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Mrozek v. Intra Financial Corp.6/9/2005
, 605 n.6, 557 N.W.2d 480 (Ct. App. 1996).
PMI and Mrozek argue that at trial they would have produced numerous sources of information showing a basis for ascertaining lost profits, including the AmericInn franchise license agreement offering assistance in operating the motel and representing that the franchise would be profitable; the "forecasted statement of operations and pre-tax cash flow" prepared by CPAs and included in the stock offering documents prepared by Mallery; a 1992 appraisal of the PMI property; deposition testimony establishing that the area surrounding the motel has been developed, having a positive effect on the motel's profitability; and five years of tax returns from the entity that ultimately purchased the property and operated the motel.
Notwithstanding the above recitation, the information presented is not sufficient for a fact finder to reasonably ascertain lost profits. The franchise license agreement does not provide any specific profit projections for the motel and in fact disclaims such projections:
The LICENSOR expressly disclaims the making of . . . any estimates, projections, warranties or guaranties, express or implied, regarding the potential Gross Revenues, profits, earnings or financial success of the LICENSEE'S AmericInn(r) Motel, except as may be set forth in the LICENSOR'S Uniform Franchise Offering Circular, a copy of which has been received by the LICENSEE.
The forecast statement prepared by CPAs likewise included a disclaimer, stating:
[The forecast statement] is limited to presenting in the form of a forecast information that is the representation of management and does not include evaluation of the support for the assumptions underlying the forecast. We have not examined the forecast and, accordingly, do not express an opinion or any other form of assurance on the accompanying statements or assumptions. Furthermore, there will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material.
The 1992 appraisal contains a valuation based on the income capitalization approach, but states that " he income, expenses and conversion rates estimated in this analysis are unknown variables which will occur in the future. . . . ecause the real estate market is constantly changing, no warranty or representation is made that these projections will occur as estimated in this report." Therefore, any income or expense projections in these documents are purely speculative.
Although Mrozek claims she would produce deposition testimony establishing that the area surrounding the motel had been developed, there is no evidence of this in the record, and a court considering a motion for summary judgment cannot rely on mere allegations in the pleadings, but must examine the facts of record. See Moulas v. PBC Prods., Inc., 213 Wis. 2d 406, 410-11, 570 N.W.2d 739 (Ct. App. 1997), aff'd, 217 Wis. 2d 449, 576 N.W.2d 929 (1998). Furthermore, even if this information about the surrounding area had been supplied, it would not allow us to reasonably ascertain the profitability of a particular establishment within that area.
The last documents Mrozek points us to, the tax returns of the entity that eventually operated the motel, contain the type of information that may be useful in making a determination of lost profits. The returns show that the new owner began to show positive ordinary income in 1997, year three of operation, and averaged roughly $31,000 in ordinary income through the six-year period. Looking at this data, the circuit court stated:
I think that . . .
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