VAT Master Corp. v. Almanac Realty Securities V, LP ( 2023 )

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
September 14, 2023
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10 and
RULE 809.62.
Appeal No. 2022AP1413 Cir. Ct. No. 2020CV1893
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV
VAT MASTER CORP. AND VAT MASTER LIMITED PARTNERSHIP,
PLAINTIFFS-RESPONDENTS-CROSS-APPELLANTS,
V.
ALMANAC REALTY SECURITIES V, LP, TWP-FARS CORP.,
TW-ARS CORP., MOREEN R. MCGURK, AS EXECUTOR OF
THE ESTATE OF JOHN MCGURK, AND JUSTIN HAKIMIAN,
DEFENDANTS-APPELLANTS,
ALMANAC REALTY INVESTORS, LLC,
MATTHEW KAPLAN AND RANDALL GUENTHER,
DEFENDANTS-CROSS-RESPONDENTS.
APPEAL AND CROSS-APPEAL from an order of the circuit court
for Dane County: SUSAN M. CRAWFORD, Judge. Affirmed.
Before Kloppenburg, P.J., Blanchard, and Graham, JJ.
No. 2022AP1413
¶1 BLANCHARD, J. VAT Master Corporation and VAT Master
Limited Partnership (collectively, “VAT”) claim that four entities and four
individuals (collectively, “the Almanac defendants”) breached a 2013 agreement
intended to settle disputes between the two sides. VAT’s specific claim is that in
2014 and again in 2015 the Almanac defendants breached corporate governance
rules that were newly established in, and enforceable through, the 2013 settlement
agreement.
¶2 The Almanac defendants moved the Dane County Circuit Court to
dismiss VAT’s operative complaint against all defendants based on the failure to
state a claim, arguing that the settlement agreement does not itself create an
independent obligation to follow the corporate governance rules described in the
settlement agreement. Instead, the Almanac defendants argue, the settlement
agreement requires only that the parties amend a corporate operating agreement to
reflect the new corporate governance rules at issue, which is an amendment that
both sides agree occurred. The court denied the motion to dismiss on the ground
that the settlement agreement itself unambiguously creates the obligation to follow
the new corporate governance rules. We granted the Almanac defendants’ petition
for an interlocutory appeal.
¶3 We affirm denial of the motion to dismiss, but based on a different
rationale from the circuit court’s. We conclude that dismissal is not appropriate
because the settlement agreement is fairly susceptible to more than one reasonable
interpretation as to whether the settlement agreement independently obligates the
parties to follow the new governance rules. Therefore, proper interpretation of the
ambiguously worded agreement will require a factfinder to consider extrinsic
evidence about the mutual intent of the parties, assuming that relevant extrinsic
evidence is available and that the evidence creates a genuine issue of material fact.
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¶4 Separately, the Almanac defendants appeal a circuit court ruling that
involves only John McGurk and Justin Hakimian, two signers of the settlement
agreement. McGurk and Hakimian moved to be dismissed on the ground that they
cannot be sued in their individual capacities, because they signed solely in their
capacities as members of a corporate board. The circuit court rejected that
argument. We conclude that the only reasonable interpretation of the settlement
agreement is that McGurk and Hakimian are parties to it, each signing in an
individual capacity, and that the operative complaint states claims for breaches of
the contractual duties that McGurk and Hakimian individually owe to the VAT
plaintiffs. Accordingly, we affirm the circuit court on this issue.
¶5 In a cross appeal, VAT argues that the circuit court erred in dismissing
this action against Randall Guenther, who is not a party to the settlement agreement,
and Matthew Kaplan, who is a party to it. The court ruled that the operative
complaint fails to state claims against either Guenther or Kaplan upon which relief
may be granted. We agree with the circuit court in each case and, accordingly, also
affirm the order dismissing the claims against them.
BACKGROUND
Allegations in VAT’s Complaint
¶6 Broadly summarized, VAT alleges the following in its operative
complaint.1 Beginning in 2007, VAT entered into agreements with various
1
Both sets of appellate briefs share a repeated shortcoming that has created unnecessary
work for this court. For the most part, in the places in the briefs where the parties should be citing
to the record both sides exclusively cite to the appendices of the appellate briefs. We remind
counsel that this violates WIS. STAT. RULE 809.19(1)(e) (2021-22), which requires citations to
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Almanac defendants under which the Almanac defendants invested in VAT’s real
estate business, but the relationship established by those agreements eventually
deteriorated. To resolve their disputes, the parties entered into a written settlement
agreement in 2013. The Almanac defendants breached the settlement agreement,
once in 2014 and again in 2015. These breaches allowed the Almanac defendants
to: “sabotage” VAT’s “reasonable” attempts to have the Almanac defendants’
interests in VAT’s business bought out; “collect inflated interest payments” on
debts; improperly conceal and destroy records of the business; and improperly break
up the business and sell its assets at “fire-sale” prices. These breaches of the
settlement agreement allowed the Almanac defendants to “plunder[]” the business
and reduce VAT’s “equity value” in the business from more than $130 million to
zero.
¶7 With that broad set of allegations in mind, the operative complaint
more specifically includes the following allegations against: Almanac Realty
Investors, LLC; Almanac Realty Securities V, LP; TWP FARS Corporation; TW-
ARS Corporation; Matthew Kaplan; the executor of the estate of John McGurk;
Justin Hakimian; and Randall Guenther.2 At all relevant times, VAT Master
Corporation was the general partner of VAT Master Limited Partnership; the VAT
corporation owned the VAT partnership, along with more than 200 additional
“parts of the record relied on.” Record citations are always required, whether or not parties also
add parallel citations to the appendix pages that correspond to the record citations.
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise noted.
2
McGurk is deceased. For ease of reference we refer to both the deceased person and to
the estate that is a party to this action as “McGurk.”
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partners who consisted of VAT’s investors.3 The VAT partnership held an interest
in a Wisconsin-based commercial real estate company.
¶8 VAT sought to expand. To raise money, on November 1, 2007, VAT
“entered into a series of investment agreements” with the Almanac defendants,
including Almanac, a Delaware limited liability corporation with a principal place
of business in New York City and then called Five Arrows Realty Securities V., LP.
In the “primary” agreement, Almanac extended a line of credit of up to
$106.7 million, at 8.5% interest.
¶9 To facilitate these investments, a credit agreement and an operating
agreement were entered into in 2007, which called for the following:
 VAT would create a new holding company named Vanta Commercial
Properties, LLC (“Vanta”).4
 The VAT partnership was to own 98 percent of Vanta, with Almanac
owning the remaining two percent.
