Sands v. Menard
| Decision Date | 29 December 2017 |
| Docket Number | Nos. 2012AP2377 & 2015AP870,s. 2012AP2377 & 2015AP870 |
| Citation | 904 N.W.2d 789,379 Wis.2d 1,2017 WI 110 |
| Parties | Debra K. SANDS, Plaintiff-Appellant-Petitioner, v. John R. MENARD, Jr., 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, Menard, Inc., Defendant-Respondent-Cross Petitioner. Debra K. Sands, Plaintiff-Appellant-Cross-Respondent-Petitioner, v. John R. Menard, Jr. 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, Menard, Inc., Defendant-Respondent-Cross-Appellant-Cross Petitioner. |
| Court | Wisconsin Supreme Court |
For the plaintiff-appellant-cross-respondent-petitioner, there were briefs filed by Charles K. Maier, Daniel R. Shulman, Richard C. Landon, and Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, Minnesota, with whom on the briefs were Mel C. Orchard, III, and The Spence Law Firm, LLC, Jackson, Wyoming. There was an oral argument by Daniel R. Shulman.
For the defendant-respondent-cross-appellant-cross petitioner, there were briefs filed by G. Richard White and Weld Riley, S.C., Eau Claire, with whom on the briefs were Michael D. Freeborn, Brian P. Norton, Andrew C. Nordahl, and Freeborn & Peters, LLP, Chicago, Illinois. There was an oral argument by Brian P. Norton.
For the defendants-respondents, there was a brief by G. Richard White and Weld Riley, S.C., Eau Claire, with whom on the brief were Todd Wind and Fredrikson & Byron, P.A., Minneapolis, Minnesota. There was an oral argument by Todd Wind.
For the defendants-respondents-cross-appellants, there was a brief filed by there was a brief filed by G. Richard White and Weld Riley, S.C., Eau Claire, with whom on the briefs were Michael D. Freeborn, Brian P. Norton, Andrew C. Nordahl, and Freeborn & Peters, LLP, Chicago, Illinois.
¶1 We review a decision of the court of appeals, affirming the circuit court's1 grant of summary judgment dismissing Debra Sands' claims and Menard, Inc.'s counterclaim.
Debra Sands and John Menard, Jr., were involved in a romantic relationship from late 1997 to April 2006.2 Sands alleges that from 1998 until 2006 she cohabitated with Menard and they engaged in a "joint enterprise" to work together and grow Menard's businesses for their mutual benefit. Menard and his affiliated entities argue that by failing to comply with Supreme Court Rule 20:1.8(a), which regulates business transactions between lawyers and their clients, Sands is precluded from seeking an ownership interest in any of Menard's various business ventures.
¶2 We review four issues. First, we consider whether Sands has pleaded facts sufficient to establish what she styled as an unjust enrichment claim under Watts v. Watts, 137 Wis. 2d 506, 405 N.W.2d 303 (1987), thereby necessitating a remand to the circuit court for a full hearing on the merits. Second, we consider whether the court of appeals properly concluded that SCR 20:1.8(a) may be raised as a defense to an unjust enrichment claim. Third, we consider whether the court of appeals properly granted summary judgment to Sands on Menard, Inc.'s counterclaim for breach of fiduciary duty. And fourth, we consider whether the court of appeals properly granted summary judgment to the Menard Trustees.
¶3 As to the claim she has characterized as a Watts unjust enrichment claim, we conclude that Sands has failed to allege facts which, if true, would support her legal conclusion that she and Menard had a joint enterprise that included accumulation of assets in which both she and Menard expected to share equally. On the second issue, for the reasons explained below, we conclude that SCR 20:1.8(a) may guide courts in determining required standards of care generally; however, it may not be used as an absolute defense to a civil claim involving an attorney.3 And finally, we also conclude that the court of appeals properly granted summary judgment to Sands on Menard, Inc.'s counterclaim for breach of fiduciary duty, and to the Trustees on their motion for summary judgment dismissing Sands' claim.
¶4 Accordingly, we affirm the court of appeals.
