Title: Management Computer Services, Inc. v. Hawkins

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

No. 16853.rtf 
 
1 
 
NOTICE 
This opinion is subject to further editing 
and modification.  The final version will 
appear in the bound volume of the official 
reports. 
 
 
No. 93-0140 
 
STATE OF WISCONSIN               :               
 
 
 
 
IN SUPREME COURT 
 
 
Management Computer Services, Inc., 
A Wisconsin Corporation, 
 
  
Plaintiff-Appellant-Cross 
Respondent-Petitioner, 
 
 
v. 
 
Hawkins, Ash, Baptie & Co. 
A Wisconsin Partnership, 
Hawkins, Ash, Baptie, Inc., 
A Wisconsin Corporation, 
David D. Baptie, James O. Ash, 
R. Roy Campbell, Robert J. Daley, 
Walter L. Leifeld, Larry E. Rangoon 
and Jack E. White, 
 
 
Defendants-Counter Claimants-
Respondents-Cross Appellants, 
 
     v. 
 
Management Computer Services, Inc.,  
 
 
Counter Defendant-Appellant-
Petitioner. 
 
FILED 
 
DEC 20, 1996 
 
Marilyn L. Graves 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
REVIEW of a decision of the Court of Appeals.    Affirmed in 
part, reversed in part, and cause remanded. 
 
N. PATRICK CROOKS, J.  Management Computer Services, Inc. 
(“MCS”) seeks review of a published decision of the court of 
appeals,
1 which affirmed in part and reversed in part a judgment 
of the circuit court for La Crosse County, the Honorable Robert 
W. Radcliffe presiding.  In particular, the court of appeals held 
the following: (1) the circuit court correctly entered judgment 
notwithstanding the verdict (“JNOV”) on the breach of contract 
claim and counterclaim, because the contract is too indefinite to 
enforce; (2) the circuit court erroneously changed the jury 
answer to reduce the conversion award against Hawkins, Ash, 
Baptie & Company (“HABCO”)
2 from $65,000 to $62,000, but 
correctly changed the jury answer to reduce the unjust enrichment 
award from $1,000,000 to $0 based on lack of sufficient evidence 
as to damages; (3) the circuit court erroneously ordered a new 
trial on punitive damages unless MCS accepted a reduced sum of 
$50,000; instead, the court of appeals set the amount of 
reasonable punitive damages at $650,000.  We conclude, as a 
matter of law, that the contract at issue is not too indefinite 
to enforce and that HABCO was not excused from performance by 
MCS's breach of contract.  Therefore, we reverse the court of 
appeals’ decision in part.  However, we affirm the court of 
appeals’ decision regarding the claims of conversion and unjust 
enrichment, and the award of punitive damages. 
                                                          
 
1  Management Computer Servs., Inc. v. Hawkins, Ash, Baptie 
& Co., 196 Wis. 2d 578, 539 N.W.2d 111 (Ct. App. 1995) 
2  For purposes of this opinion, Respondents will be 
collectively referred to as HABCO.  However, it should be noted 
that Hawkins, Ash, Baptie, Inc. (HABINC) is a corporation owned 
by HABCO, and the individually named respondents are partners of 
HABCO. 
I. 
 
The factual background of this case is lengthy and 
complicated.  HABCO is a regional certified public accounting 
firm with offices in La Crosse, Manitowoc, Marshfield, Medford, 
Green Bay, Sturgeon Bay, Wisconsin, and Winona, Minnesota.  Part 
of HABCO’s business involves providing accounting services to 
public housing authorities (“PHAs”).
3  In 1968, Robert Sierp and 
Robert Daley, employees of HABCO, worked together to develop 
computer programs to service PHA clients.   
 
