COURT OF APPEALS DECISION DATED AND FILED September 2, 2010 A.
John Voelker Acting Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL from a judgment of the circuit court for Columbia County: JAMES MILLER, Judge. Affirmed.
Before Vergeront, P.J., Lundsten and Higginbotham, JJ.
¶1 LUNDSTEN, J. Richard Lynn appeals a
judgment determining damages owed to Elizabeth Leonard for unjust
enrichment. The judgment followed after
Richard stipulated that he was unjustly enriched during a period of
cohabitation with Elizabeth. The court
awarded
Background
¶2 In the summer of 1994, Elizabeth Leonard and Richard Lynn,
who were involved romantically, moved in together. Prior to this cohabitation, Richard had
substantial experience in the construction business and had assets that
included his residence in
¶3 In 2001, the couple first separated and, after a brief
reconciliation, they separated permanently in 2002. For reasons that are disputed, but not
pertinent to this appeal, in May 2002,
¶4 After a trial on the issue of damages, the court awarded
¶5 Richard appeals from the resulting judgment. We reference additional facts as needed below.
Discussion
¶6 Richard and Elizabeth stipulated that they engaged in a joint
enterprise to accumulate assets during their years of cohabitation. This case, then, concerns the proper division
of the joint enterprise assets. See Ulrich
v. Zemke, 2002 WI App 246, ¶11, 258
A. Unjust
Enrichment Methodology
¶7 Richard makes several arguments that, either directly or indirectly, suggest that the circuit court applied improper standards or methods when dividing the joint enterprise assets. As the following explains, we disagree.
1.
Division Asset-By-Asset
¶8 Implicit in several of Richard’s arguments is the suggestion that each joint enterprise asset should be analyzed in isolation and, accordingly, divided in isolation. For example, Richard points to particular instances where, he asserts, he contributed significantly more than Elizabeth to increasing a particular asset’s value, and he suggests that this means that the particular asset should be excluded from the 50/50 division. As the following explains, we disagree with Richard that this is required in the present circumstances. After explaining this disagreement, we then proceed to show how our general rejection of Richard’s argument also leads us to reject several of Richard’s specific arguments.
¶9 Ulrich, cited by both parties, is useful for illustrating the
proper approach to asset division. As is
the case here, Ulrich dealt with an unjust enrichment claim following the
termination of a relationship between unmarried cohabitants.
¶10 Here, given the stipulation, we bypass the step of determining
the existence of a joint enterprise. Ulrich
instructs, then, that all assets acquired by the parties during that joint
enterprise time period are to be part of the division, unless outside the joint
enterprise’s domain. See id.
Put another way, to the extent Richard assumes that an asset-by-asset
approach is appropriate, he fails to come to terms with Ulrich’s focus on the
overall scope of the joint enterprise. See
id., ¶9 (adopting an approach that unjust enrichment division may be
determined by “considering the overall scope of their joint enterprise and dividing
the property accordingly”). Richard
labors under the misconception that each and every task by
¶11 We note that it is at times unclear to what extent Richard may
be challenging certain assets as outside
the joint enterprise’s domain and to what extent he merely means to minimize
¶12 For example, Elizabeth testified that she contributed $30,000 in insurance proceeds and used her credit cards toward the “interior build out” of the Broadway property and that she also took part in cleaning and landscaping the property. She also testified that the Cascade Mountain Motel was “primarily in [her] hands,” which included various roles in rehabbing it and, at times, personally managing it to keep it operational. There was testimony by other witnesses also along these lines and tending to support the inclusion of these assets in the joint enterprise.
¶13 Richard, for his part, points out that his independently acquired
¶14 Richard’s argument regarding the
2. Dollar Value Relationship
¶15 Richard seems to argue that, in order to divide the assets
50/50, the circuit court had to make findings that 50% of the assets’ value was
“the direct result” of
¶16 As Ulrich makes plain, unjust enrichment division may be
determined by “considering the overall scope of their joint enterprise and
dividing the property accordingly.”
¶17 Richard relies on several cases, but none of them provide clear
support for his dollar-value-connection premise. For example, Richard relies on the following
statement from Ward v. Jahnke, 220 Wis. 2d 539, 583 N.W.2d 656 (Ct. App.