 The Vanta board would have four directors—two appointed by Almanac
and two appointed by the VAT partnership—and “all material decisions”
would require majority board approval. The result was that any major
action would require a vote from at least one Almanac director or one
VAT director.
¶10 Almanac appointed John McGurk and Matthew Kaplan to the Vanta
board. The VAT partnership appointed Terrence Wall, then Vanta’s chief executive
officer, and another individual, who was then Vanta’s chief operating officer.
3
At times relevant to the litigation, VAT Master Corporation was known as T. Wall
Properties Master Corporation and similarly VAT Master Limited Partnership was known as
T. Wall Properties Master Limited Partnership. For ease of reference and following the parties, we
use the more recent VAT designations.
4
Vanta was once known as T. Wall Properties, LLC. For ease of reference and following
the parties, we use the more recent Vanta designation.
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¶11 In 2011, Vanta and Almanac “renegotiated the terms” of the 2007
credit and Vanta operating agreements. Under the renegotiated 2011 agreements:
 “[T]he original line of credit was capped at the then outstanding balance
of approximately $76.5 million—no longer $106.7 million—and a
second new $25 million line of credit was opened at a 15% interest rate.”
 The size of Vanta’s board was increased from four to five, with Almanac
to appoint three members and the VAT partnership to appoint two.
 All Vanta matters “were to be decided by a majority vote of the Board,
except for modifications of any of the ‘Transaction Documents’—
including the 2011 Credit Agreement,” which would require unanimous
board approval.
 The VAT partnership was given 14 months “to attempt to raise capital to
buy Almanac out,” during which time Wall would remain as Vanta’s
chief executive officer.
¶12 Almanac appointed its employee Justin Hakimian as a Vanta director,
joining Kaplan and McGurk on the Vanta board. The VAT partnership appointed
Terrence Wall and another individual.
¶13 In April 2012, the three Almanac directors voted to remove Terrence
Wall both as chief operating officer and as board chair of Vanta and further voted
to appoint McGurk as chief operating officer.
¶14 Disputes that arose among VAT, the Almanac defendants, and others
included a breach of fiduciary duty lawsuit that was litigated in the Delaware Court
of Chancery. The parties sought to resolve their disputes, including the Delaware
litigation, through a written settlement agreement that was executed in August and
September 2013. The settlement agreement is at the center of this appeal. For
background purposes it is sufficient to note the following regarding the settlement
agreement.
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¶15 Ten entities and four individuals entered into the settlement
agreement. It obligated the parties to amend the Vanta operating agreement to cause
the following changes to Vanta’s governance: the board would be reduced from
five members to three, with two appointed by Almanac and one by the VAT
partnership; all board decisions would be made by majority vote of the three; but
for transactions involving Almanac and the Almanac-related entity TWP-FARS, a
unanimous vote would be required and all three board members would have to be
present at a meeting for the board to take any action. There is no dispute by the
parties now that the Vanta operating agreement was in fact amended, following
execution of the settlement agreement, to establish the new governance rules
addressing these quorum and unanimity requirements.
¶16 VAT’s operative complaint in this Dane County action is based on the
following premises: the settlement agreement itself required the parties to follow
the new Vanta governance rules, and the Almanac defendants breached their
standalone obligations to follow the governance rules that were created by the
settlement agreement. The current action is not based on an alleged failure to amend
the Vanta operating agreement as called for in the settlement agreement, nor is it
based on alleged breach of the Vanta operating agreement. More specifically,
additional allegations in VAT’s operative complaint include the following:
 The settlement agreement “required that transactions involving Almanac
necessitate a unanimous vote of all [Vanta] Board members” and that
three members had to be present for the board to take any action.
 The defendants “knowingly and intentionally breached” the settlement
agreement in August 2014 “by purporting to take action on behalf of the
Company to liquidate the Company’s assets with only the two Almanac
Board members being present,” not the required three.
 The defendants further breached the settlement agreement in September
2015 by attempting to pressure the VAT appointee to the board “into
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No. 2022AP1413
approving the extension of [the defendants’] Credit Agreements” and
then extending the loans through votes of “only two of three then-serving
Directors’ votes” at a special meeting of the board.
 These breaches of contract caused VAT “to incur substantial damages,
including the payments of exorbitant and unnecessary interest to
Almanac, the loss of Vanta’s portfolio value, and ultimately, the loss to
[VAT of its] investments” in Vanta.
¶17 To clarify, while the operative complaint uses words such as
“scheme” and “conspiracy” as characterizations and to state factual allegations, it
purports to state two causes of action, both against all of the Almanac defendants
and both breaches of a contract, namely, the 2013 settlement agreement. VAT’s
decision to limit the operative complaint to contract breaches appears to be the result
of an injunction entered by the Delaware Court of Chancery.5 The Delaware court
enjoined VAT from pursuing claims that include breach of the Vanta operating
agreement, breach of fiduciary duty, fraud, and civil conspiracy, which were
included in an earlier version of VAT’s complaint in this Dane County litigation. It
appears that under the Delaware injunction the only claims from VAT’s original
complaint that it could pursue in Dane County are claims for breaches of the
settlement agreement.
Motion To Dismiss and Circuit Court Rulings
¶18 The Almanac defendants moved to dismiss the operative complaint
against all defendants. The circuit court ruled that it states claims for breaches of
the settlement agreement against Almanac Realty Securities V, LP, TWP-FARS
5
The settlement agreement states that it “shall be governed by the laws of Wisconsin” and
that any related litigation is to be venued in Dane County Circuit Court. In contrast, the Vanta
operating agreement has a Delaware forum selection clause.
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No. 2022AP1413
Corp., TW-ARS Corp., McGurk, and Hakimian. The Almanac defendants now
appeal this ruling and we affirm for reasons explained below.
¶19 Separately, the Almanac defendants argued in the circuit court that the
claims against McGurk and Hakimian in particular must be dismissed. The court
denied the motion. The Almanac defendants now appeal this ruling and we affirm.
¶20 In addition, the Almanac defendants argued in the circuit court that
the operative complaint fails to state claims upon which relief may be granted
against Guenther, Almanac Realty Investors, LLC (“ARI”), and Kaplan. The court
dismissed the action against Guenther and Kaplan as individuals, but withheld
ruling on the motion to dismiss ARI.6 VAT cross-appeals these rulings and we
affirm.