On January 1, 1970, HABCO incorporated MCS, which served as 
a separate department providing computer services to HABCO’s 
clients.  MCS also processed HABCO’s internal accounting work, as 
well as its time and billing systems.  In the late 1970’s, MCS 
began pursuing opportunities to provide turnkey computer systems
4 
to PHAs.   
Initially, the HABCO partners and members of their families 
owned ninety percent of the shares of MCS stock and Sierp owned 
ten percent of the shares.  However, on March 31, 1979, MCS 
redeemed the HABCO partners’ and families’ shares, leaving Sierp 
as sole shareholder.  Sierp also became president of MCS.  At the 
time of the redemption, neither HABCO nor MCS carried any of the 
existing software on their books as assets. 
                                                          
 
3  In fact, both HABCO and MCS license similar computer 
software and services to meet the accounting needs of PHAs.  They 
are competitors in this area.   
4  A turnkey computer system is a total computer system 
including hardware, software, installation, training, and support 
services. 
 
Prior to the redemption, HABCO and MCS began negotiating an 
agreement intended primarily to outline the terms and conditions 
under which MCS would provide HABCO with a computer and the 
software necessary to continue its monthly services accounting 
operations.  An MCS employee
5 drafted the initial agreement, and 
it was later revised by HABCO.  In fact, the agreement went 
through numerous revisions, with Sierp and James Ash, a HABCO 
partner, serving as the primary negotiators.   
In addition, Gerard O’Flaherty, an attorney, reviewed one of 
the contract drafts.  O’Flaherty sent a letter to MCS indicating 
that Attachment C should be re-drafted because of its “loose 
construction.”  During the trial, Ash testified that he was aware 
O’Flaherty had reviewed the agreement and made comments on it, 
but he was not aware of the content of those comments.  In 
addition, both Ash and O’Flaherty testified that O’Flaherty was 
not representing HABCO, even though it paid half of his fees for 
reviewing the contract. 
 
On June 1, 1979, shortly after the stock redemption, MCS and 
HABCO signed a thirty-one page “Contract for Computer Services 
and Equipment.”  The contract established four classes of 
software, with Classes III and IV being the most relevant to this 
case.  Class III software (“contract software”) was jointly owned 
by MCS and HABCO, but there were certain restrictions on its use.  
In particular, Attachment C of the contract provides in pertinent 
part: 
                                                          
 
5  The employee was not an attorney. 
HABCO shall have the use of the Jointly Owned Software 
on a single computer system as defined in this 
Agreement for an unrestricted number of clients. 
 
HABCO shall pay MCS 25% of the program value as 
identified in this Agreement for the use of the Jointly 
Owned Software on each additional computer system 
purchased through MCS, and installed or operated by 
HABCO. 
 
Class IV software was application software, including most of the 
software needed to operate the PHA turnkey systems.  However, 
Class IV software became Class III software pursuant to the 
contract, because HABCO did not exercise an option to purchase it 
before November 1, 1979.  
MCS subsequently developed additional proprietary software 
that was not covered by the contract (“non-contract software”).  
MCS and HABCO agreed that MCS could store back-up tapes 
containing the non-contract software at HABCO’s offices.
6  In 
1981 or early 1982, a HABCO employee and partner
7 copied programs 
from the back-up tapes onto HABCO’s computer, backed it up on 
another tape, printed a copy of the software, and removed the 
software from the HABCO computer.
8 This process ensured that no 
one would be able to tell that the software had been copied to 
HABCO’s computer.  HABCO then used the programs in its own 
operations.  In fact, HABCO changed its billing format so that 
                                                          
 
6  A back-up tape is a copy of the original software.  Off-
site storage of the back-up tapes ensured that the software would 
survive in the event of a fire or other damage at MCS’s site. 
7  The parties dispute the extent of the partner’s 
participation in the incident. 
8  The programs that were copied were PRS (payroll), AR 
(accounts receivable), CPR (commercial payroll) and AP (accounts 
payable). 
MCS would not discover that HABCO was using the software to 
process accounts receivable.   
On January 20, 1989, MCS filed suit in circuit court.
9  The 
complaint alleged several claims, including breach of contract, 
conversion, unjust enrichment, and punitive damages.  The breach 
of contract claim involved the contract software, in particular, 
the software needed to run the PHA turnkey systems.  MCS alleged 
that HABCO breached the contract by making unauthorized copies of 
the contract software, using those copies on equipment that was 
not purchased from MCS and was not the single computer system 
designated in the contract, and selling or licensing copies of 
the software to PHAs across the country.  MCS’s claims for 
conversion, unjust enrichment, and punitive damages were based on 
HABCO’s copying of the non-contract software from MCS’s back-up 
tape.  In addition, HABCO filed a counterclaim for breach of 
contract against MCS.
10    
On October 1, 1990, MCS brought a motion in limine to 
exclude all testimony regarding ownership of the contract 
software prior to June 1, 1979, based on the parol evidence 
                                                          