1998): “[The] application of unjust
enrichment as a legal theory of recovery includes a requirement that the
complaining party present proof of specific contributions that directly led to
an increase in assets or an accumulation of wealth.”
¶18 Additionally, we reject Richard’s related proposition that it
is proper to analyze Elizabeth’s contributions as if she were Richard’s employee
and to then tally her theoretical wages to determine unjust enrichment. Richard cites two cases when discussing this
approach, but he does not explain how these cases support a wage-based approach
in the present circumstances. See Lawlis v. Thompson, 137
3. Automatic
50/50
¶19 Richard asserts that the circuit court presumed that assets
accumulated by a joint enterprise must be split equally. Richard points out that cases such as Ulrich
speak in terms of “equitable” division, not “equal” division. See
Ulrich,
258
¶20 After making findings that enumerated a variety of efforts by Elizabeth and Richard, the court stated:
Based upon the credible evidence before this court, the court finds that the parties engaged in a joint enterprise each contributing equally their skills and strengths in accumulating wealth during their cohabitation and each should be entitled, in fairness and equity, to share equally in that accumulation.
(Emphasis added.) It appears that Richard assumes that, because the result of the circuit court’s decision was to divide the wealth equally, then it must be that the court did so through an automatic 50/50 rule. As is apparent from the above passage, however, the court’s equal division is premised on its finding of equal contribution to the accumulated wealth. This is consistent with the rule that Richard cites, and there is simply no indication here or elsewhere that the circuit court applied an automatic 50/50 rule.
¶21 Having addressed and rejected Richard’s general arguments about the circuit court’s methodology,[2] we next address Richard’s remaining arguments that the circuit court erred.
B. Richard’s
Will
¶22 Richard suggests that it was erroneous for the circuit court to base its 50/50 split “in large part” on Richard’s 1996 will. We reject this argument because, although the court referenced this will, there is no indication that the court primarily based its 50/50 split on it.
¶23 The circuit court’s discussion of the will, in its entirety, was as follows:
While it is understandable that after separating each party would attempt to minimize the contribution of the other to their joint enterprise, the court finds most credible the defendant’s expression of their relationship as contained in a will prepared in December of 1996. That will, exhibit 1, leaves defendant’s property to the plaintiff and specifically provides for his children only if plaintiff fails to outlive him by fifteen days. That will further provides, when referring to his bequest to the plaintiff: “I recognize what we have accumulated over the last four or five years was done as a result of our joint efforts and I appreciate that.”
¶24 As is apparent, to the extent the court relied on Richard’s
will, it was to evaluate Richard’s credibility regarding his characterization
of
C. Failure
To Value Benefits Already Enjoyed
¶25 Richard argues that “[t]he trial court failed to include in its
calculations the value of assets [
¶26 As to the benefits
D. Overall
Basis For The 50/50 Division
¶27 Richard raises a number of points that, either directly or indirectly, go to whether the circuit court erred when settling on a 50/50 division of the joint enterprise assets. We addressed some of these points above, such as the role of Richard’s independently owned collateral in acquiring certain joint enterprise property. See supra, ¶13. Richard also more generally argues that “he provided the genius and driving force, as well as the capital and credit that was necessary for the businesses to succeed.” Similarly, Richard points to his role in financing, negotiating real estate transactions, and remodeling “distressed buildings.”
¶28 Richard contrasts this to
¶29 The circuit court made substantial findings about
¶30 The pertinent question here is whether the 50/50 division was reasonable in light of the facts summarized above. See id., ¶¶8, 20 (noting that the division of the joint enterprise property is discretionary and that such a decision is “sustained if the circuit court examined the relevant facts, applied a proper standard of law, and using a rational process, reached a conclusion that a reasonable judge could reach”). We conclude that the division was reasonable. The facts, as a whole, can reasonably be viewed as demonstrating that Elizabeth and Richard contributed equally to the accumulation of assets. It was reasonable, for example, for the circuit court to find that Elizabeth enabled the enterprise to function by performing tasks that Richard was either uninterested in performing or that he could not perform as well. Accordingly, we affirm the division.
