954 N.W.2d 339
Wis.2021Background
- Mohns, Inc. (general contractor) performed work on the Hickory Hills condominium project; BMO Harris (successor to M&I) financed the project and sold the loan in 2011. Mohns continued work after BMO bankers allegedly assured payment but was not paid for several draws.
- Mohns sued BMO for breach of contract, unjust enrichment (quasi-contract), and intentional misrepresentation; BMO resisted discovery and produced evasive/interrupted responses and late, voluminous document disclosures.
- The circuit court found BMO repeatedly violated discovery orders, produced unknowledgeable corporate representatives, and withheld a key email; it sanctioned BMO under Wis. Stat. § 804.12(2) by entering judgment on liability (including misrepresentation) and sent only damages to the jury.
- A jury (with liability pre‑determined by sanction) awarded Mohns compensatory damages for breach of contract and unjust enrichment and awarded punitive damages; the circuit court reduced punitive damages and awarded attorney’s fees as part of the sanction.
- The court of appeals affirmed the discovery sanction; this Court affirmed the sanction but reversed the awards for unjust enrichment and punitive damages and remanded to the circuit court to amend the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default judgment on liability was an appropriate discovery sanction | Sanction justified by BMO's withholding and evasive discovery | Circuit court abused discretion and should have expressly found prejudice to plaintiff | Affirmed: Sanction permitted under Wis. Stat. § 804.12(2); explicit finding of prejudice not required; court reasonably found egregious, bad‑faith conduct |
| Whether plaintiff may recover both breach‑of‑contract and unjust‑enrichment damages for the same conduct | Pleading alternative theories allowed; sanction‑based liability permits both recoveries | Recovery for both is legally impermissible where a contract exists | Reversed unjust‑enrichment award: where a valid contract exists and contract damages awarded, unjust enrichment (equitable) recovery is barred |
| Whether punitive damages may be awarded based on contract claims here | Punitive damages appropriate given intentional misconduct and jury finding of malice | Punitive damages are only available for torts, not mere contract breaches | Reversed punitive award: punitive damages must be based on tort compensatory damages (none were submitted/awarded for misrepresentation) |
Key Cases Cited
- Industrial Roofing Serv. v. Marquardt, 299 Wis. 2d 81 (2007) (discusses standard and discretion for imposing discovery sanctions)
- Split Rock Hardwoods, Inc. v. Lumber Liquidators, Inc., 253 Wis. 2d 238 (2002) (addressed prejudice in default‑judgment context for failure to file an answer)
- Meyer v. The Laser Vision Inst., LLC, 290 Wis. 2d 764 (2006) (unjust enrichment cannot coexist with an enforceable contract)
- Entzminger v. Ford Motor Co., 47 Wis. 2d 751 (1970) (punitive damages are not available for mere breach of contract)
- Johnson v. Allis‑Chalmers Corp., 162 Wis. 2d 261 (1991) (upholds severe discovery sanctions for egregious noncompliance)
- Continental Cas. Co. v. Wisconsin Patients Comp. Fund, 164 Wis. 2d 110 (1991) (equitable relief like unjust enrichment is unavailable where a valid contract covers the subject)