 
9 MCS initially filed suit against HABCO in federal district 
court.  On December 16, 1988, the district court granted summary 
judgment dismissing MCS’s federal claim under the Racketeer 
Influenced and Corrupt Organizations Act.  MCS then filed its 
common law claims in state court.  The decision of the district 
court was subsequently affirmed.  See Management Computer Servs., 
Inc. v. Hawkins, Ash, Baptie & Co., 883 F.2d 48 (7th Cir. 1989). 
10 Although a provision in the contract provided that “this 
Agreement shall be governed by any applicable provisions of the 
Uniform Commercial Code,” the claims filed by MCS and HABCO were 
based on the common law.  Since this case has been tried under 
the common law, we do not consider the applicability of the 
Uniform Commercial Code. 
rule.
11  In its response, HABCO claimed that the parol evidence 
rule did not apply because the contract was ambiguous as to 
ownership of the software.  The circuit court judge denied MCS’s 
motion, and thus allowed parol evidence to be presented.  
A jury trial was held on April 15 through April 26, 1991.  
In the opening statement, an attorney for HABCO said: 
Unfortunately one of the big problems in this case is 
the ambiguity of the contract.  HABCO did not have 
legal representation, and that’s –- of course, when you 
have an ambiguous contract you wind up in a courtroom 
like this, and you have to leave it to ladies and 
gentlemen like yourselves to figure out what the 
parties meant by this contract.  And this will be one 
of your important jobs in this case. 
 
(R. 117 at 72.)  In fact, much of the evidence presented by both 
HABCO and MCS related to their interpretations of the contract. 
 
At the close of MCS’s evidence, HABCO moved the court to 
dismiss the claim of breach of contract, based on its contention 
that 
the 
contract 
was 
not 
susceptible 
of 
MCS’s 
alleged 
construction.  The circuit court judge denied the motion.  He 
specifically stated: 
There is a reasonable disagreement between the parties 
as to the interpretation of this contract, and if the 
interpretation of the contract as pled and claimed by 
the plaintiff is correct, why then the court would have 
to find that there would be evidence to support a 
finding that they, HABCO, had failed to pay 25 percent 
of the program value for the software . . . .   
 
                                                          
 
11  The court of appeals erroneously indicated that “MCS 
claimed the provisions of the contract were ambiguous and it 
sought leave before the trial to submit parol evidence on the 
intention 
of 
the 
parties 
regarding 
their 
contractual 
obligations.”  Management Computer Servs., Inc. v. Hawkins, Ash, 
Baptie & Co., 196 Wis. 2d 578, 593, 539 N.W.2d 111 (Ct. App. 
1995).  In fact, the opposite is true. (R. 25 at 1, R. 27 at 1-
3.)  HABCO is the party that argued for the admission of parol 
evidence due to ambiguity. (R. 31 at 3-7.) 
(R. 120-7 at 1068) (emphasis added.)  
 Again, at the close of all the evidence, HABCO moved the 
court to dismiss the breach of contract claim.  However, this 
time HABCO argued that the contract was void for indefiniteness.
12 
The circuit court judge once more denied the motion, concluding: 
Certainly the interpretations that are being given to 
the contract now by the parties would come very close 
to finding that there was never a meeting of the minds 
as to what it was intended by the parties.  But the 
contract is susceptible of different interpretations.  
The jury has heard [HABCO’s] evidence concerning [its] 
understanding, Mr. Sierp has testified as to his 
understanding of the contract, each of the principals 
for the defendant have had their opportunity to testify 
to their understanding . . . . . I’m satisfied that 
this issue of breach of contract by the plaintiffs, as 
well as by the defendant, will have to go to the jury, 
and the jury ought to make that decision on that. 
 
