Breach of contract claim dismissed in The Corners’ lawsuit
But bad faith argument brought by Marcus could go to trial

By Cara Spoto

Dec. 27, 2018

WAUKESHA A judge has dismissed a breach of contract claim brought by the Marcus Corporation against the Town of Brookfield and The Corners, but a claim that the defendants acted in bad faith when they embarked on plans to build a movie theater at the development could continue to trial.

The Milwaukee-based Marcus filed a lawsuit in Waukesha County Circuit Court against the Town of Brookfield and Brookfield Corners LLC just over a year ago, alleging the addition of a nine-screen movie theater by competitor Silverspot Cinemas breached the terms of a developer’s agreement. Marcus, owner of the Majestic Cinema that sits a mile away from Silverspot’s proposed site, has a 10 percent ownership stake as a minority partner in the The Corners.

In an oral ruling delivered Wednesday afternoon, Waukesha County Circuit Judge Michael O. Bohren granted requests brought by the defendants to dismiss the breach of contract claim. He also dismissed a request by Marcus that the court rule the theater addition required its written approval.
 

Bad faith

But Bohren let stand, at least for now, Marcus’s claim that The Corners’ proposal to add the now partially completed theater, and the town’s approval of that proposal, constituted a breach of the defendants’ "contractual duty of good faith and fair dealing."

In a Sept. 28 court filing, attorneys for Marcus wrote that the company had every reason to believe a theater could never be built at The Corners, mainly because the development agreement never mentioned it. But attorneys for The Corners have argued that Marcus had no reason to believe a theater could never be built on the site. They have also pointed out that Marcus never argued for a non-compete clause in the agreement.
 

Ruling

Bohren didn’t find that the theater addition constituted a de facto modification to the developer’s agreement, mainly because the agreement itself doesn’t define retail space or exactly how much of it the project can have. He did find, however, that Marcus has a viable argument with regard to the "duty of good faith and fair dealing" it expected as a partner in the project.

"Marcus asserts it would not have entered into the contract knowing a theater was going to be built. The question they ask rhetorically is ‘why would Marcus (help to) assure the construction of a competing enterprise?’" Bohren said Wednesday.

"The allegation in the complaint is of a quid pro quo, meaning that in Marcus’ assertive guarantee of construction it had the authority to block construction and expansion of the project. Those are allegations, but I am satisfied that they are sufficient to meet the state of the law with regard to the duty of good faith and fair dealing."

In a written statement issued Wednesday evening, Corners attorney John Franke wrote that the developer had "hoped that (the) matter could be fully resolved on the pleadings," but that it looks forward to prevailing on the remaining claim on a motion for summary judgment or, if necessary, at trial."

In the meantime, construction of the theater, which is slated to open in the spring, will continue, he wrote.

"While it is The Marcus Corporation’s policy not to comment on pending litigation, we are pleased the judge agreed that our claims that our partners and the Town of Brookfield have not dealt with us in good faith and have not dealt with us fairly have merit," said Maggie Cook, an attorney for the Marcus Corporation, in a written statement. "We look forward to litigating this matter further."
 

Other elements

In other items related to the case, Bohren rejected the town’s claim that it enjoys immunity under the law for acts done in legislative or judicial functions synonymous with discretionary acts.

He also denied The Corners’ request to discharge a "lis pendens" in the case, saying the development of the theater does affect the interests of the Marcus Corporation.

The court is slated to meet again in the case on Feb. 6, for a scheduling conference.