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Wisconsin Supreme Court Confirms Unmarried Spouses Can Bring Unjust Enrichment Claims

moneyWisconsin law and public policy give significant preference to marriage and marital families. The structures of family law and divorce revolve around the idea that a couple who love each other will get married, have children in wedlock, and later get divorced if needed.

Yet many couples, especially in recent years, have chosen to cohabitate, merge finances, and raise families together without ever officially marrying. When these couples break up, they don’t have the ability to utilize the divorce system in order to divide their property equally and fairly, and, as a result, one spouse sometimes gets the short end of the stick.

As a recent Wisconsin Supreme Court case makes clear, one remedy for this situation that the courts have adopted is to allow former partners in a relationship to seek unjust enrichment claims against the other when the assets of a relationship are not evenly divided.

In Sands v. Menard, et al.Debra Sands brought a claim for unjust enrichment, among other claims, against John Menard, the owner and CEO of Menards, Inc.  Ms. Sands met Mr. Menard shortly after graduating from law school, and they began a romantic relationship. According to Ms. Sands, the two moved in together and eventually became engaged. From 1997 to 2006, Ms. Sands alleged that she contributed significantly to the growth of Mr. Menard’s businesses, including helping to guide projects, acting as a social hostess for clients, overseeing renovations, and taking on other important initiatives. In exchange, Ms. Sands alleged that Mr. Menard offered her an ownership share in his businesses. In 2006, the two broke up, and Ms. Sands received nothing, which was the basis for her unjust enrichment claim.

Both the circuit court and the court of appeals denied Ms. Sands’ claim, finding, for different reasons, that there was no basis to her claim for unjust enrichment. Ms. Sands then appealed to the Wisconsin Supreme Court.

On appeal, the Wisconsin Supreme Court first acknowledged that prior caselaw in Wisconsin does allow for people who live together and contribute to the development of a common business or common growth of assets to use unjust enrichment claims to recover compensation when they are not married. According to the court, the three elements of that claim are:  (1) a benefit is conferred on the defendant by the plaintiff; (2) the defendant acknowledges or appreciates the benefit; (3) the acceptance of the benefit by the defendant without payment to the plaintiff would be inequitable. In the absence of a marriage or divorce, the court held that this type of “quasi-contractual” claim can be used between unmarried people to recover against each other.

In Ms. Sands’ case, however, the Supreme Court held that she could not meet these elements. First, the court noted that while Ms. Sands claimed contributions that helped to create Menards, Inc., the business was already a multi-million dollar entity by the time that Ms. Sands began dating Mr. Menard. Additionally, while Ms. Sands alleged numerous contributions to the company, she could not show how those contributions actually resulted in the growth of Menards or the growth of assets held by Mr. Menard.

According to the court, there must be a “joint enterprise” to which both parties are contributing and that they are growing, whether it is the development of a business or the purchase of a house. Here, the court did not believe that Menards, Inc. was the joint enterprise of both Ms. Sands and Mr. Menard, and it declined to award Ms. Sands a portion of ownership in the business for her time that she was in a relationship with Mr. Menard. Instead, the court noted that Ms. Sands had received numerous benefits during the relationship, including the ability to live an expensive lifestyle with a very wealthy man.

This case makes clear that while Wisconsin law permits unjust enrichment claims for individuals in long-term relationships who are not married, there must be a strong basis for the claim and a contribution to a type of “joint enterprise” that clearly confers a benefit on the defendant. Former partners will not be able to use the claim simply to attempt to recover money or assets from their partner without a valid basis for doing so.

If you were involved in a long-term committed relationship and believe that you were denied benefits or assets you were entitled to receive upon separation, contact a Milwaukee divorce attorney as soon as possible. To speak with a knowledgeable divorce lawyer today, do not hesitate to contact the law offices of Reddin & Singer, LLP online or give us a call at 414-271-6400.

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