We do not address the Almanac defendants’ motion to dismiss ARI or any issue related
6
to a proposed second amended complaint that VAT seeks leave to file in a motion that remains
pending in the circuit court. See State ex rel. Wolf v. Town of Lisbon, 75 Wis. 2d 152, 155-56,
248 N.W.2d 450 (1977) (appellate review is limited to the pertinent record before the circuit court).
Explaining further, before the circuit court issued the decision at issue in this interlocutory
appeal and cross appeal VAT asked the court for leave to file a second amended complaint to
replace what we refer to as the operative complaint. VAT’s position was that it deserved an
opportunity to attempt to allege that ARI, which is not a party to the settlement agreement, is liable
under one particular theory of liability: allegedly exercising control over other corporate
defendants in a manner that triggers liability under the alter-ego theory for piercing the corporate
veil. The court stated in its now-challenged decision that it would allow VAT to amend the
operative complaint in the interest of justice, given that the Almanac defendants did not object or
otherwise address these particular theories of liability for ARI and also considering the procedural
posture of the case. See WIS. STAT. § 802.09. Approximately one month later, VAT filed a
proposed second amended complaint and a motion for leave to file it, making additional claims and
allegations regarding ARI, Kaplan, Guenther, and McGurk. The circuit court has not acted on the
motion. Today’s opinion is limited to resolving the challenges to the rulings the circuit court made
that were based on the operative complaint, without reference to the proposed second amended
complaint.
Separately, in a ruling not challenged in the appeal or the cross appeal, the circuit court
also directed VAT to amend the operative complaint to remove references to a “knowing and
intentional breach of contract” as a cause of action.
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No. 2022AP1413
DISCUSSION
I. Legal Standards
¶21 The parties do not dispute the following well-settled legal rules.
¶22 The motion at issue in this appeal is one to dismiss for failure to state
a claim, which is a challenge to the legal sufficiency of the complaint. Data Key
Partners v. Permira Advisers LLC, 2014 WI 86, ¶19, 356 Wis. 2d 665, 849 N.W.2d
693; WIS. STAT. § 802.02(1)(a). Courts “accept as true all facts well-pleaded in the
complaint and the reasonable inferences” arising from those facts, but courts
“cannot add facts in the process of construing a complaint.” Data Key, 356 Wis. 2d
665, ¶19. Whether a complaint states a claim upon which relief can be granted is
an issue of law that is subject to de novo review on appeal. Id., ¶17.
¶23 The issues in this appeal and cross appeal all involve the interpretation
of the settlement agreement, a written contract. Therefore, the contract analysis is
based on canons of contract interpretation. See Tufail v. Midwest Hospitality, LLC,
2013 WI 62, ¶24, 348 Wis. 2d 631, 833 N.W.2d 586 (applying the canons of contract
interpretation to a lease because the lease is a written contract).
¶24 “The elements of [a] breach of contract claim are (1) the existence of
a contract between the plaintiff and the defendant; (2) breach of that contract; and
(3) damages.” Pagoudis v. Keidl, 2023 WI 27, ¶12, 406 Wis. 2d 542, 988 N.W.2d
606. The dispute here is whether the Almanac defendants could have breached the
settlement agreement by allegedly violating the new quorum and unanimity
governance rules referred to in the settlement agreement.
¶25 The following contract law canons are relevant here:
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Contract interpretation generally seeks to give effect
to the parties’ intentions. However, “subjective intent is not
the be-all and end-all.” Rather, “unambiguous contract
language controls contract interpretation.”
Where the terms of a contract are clear and
unambiguous, we construe the contract according to its
literal terms. “We presume the parties’ intent is evidenced
by the words they chose, if those words are unambiguous.”
If the terms of the contract are ambiguous, evidence
extrinsic to the contract itself may be used to determine the
parties’ intent. “A contract provision is ambiguous if it is
fairly susceptible of more than one construction.”
Contract language is construed according to its plain
or ordinary meaning, consistent with “what a reasonable
person would understand the words to mean under the
circumstances.” For a business contract, that is “the manner
that it would be understood by persons in the business to
which the contract relates.”
Tufail, 348 Wis. 2d 631, ¶¶25-28 (quoted sources omitted).
¶26 Contract interpretation generally presents issues of law that we review
de novo without deference to circuit court conclusions. Briggs & Stratton Power
Prod. Grp., LLC v. Generac Power Sys., Inc., 2011 WI App 36, ¶4, 332 Wis. 2d
160, 796 N.W.2d 234. This includes review of the specific issue as to whether the
terms of a written contract are ambiguous. Wisconsin Label Corp. v. Northbrook
Prop. & Cas. Ins. Co., 2000 WI 26, ¶24, 233 Wis. 2d 314, 607 N.W.2d 276; Brown
v. Maxey, 124 Wis. 2d 426, 442, 369 N.W.2d 677 (1985) (“‘[w]hether ambiguity
exists in a contract is a question of law’” (quoted source omitted)). However, once
it is determined as a matter of law that a provision is ambiguous, interpretation of
that provision then becomes an issue of “contract interpretation for the jury.” See
Management Comput. Servs., Inc. v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d
158, 177-78, 557 N.W.2d 67 (1996); Jones v. Jenkins, 88 Wis. 2d 712, 722, 277
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N.W.2d 815 (1979) (when a contract is ambiguous, requiring reliance on extrinsic
evidence, “the question is one of fact”).7
II. The Settlement Agreement is Ambiguous Regarding the
Obligations of the Parties
¶27 The Almanac defendants moved to dismiss VAT’s operative
complaint against all of them, arguing in pertinent part that the complaint rests on
the false premise that the new Vanta governance rules are independently enforceable
through the settlement agreement. In response, VAT argued that this premise is not
false and that the settlement agreement is an independently enforceable agreement
requiring the parties to follow the new governance rules that the Vanta board “could
not act without [the presence of] VAT’s representative” on the board and “could not
approve transactions with Almanac without the affirmative vote of all members.”
In other words, the dispute between the parties is whether the settlement agreement
creates a standalone contractual basis to enforce the new governance rules, as VAT
argues, or instead the parties agreed in the settlement agreement to effectuate the
new governance rules exclusively by amending the Vanta operating agreement, as
the Almanac defendants argue.