(R. 120-10 at 1424) (emphasis added.) 
 
Accordingly, the court determined, without reserving a 
ruling, that all of the claims should go to the jury.  When 
instructing the jury on the contract claim, the circuit court 
judge stated: 
MCS and HABCO agree that they entered into an agreement 
or contract on or about June 1, 1979 . . . . For 
purposes of this cause of action you shall consider the 
June 1, 1979 agreement as a contract between MCS and 
HABCO. 
 
MCS 
and 
HABCO, 
however, 
dispute 
their 
obligations under the contract’s terms and conditions. 
 
(R. 120-10 at 1456.)  Furthermore, the court informed the jury 
they were to “determine the intention of the parties by 
                                                          
 
12   HABCO also argued, in the alternative, that MCS had 
materially breached the contract prior to HABCO, and therefore 
HABCO was excused from future performance.  Although the circuit 
court judge denied the motion, he only partially addressed this 
claim, by indicating: "Each of the breachs [sic] that are alleged 
by each of the parties are compensable by damages . . . ."  (R. 
120-10 at 1424.) 
considering the contract as a whole and evidence which bears upon 
the intention of the parties.”  (R. 120-10 at 1457-58.)  HABCO 
did not object to these instructions, nor did it request Wis 
JICivil 3022, the pattern jury instruction on definiteness.  
The jury subsequently found: (1) HABCO breached the contract by 
failing to purchase computer hardware from MCS, failing to pay 
25% of the program value to MCS for the use of the contract 
software, and failing to compensate MCS for its use of the 
proprietary software, resulting in damages totaling $1,520,750;
13 
(2) HABCO converted MCS’s non-contract software from the back-up 
tapes, resulting in damages of $65,000; (3) HABCO was unjustly 
enriched by copying the non-contract software, resulting in 
$1,000,000 of damages; and (4) HABCO’s conduct was outrageous, 
with the jury assessing $1.75 million in punitive damages. In 
addition, the jury awarded HABCO $5,140 on its counterclaim 
against MCS for breach of contract.  
 
On May 15, 1991, HABCO filed several motions after verdict.  
In particular, HABCO moved for an entry of JNOV regarding the 
breach of contract claim and counterclaim, because HABCO again 
argued that the contract was void for indefiniteness.  Despite 
his earlier decisions, the circuit court judge granted the motion 
on July 12, 1991.  In making his ruling, the circuit court judge 
indicated, “The parties in 1979 really never anticipated this 
 . . .  the contract does not provide for what happens in the 
                                                          
 
13  MCS is not pursuing $250,750.00 of these damages, which 
is the amount the jury awarded for HABCO’s failure to compensate 
MCS for its use of the proprietary software.  (Petitioner’s reply 
brief at p.9 n.4.)  
event the parties each go their own way and become competitors.” 
(R. 113 at 16.)  Therefore, the circuit court judge determined: 
“This court is going to find that the contract of June 1, 1979 as 
it relates to the future relationship of the parties insofar as 
their use and maintenance of what has been described as the 
contract software is void for indefiniteness.” (R. 113 at 19.)  
The circuit court judge provided no other reasoning for his 
decision.   
The circuit court judge also concluded: "If, on appeal, it 
is determined that the trial court is in error, the Court 
alternatively holds that Defendants are excused from performing 
the contract because the jury determined on credible evidence 
that Plaintiff materially breached the contract before any breach 
occurred by the Defendants." (R. 61 at 2.)  The circuit court 
judge largely based this decision on the jury’s affirmative 
answer to the following question in the special verdict: 
Question #3:  Did the plaintiff (MCS) materially breach 
the June 1, 1979, contract by:  
 
 
(a) failing to pay the defendants (HABCO, HABINC) 
10% of the program value for contract software provided 
and installed for the defendants' clients? 
 
