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Ritter v. Farrow

Court of Appeals of Wisconsin, District III

July 30, 2019

Ted Ritter and Carolyn Ritter d/b/a Ritter Enterprises, Inc., Plaintiffs-Respondents,
v.
Tony Farrow and Arlyce Farrow d/b/a Farrow Enterprises, Inc., Defendants-Appellants, Bibs Resort Condominium, Inc., Intervenor-Respondent.

          APPEAL from a judgment of the circuit court for Vilas County, Cir. Ct. No. 2010CV212 MICHAEL H. BLOOM, Judge. Affirmed.

          Before Stark, P.J., Hruz and Seidl, JJ.

          SEIDL, J.

         ¶1 This case is before us a second time. In 1986, Ted and Carolyn Ritter d/b/a Bibs Resort, Inc.[1] (the Ritters) purchased a lakefront resort property and named it "Bibs Resort." Twelve years later, they converted their resort to a condominium, using the name Bibs Resort Condominium (the Condominium). The legal name of the statutorily required association of condominium owners was Bibs Resort Condominium Inc. (the Association). In 2006, the Ritters sold to Tony and Arlyce Farrow, d/b/a Farrow Enterprises (the Farrows), the Ritters' property management business, called Bibs Resort, along with two of the thirteen units that comprised the Condominium (the 2006 transaction). A dispute ensued over the Ritters' continuing use of the name "Bibs Resort" after the transfer, and in 2012 a jury found the Ritters liable for infringing on the Farrows' trademark rights to that name.

         ¶2 On appeal, the Ritters argued that the circuit court erred by denying their motion to require joinder of the Association. We agreed, concluding the Association had a valid interest in claiming it had acquired independent rights to the name "Bibs Resort" prior to 2006 and that, consequently, the rights to the name could not have been transferred to the Farrows because the Association was not a party to the 2006 transaction. See Ritter v. Farrow, Nos. 2012AP781 and 2013AP927, unpublished slip op. ¶37 (WI App June 24, 2014) (Ritter I). We therefore remanded the matter for further proceedings on the Farrows' trade name claim. Id., ¶55.

         ¶3 On remand, the circuit court granted summary judgment in favor of the Association and the Ritters. The court concluded, in relevant part, that: (1) the name "Bibs Resort" "became a part" of the Association at the time of the condominium conversion; and (2) the Association's interest in the name "Bibs Resort" prevented the Farrows from acquiring exclusive ownership of the rights to the use of the name as part of the 2006 transaction.

         ¶4 The Farrows now appeal, arguing the circuit court erred by concluding that the Association acquired any rights to the name "Bibs Resort" as part of the condominium conversion.[2] In support, they argue that Wisconsin's Condominium Ownership Act affects only real property. See Wis. Stat. ch. 703 (2017-18).[3] Thus, the Farrows contend the condominium conversion could not have had any effect on the Ritters' intangible personal property-i.e., their trademark rights.

         ¶5 We conclude the Ritters' conduct in establishing the Association and converting Bib's Resort to a condominium-taken together with both the Ritters' and the Association's subsequent actions which support Carolyn Ritter's averment that the Association owned the name "Bibs Resort"-manifested an implied agreement to transfer the name "Bibs Resort" to the Association. Because the Ritters did not own the name "Bibs Resort" in 2006, they could not have sold the name to the Farrows as part of the 2006 transaction. Accordingly, we affirm the circuit court's grant of summary judgment.

         BACKGROUND

         ¶6 From 1986 to 1998, the Ritters owned and operated Bibs Resort in St. Germain, Wisconsin. Bibs Resort consisted of: eleven cottages that the Ritters rented to the public; one house in which the Ritters lived; and a building the Ritters used as a tavern and game room.

         ¶7 In 1998, the Ritters converted Bibs Resort to the Condominium. The Ritters did so by first creating the Association, as required by statute, [4] and then executing a Declaration of Condominium.[5] The Condominium property consisted of: (1) thirteen units-namely, the eleven cottages, the Ritters' personal residence, and the tavern and game room described above; and (2) common elements comprised of "the land and all other parts of the condominium not within the perimeters of the individual units."[6]

         ¶8 At the time of the condominium conversion, the Ritters owned all thirteen condominium units and, therefore, were the sole members of the Association. Immediately after the conversion, the Ritters continued to rent all eleven cottage units to the public under the name "Bibs Resort." They subsequently sold four of the cottage units between 1998 and 2005. The new owners of these four units became members of the Association upon their purchase, and they were permitted to place the Bibs Resort logo on their respective unit doors. The Ritters, through a subchapter S corporation called Bibs Resort, Inc., "continued to rent the [sold] unit[s] under a management agreement with [each] new owner," referring to the rental properties as being part of "Bibs Resort."