7
Read in isolation, some shorthand references in Wisconsin case law suggest that it is for
the courts to resolve contract ambiguity in enforceable contracts when extrinsic evidence is
properly under consideration. See, e.g., Patti v. Western Mach. Co., 72 Wis. 2d 348, 351, 241
N.W.2d 158 (1976) (stating that, if a contract is determined by a court to be ambiguous, “then the
court is not restricted to the face of the instrument in ascertaining intent, but may consider extrinsic
evidence”). But the authority we cite in the text addresses the issue directly and establishes that it
is for the jury or other trier of fact to interpret ambiguous terms “in light of the apparent purpose of
the contract as a whole, the rules of contract construction, and relevant extrinsic evidence of the
parties’ intent and the meaning of the words that they used.” See 11 WILLISTON ON CONTRACTS
§ 30:7 (4th ed. May 2023 update) (citing authority that includes Management Comput. Servs., Inc.
v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158, 557 N.W.2d 67 (1996)). Consistent with this
rule, it is only when no extrinsic evidence is available, or if the extrinsic evidence bearing on the
interpretation leads to just one reasonable interpretation, that the meaning of an ambiguous contract
becomes an issue of law to be resolved by a court. See id.12
No. 2022AP1413
¶28 In ruling that the operative complaint states claims for breach of the
settlement agreement against defendants Almanac Realty Securities V, LP, TWP-
FARS Corp., TW-ARS Corp., McGurk, and Hakimian, the circuit court
intentionally did not consider evidence that is extrinsic to the four corners of the
settlement agreement. Instead, the court agreed with VAT that the settlement
agreement itself unambiguously requires that the parties follow the new Vanta
governance rules.
A. Additional Background
¶29 The settlement agreement states that it is “a comprehensive
resolution” of the Delaware litigation as well as “a series of other disputes, claims,
and issues.” It is divided into the following pertinent parts: an August 14, 2013
document entitled Settlement Agreement (“the initial part of the settlement
agreement”); an amendment dated September 16, 2013 (“the September 2013
amendment to the settlement agreement”); and exhibits to the amendment, most
notably an unexecuted document called “First Amendment to Amended and
Restated Limited Liability Company Agreement of T. Wall Properties, L.L.C.”
(“the form Vanta operating agreement amendment”).
¶30 Section 1 of the initial part of the settlement agreement consists of two
paragraphs. VAT does not claim that the Almanac defendants breached any
provision in the first paragraph, but the following portion of the first paragraph
provides context:
Effective upon the date of execution of this Agreement by
all parties, [Wall] and Kaplan shall be deemed to have
resigned from the [Vanta board] and the [Vanta board] shall
thereafter be comprised of three (3) members, who shall be
McGurk, Hakimian[,] and a third member appointed by [the
VAT partnership] promptly after the execution of this
Agreement[, but Wall shall not be the third appointee].
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The second paragraph of Section 1 addresses Vanta governing procedures that VAT
claims were breached by the Almanac defendants. It states in full:
The parties also agree that the [Vanta] Operating Agreement
shall be amended to reduce the size of the [Vanta] Board
from five (5) members to three (3) members[,] with two (2)
members appointed by Almanac and one (1) member
appointed by [the VAT partnership] and thereafter all Board
decisions shall be made by majority vote of the three (3)
Board members[,] either at a regular meeting or a special
meeting of the Board or by a written consent resolution
signed by all three members of the Board; provided,
however, that the parties acknowledge that the 80%
supermajority Board member vote required for transactions
with Almanac and TWP-FARS by Section 2.1 of the
Amended and Restated Supplemental Rights Agreement
shall be construed to require a unanimous vote of all Board
members with a 3[-]person Board. Except as otherwise
provided in this Section, all three Board members shall be
present at a meeting in order for the Board to take any action,
although a vote by two members of the Board will constitute
legal action of the Board and shall be binding upon [Vanta]
even if the third member of the Board abstains from the vote.
If only two Board members appear at two consecutive
regular or special Board meetings properly called in
accordance with the [Vanta] Operating Agreement, then
such two Board members shall constitute a quorum at the
next regular or special meeting called thereafter and a vote
by such two members shall constitute legal action by the
Board.
The specific quorum and unanimity requirements for Vanta governance reflected in
the second paragraph of Section 1 are the only types of changes in Vanta governance
rules that are at issue in this appeal.
¶31 Under Section 11 of the initial part of the settlement agreement, “[t]he
various transactions and other elements of this Agreement shall be closed in two
steps[,] with the first closing to occur” at a designated law office “as soon as possible
after execution of this Agreement.” At the first closing, the Vanta operating
agreement “will be amended in accordance with the provisions of Section 1 of this
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Agreement to reduce the size of the Board from five (5) members to three (3)
members,” and this amendment “shall be executed by all parties to the present”
Vanta operating agreement.
¶32 The September 2013 amendment to the settlement agreement
provides in pertinent part that the following document would have to be created for
the first closing: a fully executed version of the form Vanta operating agreement
amendment. This is the agreed-upon form of that amendment, providing for the
governing structure for the Vanta board described in the second paragraph of
Section 1. In particular, the September 2013 amendment to the settlement
agreement states that “as required by” and “in satisfaction of” a particular provision
of the settlement agreement—namely its Section 11(a)(2), which obligates the
parties to change Vanta’s operating agreement “in accordance with” the new Vanta
governance rules described in the settlement agreement—“the parties to the [Vanta]
Operating Agreement shall deliver executed originals of” the form Vanta operating
agreement amendment at the first closing.
B. Analysis
¶33 The Almanac defendants do not dispute for purposes of this appeal
that the settlement agreement is a contract, that it binds them (putting aside the
argument addressed below regarding McGurk and Hakimian as individuals), and
that the operative complaint alleges that they violated the newly adopted Vanta
governance rule changes in 2014 and 2015.8 Instead, they argue that the settlement
8
The Almanac defendants do not suggest, for example, that the settlement agreement is
unenforceable because it is “indefinite,” as that term is used in contract law. See Management
Comput. Servs., 206 Wis. 2d at 178 (explaining that indefiniteness, or vagueness, concerning a
material term prevents the creation of an enforceable contract—in contrast to ambiguity in a
material contract term, which may be resolved through the consideration of extrinsic evidence).
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No. 2022AP1413
agreement cannot reasonably be interpreted to impose obligations—independent of
those contained in the operating agreement—requiring the parties to follow the new
Vanta governance rules, because the settlement agreement was exclusively an
agreement to amend the Vanta operating agreement. Therefore, the argument
proceeds, because the Vanta operating agreement was in fact amended, the Almanac
defendants could not have liability for breaching the settlement agreement based on
alleged failure to follow the new Vanta governance rules. In making this argument,
the Almanac defendants emphasize settlement agreement terms that establish the
obligation of the parties to amend the Vanta operating agreement and also
emphasize that the changes in governance rules identified in the settlement
agreement match the changes in governance rules contained in the September 2013
amendment to the settlement agreement.
¶34 VAT does not dispute that the parties agreed in the settlement
agreement to execute the form Vanta operating agreement amendment that bound
the parties to follow the new governance rules. Instead, VAT argues that there is
no reasonable interpretation of the settlement agreement under which the parties
were not also obligated by the settlement agreement itself to abide by the new Vanta
governance rules. In other words, the requirement to follow the governance rule
changes described in the settlement agreement constitutes a standalone set of
obligations. This is the basis on which VAT claims the Almanac defendants
breached the settlement agreement in 2014 and 2015 by failing to follow the new
Vanta governance rules.