E. Prejudgment Interest Award
¶31 Richard argues that the award of prejudgment interest was
improper. His argument turns on his
assumption that, because the amount owed to
¶32 The supreme court recently reiterated that,
in a case of equity, the allowance of interest is a matter within the circuit court’s discretion. A reviewing court will affirm the circuit court’s exercise of discretion unless it was erroneous. The circuit court erroneously exercises its discretion if it makes an error of law or neglects to base its decision upon the facts of the record.
Ash Park, LLC v. Alexander &
Bishop, Ltd., 2010 WI 44, ¶32, 324
¶33 Citing Dahl v. Housing Authority of Madison, 54 Wis. 2d 22, 31, 33, 194 N.W.2d 618 (1972), a contract damages case, Richard argues that, in addition to the framework we have just quoted, case law requires that damages be ascertainable or “measurable or computable” up-front as a prerequisite to awarding prejudgment interest. He also broadly asserts, without citation, that “[t]here is simply no reasonably certain standard by which one could calculate the extent to which damages might be awarded in an unjust enrichment case involving unmarried cohabitants.”
¶34 We acknowledge that the circuit court stated that the damages were “reasonably ascertainable” here. We need not address Richard’s contention that the circuit court was incorrect in that regard, however, because Richard fails to show that the award in this case must be based on damages that were reasonably ascertainable. It is apparent from the circuit court’s comments that, regardless of its reference to the damages being reasonably ascertainable, the court relied on its equitable powers, with the aim of providing a fair result under the circumstances. The court concluded:
[
(Emphasis added.)
¶35 We acknowledge that in Ash Park, which awarded both prejudgment
and postjudgment interest in a case applying equitable principles, the supreme
court observed in a footnote that the damages were “‘determinable by a
reasonably certain standard of measurement.’”
¶36 We need not resolve this uncertainty because it is enough to observe that Richard, as the appellant, has failed to demonstrate that the circuit court erred. He provides no case support for his assertion that prejudgment interest may never be awarded in an unjust enrichment case involving unmarried cohabitants. And, he does not otherwise point to cases that directly speak to the equitable decision to impose prejudgment interest. Rather, he relies on contract cases concerning claims for money damages. See Dahl, 54 Wis. 2d at 29-33 (discussing whether a contractor’s contract claim was liquidable and, thus, a proper subject for prejudgment interest); United Capitol Ins. Co. v. Bartolotta’s Fireworks Co., 200 Wis. 2d 284, 300, 546 N.W.2d 198 (Ct. App. 1996) (directing the award of prejudgment interest for an amount owed under an insurance contract when the amount owed was precisely determinable as of a certain date).
¶37 Because Richard does not otherwise develop an argument that the
interest award was improper, we affirm the circuit court’s decision as
reasonably based “upon the various equitable circumstances of the case.” See
F. Prejudgment
Interest Rate
¶38 Richard argues that, even if some interest award was proper, the particular rate of 5% was improper. We are not persuaded.
¶39 Richard complains that the circuit court erroneously relied on several statutes. For example, Richard criticizes the circuit court’s citation to Wis. Stat. § 138.04,[5] which Richard asserts, without further explanation, “is not facially applicable” here. See § 138.04 (providing that “[t]he rate of interest upon the loan or forbearance of any money, goods or things in action shall be $5 upon the $100 for one year”).
¶40 Here again we disagree with Richard’s characterization of the circuit court’s decision. Although it appears that the court referenced certain statutes as general guideposts, the court did not “rely” on the statutes in the sense that it believed it was bound to apply them.
¶41 The relevant inquiry is whether the 5% rate was an abuse of
discretion in the circumstances of this case.
See Ash Park, 324
¶42 This protection-from-risk assertion, however, falls short of
showing that the circuit court abused its discretion. Even granting Richard his premise that it
matters that
Conclusion
¶43 For the reasons stated above, we affirm the circuit court’s judgment.
By the Court.—Judgment affirmed.
Not recommended for publication in the official reports.
[1] In
yet another undeveloped argument, Richard seems to suggest that the court
improperly divided the increase in value of the
[2] Richard
also singles out a statement by the circuit court that “it is inappropriate to
separate the contribution of [
[3] Richard does points out that, when this will was drafted, only some of the assets were in existence and, thus, he argues that the will should only be considered as relevant to those assets. However, as we have just discussed, there is no indication that the court primarily relied on this will to divide any particular assets.
[4] Richard
also points to
[5] All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted.