Sands v. Menard - 2017 WI 110, 379 Wis. 2d 1, 904 N.W.2d 789

Rule:

A claim for unjust enrichment does not arise out of an agreement entered into by the parties. Rather, an action for recovery based upon unjust enrichment is grounded on the moral principle that one who has received a benefit has a duty to make restitution where retaining such a benefit would be unjust. Unjust enrichment requires proof of three elements: (1) a benefit conferred on the defendant by the plaintiff; (2) appreciation or knowledge by the defendant of the benefit; and (3) acceptance or retention of the benefit by the defendant under circumstances making it inequitable to do so. In order to plead an unjust enrichment claim, the party seeking judicial relief must allege facts that, if true, would be sufficient to satisfy a court that the above elements are present.

Facts:

Plaintiff Debra Sands, a licensed lawyer, and defendant John Menard Jr., founder, president, and CEO of Menard Inc., were involved in a romantic relationship from late 1997 to April 2006. Plaintiff alleged that from 1998 until 2006, she cohabitated with defendant and they engaged in a joint enterprise to work together and grow defendant’s businesses for their mutual benefit. In 2008, plaintiff filed suit against defendants asserting claims for unjust enrichment, implied contract, promissory estoppel, intentional infliction of emotional distress, negligent infliction of emotional distress, fraudulent misrepresentation, conversion, and breach of fiduciary relationship. In her amended complaint, she added the Trustees as defendants. Defendants asserted a counterclaim for breach of fiduciary duty under SCR 20:1.8(a), which regulates business transactions between attorneys and their clients, and moved for summary judgment to dismiss all of plaintiff's claims arguing that SCR 20:1.8(a) barred plaintiff from recovering any portion of defendant’s assets or an ownership interest in his companies for failure to comply. The defendant Trustees also moved for summary judgment. Following an oral ruling, the circuit court entered summary judgment. The court acknowledged that plaintiff violated SCR 20:1.8(a), but the court recognized an implicit exception to SCR 20:1.8(a), such that it does not bar an attorney from bringing an equitable claim for contributions provided in a romantic relationship if: the romantic relationship predates the attorney-client relationship, and the legal services rendered were merely ancillary or incidental to the larger joint enterprise of the parties. The court found that since neither exception to its test applied, the court concluded that plaintiff’s violation of SCR 20:1.8(a) barred her claims against the defendants. The circuit court then granted summary judgment to the defendant Trustees. Plaintiff appealed but it was denied by the court of appeals, but the court stayed her appeal of the order regarding the defendant Trustees pending the disposition of her remaining claims in circuit court. After the circuit court granted partial summary judgment, plaintiff claimed that she was entitled to compensation for her non-legal services. Defendants moved to strike which was granted. Plaintiff’s assertion that she was entitled to the quantum meruit value of her legal services was also denied. Plaintiff then moved for summary judgment on defendant’s counterclaim for breach of fiduciary duty which was granted by the circuit court. Thus, plaintiff filed a notice of appeal from the circuit court's final order, and defendant cross-appealed from the order dismissing its counterclaim for breach of fiduciary duty. The court of appeals affirmed the circuit court’s grant of summary judgment dismissing plaintiff’s claims and defendant’s counterclaim. Plaintiff filed a petition for review.

Issue:

1. Did plaintiff plead facts sufficient to establish what she styled as an unjust enrichment claim?

2. Did the court of appeals properly 

2.1 concluded that SCR 20:1.8(a) may be raised as a defense to an unjust enrichment claim?

2.2 properly granted summary judgment to plaintiff on defendant’s counterclaim for breach of fiduciary duty?

2.3 properly granted summary judgment to the defendant Trustees?

Answer:

1. No 2. Yes

Conclusion:

The court affirmed the judgment. The court found that plaintiff failed to allege facts which, if true, would support her legal conclusion that she and defendant had a joint enterprise that included accumulation of assets in which both of them expected to share equally. The court then concluded that this unjust enrichment claim arising from a long-term romantic relationship failed because the complaint did not sufficiently allege that the claimant had contributed to a joint enterprise resulting in accumulation of assets, but instead, it alleged facts showing that both parties had significant financial means and operated their businesses separately. On the second issue, the court held 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. Thus, in this case, the court ruled that plaintiff’s status as an attorney did not bar the unjust enrichment claim because disciplinary rules could not be employed as an absolute defense in a civil action involving an attorney and because providing legal services as in-house counsel while licensed outside of Wisconsin was not the practice of law under Wis. Sup. Ct. R. 20:8.5(a), thus, plaintiff was not subject to Wis. Sup. Ct. R. 20:1.8(a) regarding the alleged contributions of legal services. Lastly, the court concluded that the appellate court properly granted judgment to plaintiff on defendant’s counterclaim for breach of fiduciary duty since said counterclaim was untimely. Likewise, the court properly granted defendant Trustees summary judgment on their dismissing plaintiff’s claim. Accordingly, the court affirmed.