¶35 We conclude that the settlement agreement is fairly susceptible to
more than one reasonable interpretation on this disputed point and therefore proper
construction of the agreement requires consideration of extrinsic evidence that has
not been developed in the record to this point. Following remand, the circuit court
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may consider submissions from the parties about potential relevant extrinsic
evidence and determine proper next steps.
¶36 Turning to one side of the ambiguity issue, we conclude that the
following is one reasonable interpretation of the settlement agreement. The first
paragraph of Section 1 exclusively addresses the only two changes to governance
of the Vanta board that were put into effect upon execution of the settlement
agreement: (1) that Wall and Kaplan are deemed to have “resigned” from the Vanta
board and that two identified individuals, and a third individual appointed by the
VAT partnership, would now sit on the Vanta board; and (2) some details as to how
these three individuals would be treated as board members. In contrast, this
interpretation proceeds, the second paragraph of Section 1 is limited to an agreement
that the Vanta operating agreement “shall be amended” to create the new Vanta
governance rules described in the second paragraph. There is logic in placing these
two separate sets of topics in different paragraphs, with the first paragraph
commencing with the phrase, “Effective upon the date of execution of this
Agreement by all parties,” and the second paragraph commencing with the phrase,
“The parties also agree that the [Vanta] Operating Agreement shall be amended.”
¶37 As counsel for the Almanac defendants put it at oral argument on
appeal, under this interpretation of the settlement agreement the only aspect of
Vanta’s governance that changed upon execution of the settlement agreement—and
which creates an obligation beyond amending the operating agreement—was that
“two Board members resigned,” leaving a board of three, as required by the first
paragraph of Section 1.
¶38 Turning to the other side of the ambiguity issue, we also conclude that
the following is a different reasonable interpretation. While the first sentence of the
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second paragraph of Section 1 includes the phrase “shall be amended” in reference
to the Vanta operating agreement, the second paragraph goes on to speak in terms
more consistent with an intent that the settlement agreement independently binds
the parties to the new Vanta governance rules. Even within that first sentence, a
possible shift in meaning is signaled through use of the phrase “and thereafter all
Board decisions shall be made ....” (Emphasis added.) Then, after a semi-colon, it
states, “provided, however,” “the parties acknowledge” the unanimity requirement.
Beyond that, in an entirely new sentence the quorum requirement appears, with no
reference to the form Vanta operating agreement amendment.
¶39 In particular, VAT argues that the use of the semi-colon before the
phrase “provided, however,” is an unambiguous end point for all terms modified by
the phrase “the [Vanta] Operating Agreement shall be amended to ….” After that
point, VAT contends, there is not only the declarative statement “the parties
acknowledge,” but what follows is mandatory or directory in nature (“shall be
construed to require … shall be present at a meeting”), without making reference to
amending the Vanta operating agreement. We do not agree with VAT that these
signals go all the way to defeating ambiguity in VAT’s favor. But we conclude that
they contribute to ambiguity.
¶40 The Almanac defendants rely heavily on one reference to the
amendment of the Vanta operating agreement to change the governance rules. The
reference is that this is a task “required by” and “in satisfaction of” a particular
provision of the settlement agreement, namely its Section 11(a)(2), which requires
the parties to change Vanta’s operating agreement “in accordance with” the new
governance rules described in the settlement agreement. But there is a reasonable
interpretation for this reference that undermines the Almanac defendants’
interpretation. This could simply mean that the settlement agreement is not fully
18
No. 2022AP1413
satisfied unless such an amendment occurs—not that full satisfaction occurs upon
amendment. That is, this does not necessarily mean that there could be no
continuing governance obligations described in the settlement agreement beyond
the requirement to amend the operating agreement, a requirement that VAT does
not dispute.
¶41 Stepping back, there is another contextual point that favors the VAT
position, although again without going all the way to showing a lack of ambiguity.
There are numerous clues in the settlement agreement that it is intended as a detailed
and sweeping “comprehensive resolution,” as the agreement puts it, intended to
directly take on and resolve corporate governance issues, including potential abuses
of Vanta board positions. This context is consistent with an interpretation that the
parties could have intended that the new governance rules be enforceable in two
separate ways: through the settlement agreement and also through the amended
Vanta operating agreement.
¶42 Two additional points support our conclusion of ambiguity.
¶43 First, in entering into the settlement agreement the parties may not
have intended to create two different agreements covering overlapping topics
regarding Vanta governance: the settlement agreement governed by Wisconsin law
and the Vanta operating agreement governed by Delaware law. That is, there is at
least potential tension in creating two agreements that, as the Almanac defendants
now put it, “simultaneously and indefinitely govern the conduct of a Delaware
limited liability company”—including potentially clashing integration clauses—
creating the possibility of “tortuous interplay” between the two agreements. At the
same time, however, the Almanac defendants do not persuade us that this potential-
19
No. 2022AP1413
conflict issue establishes an unambiguous meaning in favor of the Almanac
defendants.
¶44 Explaining further, the appellate briefing by the Almanac defendants
on this clashing-agreements concept is oblique. They acknowledge that, under
Delaware law, multiple documents can simultaneously govern the operation of a
Delaware LLC, but they suggest that there is nonetheless a problem when those
documents govern the same operational aspects subject to the potential for orders
issued in two separate court jurisdictions. At oral argument, we pressed the
Almanac defendants through their counsel for details and we received no answer
that establishes an inevitable conflict or obvious absurdity arising from the
possibility of two governing documents addressing overlapping obligations—as
opposed to the mere hypothetical potential for governance confusion or litigation.
Cf. Chapman v. B.C. Ziegler & Co., 2013 WI App 127, ¶¶2, 11, 351 Wis. 2d 123,
839 N.W.2d 425 (rejecting one proposed interpretation of a contract as absurd).
¶45 Separately, the Almanac defendants assert that an interpretation that
would have the parties creating a tandem set of obligations “lacks any precedent.”
But of course VAT is not obligated to cite a court opinion reflecting a contract
entered into by parties in another case that was worded and structured the same way
as the settlement agreement here. We are guided instead by the contract law canons
summarized above as applied to the language and structure of the settlement
agreement.
