Friday, December 29, 2017

Claims Rejected

A divided Wisconsin Supreme Court has ruled in favor of the defendants in a claim brought by an ex-fiancee attorney against a prominent businessman who, among other things, operates a chain of midwestern home improvement stores.

First, at the time Sands and Menard met, Menard, Inc. had been a business for almost forty years, and Menard was already a multi-millionaire. Sands, meanwhile, was a graduate of law school operating at least three separate businesses with her sister in St. Paul, Minnesota. Therefore, while Menard's net worth was undoubtedly higher than Sands', both parties had sufficient financial means and business acumen. We therefore reject any comparison of Sands' contributions to those of Sue Ann Watts, who helped James Watts begin and grow his landscaping business, or to those of Sandra Ward, whose contributions allowed Dennis Jahnke to save $11,000 for the down payment on a house. In each of those cases, the parties had very little, and it was only through their joint efforts that their assets or property increased. Sands, however, did not support Menard as he built his empire; he already had it when they met.

Second, we note the inherent differences between how Sue Ann and James Watts conducted themselves, and how Sands and Menard conducted themselves during their respective relationships. Sands has not alleged that during their relationship she and Menard commingled finances, filed joint tax returns, or made joint purchases of real and/or personal property. Sands did not obligate herself to any business or personal debt Menard incurred. Given these undisputed facts, we conclude that Sands and Menard were not engaged in a "joint enterprise" as required under Watts.

As to the business transaction rule

In light of our conclusion that Sands has failed to allege facts which, if true, would support what she has styled as a Watts unjust enrichment claim, analyzing whether her claim also is barred by SCR 20:1.8(a) may not seem necessary. Nonetheless, because the question of whether a Supreme Court Rule can be used as an absolute defense against an attorney in a civil action is an important issue, we address it here. For the reasons stated below, we conclude: (1) the court of appeals erred in holding SCR 20:1.8(a) created an absolute bar to Sands' unjust enrichment claim; and (2) although SCR ch. 20 may not be used as an absolute defense to a civil claim where an attorney is a party, SCR 20:1.8(a) may guide courts in determining whether those standards of care that generally are required of lawyers have been met.

...we conclude that SCR ch. 20 does not apply here for at least two reasons. First, Supreme Court Rules that regulate the ethical practice of law in Wisconsin cannot be used as an absolute defense in a civil action in which an attorney is a party. In that regard, we clarify Foley Ciccantelli to so hold. Second, Sands' provision of legal services was not the practice of law, as we defined the practice of law in Mostkoff; therefore, she was not entitled to membership in the State Bar of Wisconsin during the times relevant to her Watts claim. Accordingly, she was not subject to SCR 20:1.8(a).

Sands was admitted to practice in Minnesota. 

The court affirmed the dismissal of a counterclaim.

Justice Abrahamson dissented

Unlike the majority, I conclude that Debra Sands pleaded sufficient facts to establish an unjust enrichment claim under Watts v. Watts, 137 Wis. 2d 506, 405 N.W.2d 303 (1987), against John R. Menard, Jr.  I would remand Sands' unjust enrichment claim against Menard to the circuit court for trial. Accordingly, I dissent from the majority's contrary conclusion.

The Court of Appeals decision is linked here.

Urban Milwaukee reported on Menard in this 2013 story. (Mike Frisch)

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