 
 
 
 
 
 
ANSWER:  Yes 
 
(R. 52 at 4) (emphasis added.)  Evidence produced at trial 
indicated that this “material breach” by MCS preceded any breach 
of the contract by HABCO.  
In addition, pursuant to HABCO’s motion after verdict, the 
circuit court reduced the jury award for conversion from $65,000 
to $62,000 by changing the jury answer in the verdict.  The 
circuit court also changed the jury answer regarding unjust 
enrichment, reducing the award from $1,000,000 to $0.
14  Both of 
these decisions were based on the court’s conclusion that MCS had 
not proven its damages with sufficient credible evidence.
15   
Finally, the circuit court judge ordered a new trial on 
punitive damages
16 unless MCS accepted a reduced sum.  He 
concluded that the jury’s award of $1.75 million was excessive 
and therefore constituted a violation of due process.  The 
circuit court judge determined $50,000 was a reasonable award, 
stating, “I believe there has to be some rational relationship 
between the amount of the compensatory damages and the punitive 
damages,” and “If the defendants has [sic] been charged 
criminally with the theft of these tapes, the maximum penalty 
that this court could have imposed would have been a $10,000.00 
fine.”  (R. 113 at 11.)  The circuit court judge provided no 
other explanation for the reasonableness of the $50,000 award.
17 
                                                          
 
14  Note that the circuit court did not provide MCS with the 
option of requesting a new trial on the issue of damages if it 
rejected the reduced conversion and unjust enrichment awards, as 
is typically the case with remittitur.  See, e.g., Powers v. 
Allstate Ins. Co., 10 Wis. 2d 78, 91-92, 102 N.W.2d 393 (1960).  
In fact, in its order, the circuit court did not indicate that it 
was ordering remittitur, but instead stated that it was changing 
the jury answers for unjust enrichment and conversion. 
15  The circuit court also determined that the awards for 
conversion and unjust enrichment were duplicative.  The court of 
appeals did not discuss the duplication issue.  We also do not 
reach this finding.  
16  The judge ordered a new trial both as to whether HABCO’s 
conduct was outrageous and as to the amount of punitive damages. 
17  MCS rejected the reduced amount.  A new trial on punitive 
damages was held on October 27, 1992.  MCS called only one 
witness and rested.  The court granted HABCO’s motion to dismiss 
MCS’s punitive damages claim without objection from MCS. 
The court of appeals reversed the circuit court’s decision 
in part and affirmed it in part.  The court affirmed the circuit 
court’s 
conclusion 
that 
the 
contract 
was 
void 
for 
indefiniteness,
18 and its elimination of the unjust enrichment 
award for lack of sufficient evidence as to damages.  However, 
the court of appeals reversed the circuit court’s reduction of 
the conversion award, because it determined that MCS had 
established damages of $65,000 with sufficient definiteness.  In 
addition, although it concluded that the $1.75 million punitive 
damage award excessive, and, therefore, a violation of due 
process, the court of appeals reversed the circuit court’s 
determination that $50,000 was a reasonable punitive damages 
award.  Instead, the court of appeals set the amount of 
reasonable punitive damages at $650,000.  
II. 
Initially, we consider the standard of review applicable to 
a circuit court’s decision to enter JNOV.  A motion for JNOV does 
not challenge the sufficiency of the evidence to support the 
verdict.  Kolpin v. Pioneer Power & Light Co., 162 Wis. 2d 1, 28-
30, 469 N.W.2d 595 (1991); Herro v. Department of Natural 
Resources, 67 Wis. 2d 407, 413-14, 227 N.W.2d 456 (1975);  
Wozniak v. Local 1111 of United Elec. Radio & Mach. Workers of 
America, 57 Wis. 2d 725, 733, 205 N.W.2d 369 (1973).  Rather, 
“[a] motion for judgment notwithstanding the verdict admits for 
                                                          
