887 N.W.2d 94
Wis. Ct. App.2016Background
- Debra Sands (an attorney) and John Menard Jr. had a romantic relationship from ~1998–2006; Sands performed both nonlegal household/joint-enterprise work and legal services for Menard and his companies.
- Sands alleges Menard promised her ownership interests in his businesses as compensation for her services; Menard denies such promises.
- Sands billed Menard, Inc. for legal services beginning in 2003 (invoices totaling over $1M for 2003–2006); earlier payments (1997–1999) are disputed (Menard, Inc. paid a 1998 invoice recorded as legal fees).
- Sands sued (unjust enrichment/Watts claim, breach of contract, promissory estoppel); Menard, Inc. counterclaimed for breach of fiduciary duty.
- The circuit court granted summary judgment: (1) dismissed Sands’ equitable claims to ownership/wealth based on her failure to comply with SCR 20:1.8(a) (business transactions between lawyer and client) and unclean hands; (2) dismissed claim against Trustees; (3) granted Sands summary judgment dismissing Menard, Inc.’s fiduciary-duty counterclaim as time-barred. Appeals followed; the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Sands) | Defendant's Argument (Menard/Trustees/Menard, Inc.) | Held |
|---|---|---|---|
| Whether Rule 1.8(a) bars an attorney-cohabitant from recovering ownership interests or equivalent damages for legal services provided to a cohabitant | Rule 1.8(a) is disciplinary and cannot create civil liability; Watts allows unjust enrichment claims by cohabitants | Sands violated Rule 1.8(a) (no written disclosure, no independent counsel, no written consent) so she is barred from equitable relief; Trustees likewise not liable if principal claim fails | Rule 1.8(a) applies and Sands’ undisputed violation made her ‘‘hands unclean’’; equitable claims (unjust enrichment, promissory estoppel) barred; Trustees’ claim dismissed accordingly |
| Whether Sands can recover ownership interest or equivalent under contract despite Rule 1.8(a) violation | Contract claim enforceable; Menard may have ratified | Any contract to give unspecified ownership interests is indefinite; Rule 1.8(a) issues aside, the alleged promise lacks essential terms | Contract claim dismissed for indefiniteness (no identified amount/entity of ownership); court did not decide Rule 1.8(a) waiver by ratification |
| Whether Sands can recover quantum meruit at higher hourly rates despite earlier agreed $145/hr invoices | Sands seeks market/quantum meruit value ($355–$640/hr) for unpaid hours | Invoices establish agreed $145/hr; nonpayment is breach, not repudiation that frees contract rate | Quantum meruit claim struck; plaintiff bound by agreed contract rate ($145/hr) |
| Whether Menard, Inc.’s breach-of-fiduciary-duty counterclaim against Sands was timely | Menard, Inc. contends claim timely under discovery rule; accrual Sept. 1, 2005 disputed | Sands argues claim accrued Sept. 1, 2005 and is therefore barred by the two-year statute | Counterclaim accrued Sept. 1, 2005 (sufficient suspicions existed to trigger duty to investigate); claim barred by two-year statute of limitations; summary judgment for Sands affirmed |
Key Cases Cited
- Watts v. Watts, 137 Wis.2d 506 (1987) (unmarried cohabitants may pursue unjust enrichment/contract claims after relationship ends)
- Foley-Ciccantelli v. Bishop's Grove Condo. Ass'n, 333 Wis.2d 402 (2011) (rules of professional conduct inform disqualification and duties though disciplinary process is separate)
- Hansen v. A.H. Robins, 113 Wis.2d 550 (1983) (adoption of discovery rule for accrual of tort claims)
- KDC Foods, Inc. v. Gray, Plant, Mooty, Mooty & Bennett, P.A., 763 F.3d 743 (7th Cir. 2014) (corporate plaintiffs must investigate on initial suspicion; discovery rule accrual when reasonable inquiry is triggered)
- David Adler & Sons Co. v. Maglio, 200 Wis. 153 (1929) (equitable clean-hands maxim bars relief for wrongful conduct)