Wisconsin Case Law
WOOKEY v. KAPLAN INC. D/B/A SCHWESER, 2006AP709 (Wis.Ct.App. 12-21-2006) BRENT WOOKEY, PLAINTIFF – APPELLANT, v. KAPLAN INC. D/B/A SCHWESER STUDY PROGRAM, A KAPLAN PROFESSIONAL COMPANY, DEFENDANT – RESPONDENT. Court of Appeals of Wisconsin, District IV. No. 2006AP709. Opinion Filed: December 21, 2006.
APPEAL from an order of the circuit court for La Crosse County: RAMONA A. GONZALES, Judge. Reversed and cause remanded with directions.
Before Lundsten, P.J., Dykman and Higginbotham, JJ.
Â¶ 1 Brent Wookey appeals from a summary judgment
order that dismissed his breach of contract action against
his former employer, Kaplan, Inc. For the reasons discussed
below, we reverse and remand with directions to enter
summary judgment in Wookey’s favor.
Â¶ 2 Kaplan hired Wookey to manage its Schweser Study
Program in February of 2003. Wookey signed a letter of
agreement regarding his terms of employment at the time of
his hire and shortly thereafter also signed a
“Confidentiality and Restriction Agreement.” Both documents
were drafted by Kaplan.
Â¶ 3 The initial letter of agreement stated in
You recognize that due to the nature of your employment
and relationship with Kaplan as a senior member of
Schweser, you will have access to and develop confidential
business information, proprietary information, and trade
secrets relating to the business and operations of Kaplan
Inc. and its subsidiaries or affiliates (collectively,
“Kaplan”). You acknowledge that information is valuable to
the business of Kaplan, and that disclosure to, or use for
the benefit of, any person or entity other than Kaplan
or its affiliates, would cause substantial damage to
Kaplan. You further acknowledge that your duties for
Kaplan clients, customers, employees, and management on
behalf of Kaplan and your access to and development of
those close relationships with current and potential
Kaplan clients and customers, at significant cost to
Kaplan, render your services special, unique and
extraordinary. In recognition that this good will and
these relationships are assets and extremely valuable to
Kaplan, and that loss of or damge to those relationships
would destroy or diminish the value of Kaplan, you agree
Restriction on Post-Employment Activities. During the
term of your employment and for the period of up to six
months following the termination of your employment,
regardless of the reason you terminate from employment
(the “Restricted Period”), you agree that in
consideration of Kaplan’s agreement to continue to pay
your base salary throughout the Restricted Period, you
will not engage in any of the following activities. . . .
(i) you will not become employed by – any
partnership, corporation or other entity which is engaged
[in] a business competitive with the Schweser Study
(ii) you will not hire or employ any employee of Kaplan; or
(iii) you will not engage in any other activity to
interfere with, disrupt or damage Kaplan’s relations with
any actual or potential client or customer or other
negatively impact the business of Kaplan.
(Emphasis in original.) The confidentiality and restriction
agreement further specified a number of items — such
as course materials, methods of instruction, research
reports, marketing programs, financial data, customer lists
and computer programs — which were to be considered
confidential and should not be divulged either during or
after Wookey’s employment.
Â¶ 4 When Wookey resigned in July of 2004, the
president of the company sent him a letter stating in
[T]his shall serve as notice to you that Kaplan shall not
exercise its option to restrict your post-employment
activities by continuing your salary after July 22, 2004.
Nevertheless, please be reminded that you are under a
continuing obligation not to disclose confidential
business information, proprietary information and trade
secrets relating to the business and operations of
Schweser Study Program.
Notwithstanding this purported release, Wookey notified
Kaplan that he intended to comply with the restrictions on
his postemployment activities as outlined in the letter of
agreement. When Kaplan refused to pay him six months’
salary, he filed this breach of contract action.
Â¶ 5 The parties filed cross-motions for summary
judgment. The trial court granted Kaplan’s motion and
dismissed the action. It reasoned that by defining the
restrictive period as “up to” six months, the parties had
entered an open-ended agreement that Wookey’s activities
could be restricted for some unspecified amount of time,
but no longer than six months, contingent upon Kaplan’s
optional “agreement to continue to pay” Wookey’s salary for
that amount of time. In the trial court’s view, this meant
there had been no meeting of minds with regard to the length
of the restrictive period, and the agreement was
unenforceable. Wookey appeals.
STANDARD OF REVEIW
Â¶ 6 This court reviews summary judgment decisions de
novo, applying the same methodology and legal standard
employed by the circuit court. Brownelli v. McCaughtry, 182
Wis. 2d 367, 372, 514 N.W.2d 48 (Ct.App. 1994). The summary
judgment methodology is well established and need not be
repeated here. See, e.g., Lambrecht v. Estate of
Kaczmarczyk, 2001 WI 25, Â¶Â¶ 20-23, 241 Wis.
