904 N.W.2d 789
Wis.2017Background
- Debra Sands, a lawyer, and John R. Menard, Jr. (founder/CEO of Menard, Inc.) had a romantic relationship from 1997–2006; Sands alleges she contributed extensive personal and business services and was promised ownership interests in Menard businesses.
- Dispute over whether Sands provided legal services before or after the romantic relationship began; Sands submitted voluminous invoices for legal work (190 invoices totaling ~$1,085,629.50 for 2003–2006) and received some payments (~$152,105 plus earlier payments).
- Sands sued (2008) asserting unjust enrichment (a "Watts" claim), implied contract, promissory estoppel, conversion, breach of fiduciary relationship, and other claims; Menard parties counterclaimed (including breach of fiduciary duty under SCR 20:1.8(a)).
- Circuit court found Sands violated SCR 20:1.8(a) but declined to hold the rule an absolute bar; it created a narrow exception where the romantic relationship predates attorney-client relationship and legal services are ancillary — still granted summary judgment dismissing many of Sands’ claims on other grounds (fraud re: invoice, and services not merely ancillary).
- Court of appeals affirmed on different grounds; Wisconsin Supreme Court granted review and affirmed the court of appeals: (1) Sands failed to plead facts showing a joint enterprise that produced assets she expected to share (Watts unjust enrichment); (2) SCR 20:1.8(a) cannot be used as an absolute civil-defense bar though it may guide standards of care; (3) summary judgment for Sands on Menard, Inc.’s fiduciary counterclaim (time-barred); (4) Trustees’ summary judgment affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sands pleaded a Watts unjust enrichment claim | Sands: alleged contributions (personal + business/legal) produced increased wealth she expected to share | Menard: contributions not part of a joint enterprise; no accumulation of assets attributable to Sands | Held: Sands did not plead facts showing a joint enterprise leading to asset accumulation she expected to share; unjust enrichment claim fails |
| Whether SCR 20:1.8(a) bars Sands’ equitable claims | Sands: SCR rules are disciplinary and not an absolute civil bar; she also contends some services predated any attorney-client relationship | Menard: Sands violated SCR 20:1.8(a) (business transaction with a client without required writing/consent), so she cannot recover an ownership interest | Held: SCR 20:1.8(a) may inform standards of care but cannot be used as an absolute defense in civil litigation; also Sands was not subject to the rule for some work (not practicing in WI) |
| Whether Menard, Inc.’s breach-of-fiduciary counterclaim accrued timely | Sands: (implicit) counterclaim untimely; disputes over when Menard knew of disloyalty | Menard, Inc.: breach accrued at Fund closing (Sept 1, 2005) | Held: counterclaim accrued earlier; Menard had sufficient knowledge to investigate by Sept 1, 2005; claim time-barred; summary judgment for Sands on counterclaim proper |
| Whether Trustees liable for Sands’ alleged equitable claim | Sands: Trustees hold Menard property; if Sands succeeds against Menard she should reach Trust assets | Trustees: Sands’ claim fails as to Menard, so no basis for recovery from Trustees | Held: Because Sands’ Watts claim against Menard fails, she has no basis to recover from Trustees; summary judgment for Trustees affirmed |
Key Cases Cited
- Watts v. Watts, 137 Wis. 2d 506 (Wis. 1987) (recognizes unjust enrichment remedy for former cohabitants who jointly accumulate assets and one retains an unfair share)
- Foley‑Ciccantelli v. Bishop's Grove Condo., 333 Wis. 2d 402 (Wis. 2011) (Supreme Court Rules govern discipline; violations do not automatically create civil liability)
- Mostkoff v. Bd. of Bar Exam'rs, 279 Wis. 2d 249 (Wis. 2005) (defining "practice of law" and scope of bar regulation for non‑WI licensed counsel)
- Ward v. Jahnke, 220 Wis. 2d 539 (Ct. App. 1998) (Watts requires proof of a mutual undertaking producing asset accumulation to support unjust enrichment)
- Waage v. Borer, 188 Wis. 2d 324 (Ct. App. 1994) (services unconnected to asset accumulation do not support Watts unjust enrichment)
- Gustafson v. Physicians Ins. Co., 223 Wis. 2d 164 (Ct. App. 1998) (professional conduct rules may guide courts in non‑disciplinary civil contexts)
- Ulrich v. Zemke, 258 Wis. 2d 180 (Ct. App. 2002) (factors showing joint enterprise: shared property acquisition, pooled efforts, and commingled activities)
- Hansen v. A.H. Robins, Inc., 113 Wis. 2d 550 (Wis. 1983) (statute‑of‑limitations accrual: claim accrues when injury is discovered or should have been discovered)