¶5 Menard is the founder, president, and CEO of Menard, Inc., a privately held chain of home improvement stores that began in Eau Claire, Wisconsin. In November 1997, nearly 40 years after starting his business, Menard began dating Sands, a lawyer licensed to practice in the state of Minnesota, who at the time was directing several business ventures with her sister in St. Paul. Sands claims that she moved in with Menard in the summer of 1998, and they became engaged later that year. Menard admits that he and Sands were engaged, but denies that they ever lived together.
¶6 During their relationship, Sands alleges she made a number of business and personal contributions to both Menard and his companies, including Menard, Inc. and Menard Thoroughbreds, Inc. Although the parties agree that Sands made certain contributions, they do not agree as to the nature of those contributions, when they began, or who was the recipient at any given time. Sands describes her contributions to Menard and his companies as follows:
She was Menard's life partner, social companion, and manager and hostess of his households. Sands protected Menard from unwanted approaches by serving as a "gate-keeper." She supervised his health care and medical needs; managed the remodeling of three residences; and advised on the acquisition of airplanes and their design and décor. She provided ideas for new products and product lines for the Menard, Inc., stores, such as garden centers; and scouted and proposed new store locations, store layouts, and product displays. She represented Menard, Inc., as a product buyer. She reviewed and suggested changes and additions to Menard, Inc., marketing plans. She assisted with government and public relations. She participated in the redesign of store signs and logos. She helped find new business and investment opportunities. She assisted in the management of the Team Menard auto racing venture and newly-acquired businesses, including two engine design companies in England, a thoroughbred racing business, and a $400 million private equity fund. She made her joint enterprise with Menard her focus, which occupied her every moment.
¶7 Sands claims that Menard repeatedly promised her that in return for these contributions, he would give her an ownership interest in his various business ventures. Menard denies ever making such promises, and states only that Sands provided certain legal services beginning in approximately 1997.
¶8 The parties also disagree as to whether Sands performed legal work for Menard or the Menard Defendants prior to the beginning of their romantic relationship. Sands contends that there was never any attorney-client relationship with the Menard Defendants prior to 1998. Conversely, the Menard Defendants assert that Sands began providing legal services in October 1997, before she and Menard began dating.
¶9 As evidence, the Menard Defendants submitted a May 28, 1998, invoice from Prima Group, a company owned by Sands and her sister, in the amount of $49,635.84. The invoice referenced a "client matter," listed as "Wisconsin Dept. of Natural Resources v. Menard, Inc." The invoice further indicated it was for "Governmental relations & Legal services rendered Oct. 15, 1997—May 15, 1998." Sands claims that the invoice was prepared at Menard's request, in response to his offer to pay off Sands' remaining student loans of $49,635.84. Sands claims that Menard told her to send the invoice to Menard, Inc., so that the payment would be tax deductible as a business expense. Menard, however, claims this invoice related to legal services that Sands provided in connection with a Wisconsin DNR investigation into Menard, Inc.'s disposal of wood ash.4
¶10 Although the parties disagree as to the nature of the legal services provided prior to 2003, both concede that beginning in 2003 Sands began to provide significant legal services to Menard, Inc.5 Sands billed at an hourly rate of $145, and Menard, Inc. paid Sands a total of $152,105 for seven invoices.
¶11 In early 2004, Sands assisted in the creation of a private equity fund ("the Fund"). Steve Hilbert, a businessman with money management experience and a long-time friend of Menard's, began to meet with Menard to discuss the Fund. According to Sands, Menard asked her to review documentation used to create the Fund. Menard, Inc., however, asserts that from at least January 2005 through October 2005, Menard, Inc. had retained Sands as its outside legal counsel to represent it in the Fund transaction.
¶12 Menard alleges that Sands was responsible for negotiating the terms of the transaction with Hilbert, in addition to reviewing and editing the Fund transaction documents. Sands states that she was never asked and never did create invoices for her work for Menard, in part because she believed her efforts were part of her and Menard's "joint enterprise." It was not until her relationship with...
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