         ¶9 In 2006, the Ritters agreed to sell certain property to the Farrows. More specifically, as set forth in a statement signed by the Ritters in January 2006:

Ted Ritter and Carolyn Ritter, sole owners and stockholders of [Bibs] Resort, Inc., a subchapter S corporation licensed in the state of Wisconsin, do hereby authorize the sale of [Bibs] Resort Inc. property management, its management contracts, listed inventory, unit 12 with the laundry building, unit 13 [the tavern], and the garage storage units 27-29.

         In the parties' offer to purchase, they specified that the sale included "all tangible and intangible personal property and rights in personal property owned by seller." According to Carolyn Ritter's affidavit, prior to the sale being completed:

The Farrows knew we had rental management agreements in place with all the condominium unit owners. They knew any agreement could be terminated by either party upon ninety (90) days advance notice. We discussed these rental management agreements with them, their attorney, and the real estate brokers. Everyone understood the rental management agreements could not be sold, assigned, or transferred. The Farrows' attorney insisted new rental management agreements be prepared and signed. Our attorney prepared new rental management agreements which were signed by the Farrows and all condominium unit owners, including ourselves. The new rental management agreements contained an identical ninety (90) day termination clause, enabling either party to terminate the agreement at any time, provided the required ninety (90) day advance notice was given.
We and our attorney also discussed with the Farrows and their attorney the provision of maintenance, repair, landscaping, and groundwork services to the Unit Owners Association. It was understood by all parties that those services were subject to contractual approval by the Board of Directors for [the Association]. The assumption of the right to provide these services by the Farrows was subject to approval by the Board of Directors, who also was responsible for the renewal or extension of any contract for such services. My husband and I never signed any document that conveyed or assigned to the Farrows the right to provide contract maintenance, repair, landscaping, and groundwork services to [the Association].

         ¶10 After the 2006 transaction was completed, the Ritters and the Farrows jointly reported the transfer of the Ritters' "management of vacation resort" business to Wisconsin's Division of Unemployment Insurance on a "Report of Business Transfer" form. That form listed the assets transferred in the sale, including the Ritters' "goodwill" in their business. Moreover, a box was checked stating that the sale constituted "a total transfer" of the Ritters' business.

         ¶11 The Ritters and the Farrows also submitted a request to the Wisconsin Department of Revenue (DOR) regarding a "[c]hange in business name." In their joint correspondence, they stated that Bibs Resort, Inc., still owned "business property (some rental cottages) at the resort" and "wish[ed] to maintain the businesses' corporate status but change the current name of Bibs Resort, Inc. to Ritter Enterprises, Inc." Further, they wrote that the Farrows "would like to use the name Bibs Resort as a trade name since they are handling advertising, reservations and payments under that name. Ted and Carolyn Ritter are amenable to that change."[7] (Emphases added.)

         ¶12 By February 2008, the relationship between the Ritters and Farrows had deteriorated, and the Ritters cancelled the Farrows' rental agreement for the Ritters' seven cottage units. In addition, the four remaining cottage unit owners terminated their rental management agreements with the Farrows. The Ritters then resumed renting their seven units themselves, using the name "Bibs Cottages."

         ¶13 In 2010, the Ritters filed a lawsuit against the Farrows in small claims court, asserting various claims not relevant to this appeal. The Farrows counterclaimed, asserting multiple causes of action, including trademark infringement for the Ritters' continued use of the name "Bibs Resort." Ultimately, the Ritters' claims were dismissed, leaving only the Farrows' counterclaims remaining in the case.

         ¶14 One month before the scheduled jury trial, the Association filed a motion to intervene. As grounds, the Association "claim[ed] an interest relating to the name 'Bibs Resort Condominium.'" The circuit court denied this motion, and a jury ultimately found that the Ritters ...


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