¶46 Second, the first paragraph of Section 1 simply states, without making
reference to the form Vanta operating agreement amendment, that Wall and Kaplan
are deemed to have resigned from the Vanta board and the board “shall thereafter
be comprised of three (3) members,” identifying the names or the method of
20
No. 2022AP1413
appointment for each of the three members. Do these provisions in themselves
establish, as the circuit court appeared to conclude, that the execution of the
settlement agreement caused the number of board members to change from five to
three? There is support for this view in the first paragraph, which states that the
Vanta board “shall thereafter be comprised of three (3) members.” Or, instead, was
this merely a setup intended to provide context for establishing who the three board
appointees “shall be” under the new governance rules established through
amendment of the Vanta operating agreement pursuant to the second paragraph?
There is potential support for this view in the more formal statement in the second
paragraph that the Vanta operating agreement “shall be amended to reduce the size
of the [Vanta] Board from five (5) members to three (3).” The lack of a clear answer
adds to ambiguity about what the parties intended to accomplish in Section 1 and
therefore in the settlement agreement as a whole.
¶47 The Almanac defendants at times suggest reliance on a categorical
argument that we reject. They argue that, because the settlement agreement includes
an agreement to amend the Vanta operating agreement to incorporate the new
governance rules, then the settlement agreement could not also include a separate
agreement that independently binds the parties to the new governance rules. But
this categorical argument presents a false choice. At the level of logic and common
sense, the parties here could intend to accomplish both goals in a single agreement
and we conclude that one reasonable interpretation is that they did this. The
Almanac defendants theorize that the parties to the settlement agreement could have
specified that the agreement alone bound the parties to the new governance rules—
without also agreeing to amend the Vanta operating agreement. But, assuming that
this was a viable alternative, its potential tells us nothing about the meaning of the
settlement agreement actually executed by the parties.
21
No. 2022AP1413
¶48 As part of this argument, the Almanac defendants suggest that the
settlement agreement—when all of its parts are taken into account, including the
form Vanta operating agreement amendment—is unambiguously a complete
agreement that aims to accomplish adoption of the new Vanta governance rules in
a single manner: amendment of the Vanta operating agreement. Again, this way of
viewing the settlement agreement would be consistent with one reasonable
interpretation. At the same time, however, the Almanac defendants cannot direct us
to language in the settlement agreement that unambiguously conveys this idea, for
example through the use of such phrases as “only through amendment” or
“exclusively by amendment.”
¶49 On a related point, the Almanac defendants ask us to place substantial
weight on an opinion of our supreme court, Baeten v. Kaukauna Dairy Co., 1
Wis. 2d 319, 84 N.W.2d 79 (1957), asserting that it is “controlling” here. According
to the Almanac defendants, Baeten stands for the proposition that a contract
containing an obligation to amend another document cannot also include a separate
obligation that independently enforces the substance of the planned amendment.
But for current purposes Baeten merely establishes a proposition that VAT does not
dispute: parties can enter into a contract that obligates them to amend a separate
document without at the same time intending that the contract constitutes an
agreement to effectuate the substance of the planned amendment. See id. at 324(interpreting a collective-bargaining agreement to mean that a company did not
assume the obligation at issue but instead agreed only to amend a trust toward
accomplishment of the same objective). We agree with VAT that the agreement
under discussion in Baeten, which was apparently limited to requiring amendment,
is readily distinguishable from the settlement agreement here and that Baeten does
not stand for the categorical position taken by the Almanac defendants. See id.22
No. 2022AP1413
¶50 Summing up on this issue, we would essentially have to rewrite the
settlement agreement to render it unambiguous in favor of either side’s current
position. It will be for the circuit court following remand to determine appropriate
next steps on this issue, based in part on litigation choices and options available to
the parties going forward. This would presumably involve determining whether the
parties are able to offer relevant extrinsic evidence and, if so, whether this evidence
creates a genuine issue of material fact, in which case the issue must be resolved by
the finder of fact. See Management Comput. Servs., 206 Wis. 2d 158, 177-78.9
III. McGurk and Hakimian Potential Liability
¶51 The Almanac defendants argued in the circuit court that the claims
against McGurk and Hakimian in particular must be dismissed because each signed
the settlement agreement solely in his capacity as a member of the Vanta board and
not as an individual. Almanac also argued that if the claims against McGurk and
9
We note for context the following explanation regarding how to resolve ambiguity in
contracts:
Admissible extrinsic evidence might include “the surrounding
circumstances including factors occurring before and after the
signing of an agreement.” Board of Regents of Univ. of Wis. Sys.
v. Mussallem, 94 Wis. 2d 657, 671, 289 N.W.2d 801 (1980); see
also Smith v. Osborn, 66 Wis. 2d 264, 272, 223 N.W.2d 913(1974) (“In determining the [meaning of ambiguous contract
language], this court has held that it is proper to consider the
conduct of the parties and the negotiations which took place, both
before and after the execution of the documents, and to consider
all related documents of the parties.”); Painter v. Estate of
Grossman, 250 Wis. 457, 461, 27 N.W.2d 365 (1947) (“‘The
intention of the parties to any particular transaction may be
gathered from their acts and deeds, in connection with
surrounding circumstances, as well as from their words ....’”
(quoting Tyler v. Burrington, 39 Wis. 376, 379 (1876))).
Kernz v. J.L. French Corp., 2003 WI App 140, ¶10, 266 Wis. 2d 124, 667 N.W.2d 751 (alteration
in Kernz).
23
No. 2022AP1413
Hakimian exclusively amount to claims that they breached their duties as Vanta
board members, any such claims could be brought only in a derivative action on
behalf of Vanta.10 VAT primarily responded that the complaint alleges that McGurk
and Hakimian are proper parties to this action based on their personal signatures on
the settlement agreement and because they are each alleged to have breached the
settlement agreement that they signed.
¶52 The circuit court denied the motion to dismiss primarily on the ground
that the operative complaint is based on contractual rights and obligations created
by the settlement agreement, which was personally signed by McGurk and
Hakimian. The Almanac defendants appeal this ruling.
A. Additional Background
¶53 The first page of the initial part of the settlement agreement lists the
parties, including John McGurk and Justin Hakimian, without referring to them as
representatives of any other individual or any entity. The initial part of the
settlement agreement reintroduces the parties and creates shorthand references for
them. The reintroduction list includes John McGurk and Justin Hakimian, as well
as Kaplan, “as members of the Board of Managers of [Vanta] and individually
referred to as ‘McGurk,’ ‘Kaplan,’ and ‘Hakimian’ and collectively referred to as
the ‘Almanac Directors.’”
10
“[I]ndividual shareholders cannot directly sue a corporation’s directors or officers when
the ‘primary injury’ resulting from the actor’s wrong is to the corporation itself,” but “[i]nstead, a
shareholder who wishes to seek redress for an injury ‘primarily’ to the corporation must bring a
derivative action on behalf of the corporation.” Marx v. Morris, 2019 WI 34, ¶37, 386 Wis. 2d
122, 925 N.W.2d 112 (quoted authority omitted). There is no dispute that the operative complaint
here is not a derivative action.