2d 804, 623 N.W.2d 751. The legal standard is whether there
are any material facts in dispute that entitle the opposing
party to a trial. Id., Â¶ 24.
Â¶ 7 We construe contracts to achieve the parties’
intent, giving terms their plain and ordinary meanings.
Goldstein v. Lindner, 2002 WI App 122, Â¶ 12, 254
Wis. 2d 673, 648 N.W.2d 892. If the words of a contract
convey a clear and unambiguous meaning, our analysis ends.
Id. However, if the contract language could be reasonably
understood in more than one way, we may examine extrinsic
evidence to determine the parties’ intent and will construe
any ambiguous contractual terms against the drafter,
particularly when there is a substantial disparity of
bargaining power between the parties. Seitzinger v.
Community Health Network, 2004 WI 28, Â¶ 22, 270 Wis.
2d 1, 676 N.W.2d 426; Gorton v. Hostak, Henzl & Bichler,
S.C., 217 Wis. 2d 493, 506, 577 N.W.2d 617 (1998).
Â¶ 8 The central issue presented on this appeal is
whether the letter of agreement automatically obligated
Kaplan to pay Wookey six months of salary if Wookey
complied with the restrictions outlined in the agreement,
as Wookey claims; or whether, as Kaplan maintains, the
agreement permitted Kaplan to either opt out at the time of
Wookey’s termination or make a unilateral decision as to
the length of the restrictive period before the agreement
could be enforced. Both parties point to the definition of
the restrictive period as “up to six months” and Kaplan’s
“agreement to continue to pay [Wookey’s] base salary
throughout the Restricted Period” as the key phrases in the
letter of agreement, although each party assigns different
significance to that language.
Â¶ 9 Wookey argues that Kaplan had already offered
consideration at the time the letter of agreement was
signed, in the form of an agreement to continue to pay
Wookey’s base salary in consideration for Wookey’s
restraint from engaging in specified activities. That is,
Kaplan would be obligated to continue paying Wookey’s
salary for as long as Wookey continued to comply with the
specified restrictions. Under this interpretation, it was
up to Wookey to determine how long the restrictive period
would last, up to a period of six months. For instance, if
Wookey had taken a job with a competitor four months after
terminating his employment, Kaplan would only have had to
pay him four months’ salary. The apparent logic underlying
this position is that the longer competitive secrets are
kept, the less damage disclosure would cause.
Â¶ 10 Under Kaplan’s interpretation, the letter of
agreement was referring to a future offer of consideration
in the form of an agreement to continue to pay Wookey’s
salary throughout the Restricted Period, which Kaplan would
have the option of making at the time of Wookey’s
termination. In other words, Kaplan could specify how long
it wished to restrict Wookey’s activities after his
termination, for up to six months, but it would have to pay
him for whatever time it specified. The apparent logic of
this position is that Kaplan would be in the best position
to determine how long a restrictive period would be
necessary to protect its interests, depending in part upon
how long Wookey’s employment ultimately lasted.
Â¶ 11 We deem the letter of agreement to be ambiguous
because it does not explain how, when, or by whom the
length of the restrictive period is to be determined, and
the differing interpretations offered by the parties are
both reasonable. Because Kaplan drafted the agreement, we
will construe the ambiguity against it. Accordingly, we hold
that Kaplan did not have the authority to opt out of its
agreement to continue to pay Wookey throughout the
restrictive period or set the length of the restrictive
period. Rather, Wookey’s compliance with the specified
restrictions for the maximum six-month period obligated
Kaplan to pay Wookey’s salary for that time.
Â¶ 12 We further conclude that, even if Kaplan could
have opted out, its post-termination letter was ineffective
to do so. The letter told Wookey he was “under a continuing
obligation not to disclose confidential business
information, proprietary information and trade secrets
relating to the business and operations of Schweser Study
Program.” Although Kaplan claims that sentence was referring
to ongoing obligations under the second Confidentiality and
Restriction Agreement, rather than restricted activities
under the initial letter of agreement, the phrase
“confidential business information, proprietary information
and trade secrets” appeared in the initial letter of
agreement and fell within the scope of its paragraph (iii).
More specifically, the prohibition in paragraph (iii)
against engaging in any activity that would negatively
impact Kaplan’s business encompassed disclosure of any
confidential business information, proprietary information
or trade secrets which the letter agreement purported to be
trying to protect. Kaplan could not tell Wookey both that
it would not pay him to restrict his activities and that he
still had an obligation to restrict his activities in
compliance with the third paragraph of the letter of
Â¶ 13 In sum, we conclude that the trial court erred
in granting Kaplan’s motion for summary judgment. We
reverse and remand with directions that it enter summary
judgment in Wookey’s favor.
By the Court. — Order reversed and cause remanded
This opinion will not be published. See WIS. STAT. RULE