situation are as follows:

D.L. Anderson built D.L. Anderson Co., a business offering a range of marine services and products, such as shore landscaping and manufacturing and selling and servicing piers and lifts. He sold the business for $891,000 to Scott and Steven Statz in 2000. Of the purchase price, $400,000 was allocated as consideration for Anderson executing a non-compete provision that forbade him from engaging in the business of providing marine products and services within a 120-mile radius of the business. The non-compete provision also prevented Anderson from allowing his name to be used in the industry; $200,000 of the purchase price was allocated to the business’s goodwill and for use of the trade name.

Starting in 2002, Anderson performed a number of acts that the Statzes alleged violated the non-compete agreement. Specifically, Anderson: (1) worked on the development of a boat for installing and removing boatlifts; (2) acted as a factory representative of a company that manufactured and distributed boat lifts; (3) established a new business (one mile from his prior location) named “The Sailboat House at Anderson Marine” that sold, stored, and repaired boats and sold marine accessories; and (4) publicized his ability to perform shoreline restoration work.

The Statzes sued Anderson in September 2004. In April 2006, a jury awarded compensatory and punitive damages to the Statzes for breach of the non-compete provision and trademark infringement. After the entry of the verdict, the Statzes moved for injunctive relief and asked that the non-compete provision be extended by 591 days, pursuant to a tolling provision in the sale agreement. The Statzes also requested recovery of their attorney’s fees pursuant to the agreement. The trial court granted these requests. 

The Wisconsin Court of Appeals upheld the findings of breach of the agreement and trademark infringement, as well as the damages awarded for breach of the agreement. The Court of Appeals reversed the damages award for trademark infringement and remanded the attorney’s fees issue to the trial court for further consideration.

The Wisconsin Supreme Court upheld the award of compensatory damages for the violation of the non-compete provision. In so doing, the Supreme Court found that the Statzes presented evidence showing a decrease in gross receipts for pier installation, as well as testimony attributing the decline to Anderson’s competitive activities in areas where the Statzes had previously made sales. This evidence was sufficient to uphold the award of compensatory damages. 

The Supreme Court also upheld the extension of the non-compete period. In so doing, the Supreme Court recited the Court of Appeals’s finding that the extension of the period was proper because of the jury’s findings that Anderson violated the non-compete provision and the Statzes suffered damages as a result.

The Supreme Court upheld the jury’s verdict that Anderson infringed upon the trademark that he sold to the Statzes. The Supreme Court reversed the Court of Appeals’s finding that the Statzes provided insufficient evidence to support the damages awarded by the jury for infringement. In so doing, the Supreme Court found that the Statzes were not required to offer evidence of actual confusion and negative impressions on the part of customers; the $200,000 allocated to the goodwill was sufficient to support the award, as was the testimony of the Statzes as to the value of the goodwill. The Supreme Court also cited to testimony presented by the Statzes that established customer confusion and frustration resulting from billing issues caused by Anderson operating his similarly named business. The Supreme Court concluded that the jury did not have to apportion damages with mathematical precision because of the nature of the tort. 

Because the Court of Appeals’s decision to remand the attorney’s fees question was based on its reversal of the award of compensatory damages for trademark infringement, the Supreme Court reinstated the award of attorney’s fees. The Supreme Court remanded the matter to the trial court for consideration of an award of attorney’s fees to the Statzes for fees incurred during the appellate process.