850 N.W.2d 845
Wis.2014Background
- Gagliano and Kraft executed a May 22, 2000 lease for 90,000 sf across two premises, later amended; the May 22 lease allowed a 4-year extension with notice 120 days before expiration, and directed notices to Electronic Printing Systems at Jefferson Street; Kraft personally guaranteed the May 22 lease and open-ended liability for subleases/assignments; an October 23, 2003 amendment designated OpenFirst, Inc. as successor to Electronic Printing Systems for notices; in 2002, OpenFirst entities sold assets and leases were assigned to new entities, with Gagliano consenting to assignment on condition of liability; on December 29, 2005, Gagliano sent notices extending the leases to 2010-2012 to multiple entities, including Kraft and Electronic Printing Systems, at the Jefferson Street address; Kraft asserted the extension was not valid, while New Electronic Printing Systems continued to pay rent; around 2006, Quad/Graphics began restructuring and entered a June 23, 2008 Voluntary Surrender Agreement and a Sublease with New Electronic Printing Systems; Quad/Graphics then moved to dismiss claims seeking rent for extended terms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gagliano gave valid notice to extend the leases. | Gagliano complied by sending to the designated tenant entities and the current holder; current tenant had actual notice. | Notice to Kraft at the defendant entity’s address did not satisfy the requirement to address New Electronic Printing Systems as the tenant at the time. | Notice was valid under both May 22, 2000 lease and October 23, 2003 amendment. |
| Whether Quad/Graphics was an assignee or a subtenant of the leases. | Quad/Graphics was an assignee liable for extended rent under privity of estate. | Quad/Graphics was a subtenant with no privity of estate; did not receive a full assignment of the lease. | Quad/Graphics was a subtenant, not an assignee; not liable for extended rent. |
Key Cases Cited
- Cross v. Upson, 17 Wis. 638 (Wis. 1864) (distinguishes assignment vs. under-tenancy and privity concepts)
- Cranston v. Bluhm, 33 Wis.2d 192, 147 N.W.2d 337 (Wis. 1967) (clarifies assignment vs. sublease in leasehold context)
- Lamonts Apparel, Inc. v. SI-Lloyd Assocs., 967 P.2d 905 (Or. Ct. App. 1998) (treats intent and transfer effects in assignment vs. sublease)
- Jaber v. Miller, 239 S.W.2d 760 (Ark. 1951) (intent governs whether transfer is assignment or sublease)
- Beckenheimer's Inc. v. Alameda Assocs. Ltd. P'ship, 611 A.2d 105 (Md. 1992) (illustrates variances in notice sufficiency standards)
- Congar v. Chicago & N.W. Ry. Co., 24 Wis. 157 (Wis. 1869) (corporate notice principles and agency concepts (based on officer/agent notice))