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No. 2022AP1413
¶54 The signature section of the initial part of the settlement agreement is
confusing in some respects. But the following features are most pertinent. McGurk
and Hakimian each signed on behalf of an entity and also, separately, each signed
at a location that has no obvious indication that the signer represents another person
or entity. In the places where the signature lines for McGurk and Hakimian are not
accompanied by a term such as “by” or “through” in reference to another person or
entity there is also not a variation on the words “individual” or “personal.” This
contrasts with one of the signature locations for Wall, which explicitly clarified that
he signed “Individually,” in addition to separately signing on behalf of other entities
in specified roles.
¶55 One exhibit attached to the amendment to the settlement agreement is
a consent-and-release form for investors in one related entity, which characterizes
the settlement agreement as being among parties who included: “John McGurk,
Matthew Kaplan, and Justin Hakimian,” without suggesting that either McGurk or
Hakimian signed in a representative capacity—there is no “by” or “through” signal
next to their names.
B. Analysis
¶56 We agree with the circuit court that the only reasonable interpretation
of the settlement agreement is that McGurk and Hakimian are parties to it, each
signing in an individual capacity, and that the operative complaint states claims for
breaches of the contractual duties that McGurk and Hakimian individually owe to
the VAT plaintiffs. As the circuit court put it:
By signing the agreement as parties, McGurk and Hakimian
agreed to be bound by its provisions and potentially liable to
the other parties for any material breach of the agreement.
Their status as Vanta board members does not shield them
from liability under the Settlement Agreement.
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No. 2022AP1413
We agree that this is the only viable interpretation, given all pertinent terms when
considered in context as the terms are reasonably understood. See Tufail, 348
Wis. 2d 631, ¶¶25-28.
¶57 The Almanac defendants emphasize that the settlement agreement
singles out Terrence Wall’s personal signature block for the specific label
“Terrence R. Wall, individually,” and in contrast the word “individually” does not
appear next to McGurk’s and Hakimian’s names. On its face, this could suggest
that personal liability in the settlement agreement is always flagged by the phrase
“individually.” But there is a significant contextual point that undermines this
suggestion. See MS Real Est. Holdings, LLC v. Donald P. Fox Fam. Tr., 2015 WI
49, ¶38, 362 Wis. 2d 258, 864 N.W.2d 83 (the meaning of particular provisions in
a contract are ascertained by reference to the contract as a whole). The name “Wall”
occupies a place of notable prominence in the settlement agreement: “Wall”
appears as part of the names of eight of the ten signature blocks for entities
represented as signatories and “Wall” appears 132 times in the settlement
agreement. In contrast, McGurk’s and Hakimian’s names appear 11 and 10 times
respectively and never in the names of an entity. Thus, the risk of confusion about
the capacity in which Wall signed is amplified by the frequency of “Wall”
references, especially as it appears in entity names, providing a clear explanation
for the insertion of “individually” for Wall alone when he signed as an individual.
¶58 Otherwise, the signals cited by the parties either do not clearly point
in a specific direction or else point in favor of personal capacity. For example, we
disagree with the Almanac defendants that the settlement agreement “clearly and
expressly define[s] McGurk and Hakimian as parties solely in their capacities as
Members of the Vanta Board.” It identifies them, accurately, as board members,
but at the same time in multiple ways it signals that each is signing at one place in
26
No. 2022AP1413
a representative capacity and at another in a personal capacity. Further, the Almanac
defendants fail to provide an explanation as to why, if McGurk and Hakimian were
not signing in their individual capacities, they signed at locations at the bottom of
the signature section, after all other signatures and without additional designation,
including the places at which they had signed as officers of named entities.
¶59 The Almanac defendants argue that the circuit court’s conclusion that
the operative complaint does not state a derivative claim “is beside the point”
because the sole claim that VAT could make against McGurk and Hakimian
concerning “the votes they took in their capacities as members of the Vanta Board”
would be in the form of a derivative action on behalf of Vanta. The Almanac
defendants argue that such a claim could not be made against them in this breach of
contract action. But the Almanac defendants fail to support this argument, which
appears to be inextricably intertwined with their arguments that McGurk and
Hakimian are not parties to the settlement agreement in their individual capacities.
¶60 The Almanac defendants assert that “no provision in the Settlement
Agreement affects the personal rights or obligations of McGurk or Hakimian.” But
this is a circular argument, true only if one assumes all in favor of the Almanac
defendants. Under what we conclude is the only reasonable interpretation of the
settlement agreement as a whole, McGurk and Hakimian personally assumed the
rights and obligations stated in the settlement agreement.
¶61 In sum, “‘what a reasonable person would understand the words” of
the settlement agreement “to mean under the circumstances,’” Tufail, 348 Wis. 2d
631, ¶28 (quoted source omitted), is that the parties created an agreement to which
McGurk and Hakimian bound themselves in their individual capacities, assuming
contractual duties that they assumed as individuals.
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No. 2022AP1413
IV. Guenther and Kaplan Potential Liability
¶62 The circuit court dismissed both Guenther and Kaplan from this
action. VAT cross-appeals those rulings. We address the two defendants in turn,
explaining why we affirm both rulings.
Guenther
¶63 The Almanac defendants point out that Guenther is not a party to the
settlement agreement. Based on this fact, they argue that he could not have liability
for breaches of contract, which are the only claims in the operative complaint,
arising from alleged breaches by other persons and entities. VAT acknowledges
that the theory of the operative complaint is that Guenther is a proper party because
he allegedly “actively participated in the conspiracy to breach the Settlement
Agreement”—that is, joined in a civil conspiracy to breach a contract to which he
was not a party. The circuit court granted the motion to dismiss Guenther on the
grounds that there is no claim recognized in Wisconsin law based on the proposition
“that third parties who conspire to breach a contract can be held liable in contract.”
(Emphasis in original.) In its cross appeal, VAT presents only the following as its
theory of liability for Guenther based on the operative complaint and, in its initial
cross-appeal brief, points to this single theory as its sole basis for reversing the
circuit court: Guenther could be liable under contract law for conspiring with others
to breach a contract to which he is not a party. We now explain why we reject that
narrow, breach-based argument and conclude that VAT’s other points in its cross-
reply brief come too late.
¶64 VAT’s narrow argument appears to have two closely related aspects.
One involves tort law (as opposed to contract law) and the other involves the concept
of a civil conspiracy.
