657 F.3d 615
7th Cir.2011Background
- DM&E owns rail lines in Janesville, WI, including a 200-foot spur serving Freedom Plastics, DM&E's largest local customer.
- WI&S proposes to buy DM&E's Janesville lines; DM&E agrees to sell but retains exclusive rights to its existing customers and an exclusive easement to the spur.
- After Freedom Plastics goes into receivership, its plant is purchased by NAPCO, which continues to operate at the plant.
- WI&S contracts with NAPCO to use the spur; DM&E still serves the plant but at a diminished rate.
- DM&E sues for breach of contract and trespass, arguing that the term Freedom Plastics refers to the plant regardless of ownership; district court grants summary judgment for WI&S.
- Wisconsin law governs; the court analyzes whether extrinsic evidence can reinterpret unambiguous contract terms and whether ownership changes affect the easement and trespass claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of 'Current Industry' and 'Freedom Plastics' in exclusivity clause | DM&E intended to retain exclusive access to Freedom Plastics' plant despite ownership changes. | Ownership change to NAPCO ends DM&E's exclusive access to the plant; terms refer to the plant's owner. | Contract unambiguous; DM&E loses on contract claim. |
| Whether extrinsic/trade usage evidence may interpret the contract | Trade usage shows 'Freedom Plastics' means the plant/facility, not the owner. | Parol evidence rule and integrated contract prevent such evidence from contradicting the written terms. | Extrinsic evidence insufficient; contract unambiguous; no resort to trade usage. |
| Relation between deed, merger, and rails as fixtures for trespass claim | DM&E retained ownership of the rails and right-of-way; WI&S trespassed by using spur. | Rails are fixtures sold with the land; deed extinguishes DM&E's title to rails; trespass fails. | Rails are fixtures; deed controls; trespass claim fails; contract governs exclusive access. |
Key Cases Cited
- Maryland Arms Limited Partnership v. Connell, 326 Wis. 2d 300 (2010) (contractual terms interpreted in light of common sense unless ambiguity shown)
- Gorton v. Hostak, Henzl & Bichler, 217 Wis. 2d 493 (1998) (words in contracts presumed to be used in their usual sense)
- United States Shoe Corp. v. Hackett, 793 F.2d 161 (7th Cir. 1986) (Wisconsin law on contract interpretation and extrinsic evidence)
- Beanstalk Group, Inc. v. AM General Corp., 283 F.3d 856 (7th Cir. 2002) (extrinsic evidence and contract interpretation considerations)
- Corbett v. Joannes, 125 Wis. 370 (1905) (Befores on contract interpretation and common sense limitations)