Sands v. Menard
| Decision Date | 20 September 2016 |
| Docket Number | 2015AP870.,Nos. 2012AP2377,s. 2012AP2377 |
| Citation | 887 N.W.2d 94,2016 WI App 76,372 Wis.2d 126 |
| Parties | Debra K. SANDS, Plaintiff–Appellant, v. John R. MENARD, Jr., Menard, Inc., Menard Thoroughbreds, Inc., Webster Hart as Trustee of the John R. Menard, Jr. 2002 Trust and Related Trusts, Angela L. Bowe as Trustee of the John R. Menard, Jr. 2002 Trust and Related Trusts and Alphons Pitterle as Trustee of the John R. Menard, Jr. 2002 Trust and Related Trusts, Defendants–Respondents, Midwest Manufacturing Co., Wood Ecology Inc., Countertops Inc., Team Menard Inc., Menard Engine Group, Menard Competition Technologies LTD, MC Technologies Inc., Menard Engineering LTD, UltraMotive LTD and Merchant Capital LLC, Defendants. Debra K. Sands, Plaintiff–Appellant–Cross–Respondent, v. John R. Menard, Jr., Menard, Inc., and Menard Thoroughbreds, Inc., Defendants–Respondents–Cross–Appellants, Webster Hart as Trustee of the John R. Menard, Jr. 2002 Trust and Related Trusts, Angela L. Bowe as Trustee of the John R. Menard, Jr. 2002 Trust and Related Trusts, Alphons Pitterle as Trustee of the John R. Menard, Jr. 2002 Trust and Related Trusts, Midwest Manufacturing Co., Wood Ecology Inc., Countertops Inc., Team Menard Inc., Menard Engine Group, Menard Competition Technologies LTD, MC Technologies Inc., Menard Engineering LTD, UltraMotive LTD and Merchant Capital LLC, Defendants. |
| Court | Wisconsin Court of Appeals |
On behalf of the plaintiff-appellant-cross-respondent the cause was submitted on the combined briefs of Charles K. Maier, Daniel R. Shulman and Richard C. Landon of Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, MN, and Mel C. Orchard, III of The Spence Law Firm, LLC, Jackson, WY.
On behalf of the defendants-respondents, Webster Hart, Angela L. Bowe and Alphons Pitterle, the cause was submitted on the briefs of Todd Wind of Fredrikson & Byron, PA. of Minneapolis MN, and G. Richard White of Weld Riley, S.C., Eau Claire.
On behalf of the defendants-respondents-cross-appellants, the cause was submitted on the combined brief of Michael D. Freeborn, Brian P. Norton and Andrew C. Nordahl of Freeborn & Peterson, LLP, Chicago, IL, and G. Richard White of Weld Riley, S.C. of Eau Claire.
Before STARK, P.J., HRUZ and SEIDL, JJ.
¶ 1 This case involves, in part, the extent to which an attorney can assert a claim under Watts v. Watts, 137 Wis.2d 506, 405 N.W.2d 303 (1987), arising out of legal services allegedly provided to a cohabiting partner and his businesses. Debra Sands appeals orders dismissing her claims against John Menard, Jr., Menard, Inc., and Menard Thoroughbreds, Inc., ("the Menard Defendants")1 and against the trustees of the John R. Menard, Jr. 2002 Trust and related trusts ("the Trustees"). Sands claims she cohabitated with Menard from 1998 until 2006, and during that time she performed work for Menard and his companies that increased their value and for which she was not fully compensated. Sands further claims Menard repeatedly represented to her during their relationship that he would give her ownership interests in his companies as compensation for her services, but he has since failed to do so.
¶ 2 For the reasons explained below, we conclude the circuit court properly granted summary judgment dismissing Sands' claims against the Menard Defendants and the Trustees. We also conclude the court properly granted summary judgment to Sands on Menard, Inc.'s counterclaim for breach of fiduciary duty. We therefore affirm.
¶ 3 Menard is the founder of Menards, a highly successful, privately held chain of home improvement stores, and is president and chief executive officer (CEO) of Menard, Inc. In November 1997, nearly forty years after starting his business, Menard began dating Sands. Sands had graduated from William Mitchell College of Law in 1993 and was licensed to practice law in Minnesota.
¶ 4 Sands contends she moved into Menard's home in August 1998, and they became engaged in December 1998. She claims they lived together until their relationship ended in April 2006. Menard concedes he and Sands were engaged; however, he denies they ever lived together.