28
No. 2022AP1413
¶65 Authority that VAT cites is inapposite in large part because it is based
on tort law, not contract law, and the only claims in the operative complaint are
based on contract law. In Wisconsin, tortious inducement of breach of contract is
committed by the person “‘who intentionally and improperly interferes with the
performance of a contract … by inducing or otherwise causing the third person not
to perform the contract.’” See Magnum Radio, Inc. v. Brieske, 217 Wis. 2d 130,
136, 577 N.W.2d 377 (Ct. App. 1998) (quoting RESTATEMENT (SECOND) OF TORTS
§ 766 (Am. L. Inst. 1979)); see also St. Francis S & L Ass’n v. Hearthside Homes,
Inc., 65 Wis. 2d 74, 81, 221 N.W.2d 840 (1974) (referring to liability for “the
tortious intermeddler”). Thus, for example, VAT relies heavily on selected
language in Mendelson v. Blatz Brewing Co., 9 Wis. 2d 487, 101 N.W.2d 805(1960), without coming to grips with the fact that the underlying cause of action in
Mendelson involved tortious inducement of breach of contract. See id. at 490-91
(citing RESTATEMENT OF TORTS § 766 (Am. L. Inst. 1934)).
¶66 What could remain of VAT’s argument is based on the proposition
that VAT can save its tort-based claim in this contract action by labeling it as a civil
conspiracy action.11 The notion that there is an independent civil conspiracy cause
of action in Wisconsin that is not based on an identified civil wrong has been
rejected by our supreme court. See Modern Materials, Inc. v. Advanced Tooling
Specialists, Inc., 206 Wis. 2d 435, 448, 557 N.W.2d 835 (Ct. App. 1996);
Onderdonk v. Lamb, 79 Wis. 2d 241, 246, 255 N.W.2d 507 (1977) (“The gravamen
of a civil action for damages resulting from an alleged conspiracy is … not the
conspiracy itself but rather the civil wrong which has been committed pursuant to
11
To repeat, the only causes of action in the operative complaint are breaches of contract,
even though the complaint employs characterizations and makes factual allegations using such
words as “conspiracy” and “scheme.”
29
No. 2022AP1413
the conspiracy and which results in damage to the plaintiff.”). The conduct alleged
by VAT to be the civil wrong that is the object of the conspiracy amounts to tortious
inducement of breach of contract, which is a tort. In other words, there is a fatal
mismatch between the only causes of action stated against Guenther (breach of
contract) and the nature of the allegations against him (tortious inducement).
¶67 VAT rests heavily on the statement of our supreme court in
Mendelson that “[a] conspiracy to cause a breach of contract is actionable.” See
Mendelson, 9 Wis. 2d at 490. But the Mendelson court proceeded to explain what
it meant and the meaning does not help VAT. What was actionable in that case was
a claim for civil conspiracy based on an alleged tort—specifically in that case,
“wrongful interference by a third party with an employment relationship terminable
at will.” Id. Summing up, then, an alleged violation of the duty under tort law not
to interfere with the contractual rights of others can be the subject of a civil
conspiracy claim in Wisconsin, but that is not what is alleged in the operative
complaint here.
¶68 As the Almanac defendants point out, the authority that VAT relies
on identifying viable civil conspiracy claims involves tortious civil wrongs and
therefore does not support VAT’s argument that it can state a contract law-based
claim for conspiracy to breach a contract. See, e.g., Schwenn v. Schwenn, 166 Wis.
420, 166 N.W. 171 (1918) (addressing alleged conspiracy to “fraudulently” induce
breach of contract); Martens v. Reilly, 109 Wis. 464, 473, 84 N.W. 840 (1901)
(addressing alleged conspiracy to “willful[ly] intermeddl[e]” in a right of first
refusal in purchase of leased land). It is the same with VAT’s citations to case law
from other jurisdictions. Even if those opinions could provide illumination here,
30
No. 2022AP1413
the plaintiffs in those cases also relied on torts as the alleged civil wrongs to provide
the basis for civil conspiracy claims.12
Kaplan
¶69 The Almanac defendants argue that Kaplan, although he signed the
settlement agreement, could not have breached it based on the allegations in the
operative complaint because Kaplan resigned from the Vanta board well before the
2014 and 2015 votes that VAT alleges constituted breaches of the settlement
agreement. VAT argues that he is a proper party because the operative complaint
alleges that he “participated in the conspiracy to breach” the settlement agreement,
including “actively work[ing] with Guenther to take control of Vanta.” The circuit
court ruled that the operative complaint fails to allege specific facts showing that he
breached the settlement agreement.
¶70 We conclude that the operative complaint does not state a claim that
Kaplan personally breached the settlement agreement in connection with the Vanta
board actions in 2014 and 2015 that VAT challenges. The operative complaint
contains no factual allegations, or reasonable inferences arising from the allegations,
that could support this theory. Putting aside merely conclusory assertions and
characterizations, the complaint simply fails to describe conduct by Kaplan related
to the alleged 2014 and 2015 breaches. VAT argues that the operative complaint
alleges facts that make out a claim that Kaplan “continued to participate in the
12
For the first time in its cross-reply brief, VAT offers alternative arguments to the effect
that it does not matter if the claim against Guenther is based on tort or contract law and that VAT
is free to bring a tort action against Guenther in this case. This completely diverges from VAT’s
briefing in its opening cross-appeal brief, and it would be unfair to the cross-respondents for us to
address this new theory now. See A.O. Smith Corp. v. Allstate Ins. Cos., 222 Wis. 2d 475, 492,
588 N.W.2d 285 (Ct. App. 1998) (stating that it is “inherently unfair” for an appellant to save an
argument for its reply brief because this deprives the respondent of an opportunity to address the
argument in its brief).
31
No. 2022AP1413
conspiracy after he had left the Board” and was “an active part of the conspiracy
that ran up through November 2017,” but this is based on mere conclusory
assertions in the operative complaint. Our conclusion is not, as VAT argues, a
“quibble about the facts surrounding” Kaplan’s involvement in breaches of contract
and therefore a dispute to be decided by a jury. Instead, the operative complaint
categorically fails to state a viable claim against Kaplan.13
CONCLUSION
¶71 For these reasons, we affirm each of the rulings of the circuit court
challenged in the appeal and in the cross appeal.
¶72 No costs to either party.
By the Court.—Order affirmed.
Not recommended for publication in the official reports.
13
In an attempt to save the Kaplan claim, VAT directs us to allegations in the second
amended complaint that VAT has moved the circuit court to allow it to file, in a motion that is still
pending. But as discussed in note 6, supra, the second amended complaint was not before the
circuit court when it made the decisions challenged in this appeal and cross appeal and therefore
we ignore the content of the second amended complaint.
32