No punitives or attorney fees despite infringement, rules Wisconsin Court of Appeals.

• Author: Ziemer, David

Byline: David Ziemer

A Nov. 1 decision from the Wisconsin Court of Appeals is a must-read for both litigators and attorneys drafting asset purchase agreements containing noncompete clauses.

In the late 1970s, Donald Anderson started a business installing piers and boatlifts in Waunakee. He named the business D.L. Anderson Co., and operated under that name, as well as under the name D.L. Anderson Marine Contractors. The business grew to offer a range of services and products, including marine contracting, shoreline restoration, rip rapping (dumping crushed rock on the shoreline), landscaping, manufacture, sales and service of marine accessories, docks, piers, lifts and hoists.

In 2000, Anderson sold the business to M. Scott Statz and Steven Statz, pursuant to an asset purchase agreement. Included in the sale was the tradename D.L. Anderson Co.

The agreement also contained a noncompete clause, which provided that for a period of seven years, within a radius of 120 miles of the city of Waunakee, Anderson would not permit his name to be used by any business in competition with the pier and lift business as carried on by the buyer, nor would he engage in such a business.

The purchase price of $891,000 was allocated as follows: $400,000 for the noncompete clause, $200,000 for goodwill, $200,000 for equipment, and the remainder for inventory. The Statzes operated the business under the name D.L. Anderson Co.

What's in a Name?

Anderson then took a job with a Minnesota-based manufacturer and distributor of piers and boatlifts, which distributes its products throughout Wisconsin. Anderson also formed another business, Anderson Marine, LLC.

The Statzes then filed suit against Anderson, alleging that Anderson violated the noncompete clause and the tradename rights they had purchased.

The jury found that Anderson had breached the noncompete clause and awarded $15,000 in compensatory damages. It also found that Anderson committed tradename infringement and awarded $75,000 in compensatory damages. The jury further awarded $180,000 in punitive damages on the tradename infringement claim.

Dane County Circuit Court Judge Shelley J. Gaylord entered a judgment on the verdict, ordered an extension of the noncompete clause, granted injunctive relief on both claims, and awarded the Statzes $118,435 in attorney fees, pursuant to an attorney fee provision in the asset purchase agreement.

Anderson appealed, and, in a decision by Judge Margaret J. Vergeront, the...