¶ 5 It is undisputed that, during Sands' relationship with Menard, she performed work on behalf of Menard and his companies. Sands asserts:
Among the many contributions Sands made, in addition to being Menard's life's partner, social companion, and manager and hostess of his households, were acting as a "gate-keeper" to screen Menard from unwanted approaches; supervising his health care and medical needs; managing the remodeling of three residences; advising on the acquisition of airplanes and their design and décor; finding and suggesting ideas for new products and product lines for the Menard stores, such as garden centers; scouting and proposing new store locations; proposing redesign of store layout and product displays; representing Menard, Inc., as a product buyer; reviewing and suggesting changes and additions to Menard, Inc., marketing plans; assisting with government and public relations; participating in the redesign of store signs and logo; helping find new business and investment opportunities; and assisting in the management of newly-acquired businesses, including two engine design companies in England, a thoroughbred racing business, and a $400 million private equity fund.
Sands contends Menard repeatedly promised to compensate her for her services by giving her "an ownership interest in the various Menard business ventures for which she provided assistance." Menard denies making any such promises.
¶ 6 Sands contends she did not perform any legal work for Menard until 2003, over five years after their relationship began. Conversely, the Menard Defendants assert that Sands began providing legal services for Menard in October 1997, about one month before she and Menard began dating. Specifically, the Menard Defendants claim Sands was retained to provide legal services in connection with an investigation by the Wisconsin Department of Natural Resources (DNR) regarding Menard's disposal of wood ash.
¶ 7 The record reflects that, on or about May 28, 1998, the Prima Group, a company owned by Sands and her sister, sent Menard, Inc., an invoice for a "Client Matter" entitled "Wisconsin Dept. of Natural Resources v. Menard, Inc. " The invoice stated it was for "Governmental relations & Legal services rendered Oct. 15, 1997–May 15, 1998." The total amount of the invoice was $49,635.84, which was comprised of a $35,000 retainer, $35.84 in "Disbursements," and $14,600 for "Gov't Relations & Legal Services." Menard, Inc., paid this invoice in full on May 29, 1998, and recorded the payment in its financial records as a legal expense.
¶ 8 Sands disputes that the May 29, 1998 payment was compensation for legal services. Instead, Sands contends that, in May 1998, Menard offered to give her money so that she could pay off an outstanding student loan in the amount of $49,635.84. According to Sands, Menard directed her to bill Menard, Inc., for the exact amount of the loan and to state the invoice was for government relations and legal services. Sands contends this was done so that the payment would be tax deductible by Menard, Inc., as a business expense.
¶ 9 In addition to the DNR/wood ash matter, the Menard Defendants contend Sands provided legal services to both Menard and Menard, Inc., beginning in September 1998 in a transaction involving race car driver Robby Gordon. Gordon's affidavit supports the Menard Defendants' claim. In addition, the record reflects that Menard, Inc., paid Sands $3,000 on September 21, 1999, and the Menard Defendants contend that payment was for her work on the Gordon transaction.
¶ 10 Sands concedes she performed "a small amount of work ... in assisting with negotiation" of the Gordon transaction. However, she asserts her role in the transaction was "as [Menard's] business advisor, and not as his lawyer." Sands further claims she was never paid for her work on the Gordon transaction, and the $3,000 payment she received from Menard, Inc., was actually a reimbursement for wedding planning expenses.
¶ 11 The parties do agree, however, that by the year 2003 Sands had begun doing legal work for Menard and Menard, Inc. From May 2003 to June 2004, Sands sent Menard, Inc., seven invoices for a total of 1,049 hours of "legal services" provided between April 9, 2003 and June 7, 2004.2 Sands billed at an hourly rate of $145, which she testified at deposition was "suggested, demanded, ... approved" and "agreed" upon by Menard. Menard, Inc., paid Sands a total of $152,105 for the legal work reflected in the seven invoices.
¶ 12 Sands continued providing legal services for Menard and Menard, Inc., until her relationship with Menard ended in 2006. At that point, Menard instructed Sands to submit a bill for all legal services for which she had not been paid dating back to 2003. Sands then submitted 190 separate invoices to Menard, Inc., for work performed between February 2003 and April 2006. According to those invoices, Sands performed 7,487.10 hours of legal work during that time period, which, at a rate of $145 per hour, amounted to $1,085,629.50 in legal fees.
¶ 13 Sands met with Menard and Peter Liupakka, Menard, Inc.'s chief financial officer (CFO), in October 2006. During the meeting, Liupakka advised Sands he believed the number of hours reflected in her invoices was excessive. Menard, Inc., nevertheless offered to pay Sands $961,518—the amount claimed in the invoices, less payments Menard, Inc., believed Sands had already received. However, payment of that amount was conditioned on Sands signing a one-page "Release of All Claims," which expressly included a waiver of any "quasi-marital claims." Sands refused to sign the release. According to Sands, Menard then "said that he would add an additional $100,000 to the total of these invoices and [Liupakka] would go prepare the check as [she] sat there if [she] would...
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