 
18  The court of appeals therefore did not reach HABCO’s 
material breach argument.  See Management Computer Servs., Inc. 
v. Hawkins, Ash, Baptie & Co., 196 Wis. 2d 578, 593-97, 539 
N.W.2d 111 (Ct. App. 1995).  
purposes of the motion that the findings of the verdict are true, 
but asserts that judgment should be granted the moving party on 
grounds other than those decided by the jury.”  Kolpin, 162 Wis. 
2d at 28 (quoting Herro, 67 Wis. 2d at 413-14); see also Wis. 
Stat. § 805.14(5)(b) (1989-90).
19  Accordingly, a court should 
enter JNOV where the facts found by the jury are not sufficient 
as a matter of law to constitute a cause of action.  Wozniak, 57 
Wis. 2d at 733 (quoting State v. Escobedo, 44 Wis. 2d 85, 90, 91, 
170 N.W.2d 709 (1969)).  We review a circuit court’s grant of a 
motion for JNOV de novo, since such a decision involves a 
question of law.  Allison v. Ticor Title Ins. Co., 979 F.2d 1187, 
1195 (7th Cir. 1992); Logterman v. Dawson, 190 Wis. 2d 90, 101, 
526 N.W.2d 768 (Ct. App. 1994), review denied, 531 N.W.2d 327 
(1995); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Boeck, 120 
Wis. 2d 591, 601, 357 N.W.2d 287 (Ct. App. 1984), rev’d on other 
grounds, 127 Wis. 2d 127, 377 N.W.2d 605 (1985).      
With this in mind, we consider whether the circuit court 
correctly entered JNOV on the breach of contract claim and 
counterclaim.  Initially, we discuss the relationship between 
contract ambiguity and indefiniteness.  A contract provision is 
ambiguous if it is fairly susceptible of more than one 
construction.  See, e.g., Bank of Sun Prairie v. Opstein, 86 Wis. 
2d 669, 676, 273 N.W.2d 279 (1979); Jones v. Jenkins, 88 Wis. 2d 
712, 722, 277 N.W.2d 815 (1979).  When a contract provision is 
ambiguous, and therefore must be construed by the use of 
                                                          
 
19  All further references are to the 1989-90 Statutes unless 
otherwise indicated. 
extrinsic 
evidence, 
the 
question 
is 
one 
of 
contract 
interpretation for the jury.  E.g., Jones, 88 Wis. 2d at 722; 
Pleasure Time, Inc. v. Kuss, 78 Wis. 2d 373, 379, 254 N.W.2d 463 
(1977); RTE Corp. v. Maryland Cas. Co., 74 Wis. 2d 614, 621, 247 
N.W.2d 171 (1976); Patti v. Western Mach. Co., 72 Wis. 2d 348, 
353, 241 N.W.2d 158 (1976).  
An ambiguous 
contract 
is 
not necessarily 
indefinite.  
Vagueness or indefiniteness as to an essential term of the 
agreement prevents the creation of an enforceable contract, 
because a contract must be definite as to the parties’ basic 
commitments and obligations.  Shetney v. Shetney, 49 Wis. 2d 26, 
38-39, 181 N.W.2d 516 (1970); Witt v. Realist, Inc., 18 Wis. 2d 
282, 297, 118 N.W.2d 85 (1962).  Therefore, the definiteness 
requirement 
is 
relevant 
to 
contract 
formation, 
not 
interpretation.   The issue of definiteness may be decided by the 
jury, see Wis JICivil 3022, or by the court as a matter or law.  
Shetney, 49 Wis. 2d at 38.
20 
Courts often describe the definiteness requirement as mutual 
assent, or “meeting of the minds.”  See Wis JICivil 3010; 1 
ARTHUR L. CORBIN, CORBIN ON CONTRACTS § 4.13, at 634-37 (Joseph M. 
Perillo, revised ed. 1993).   Yet, this does not mean that 
parties must subjectively agree to the same interpretation at the 
time of contracting.  Instead, mutual assent is judged by an 
                                                          
 
20  In the present case, the definiteness question was not 
submitted to the jury; instead, it was decided as an issue of law 
by the courtone way before the verdict of the jury, the other 
way on motions after verdict. 
objective standard, looking to the express words the parties used 
in the contract.  See Marion v. Orson’s Camera Ctrs., Inc., 29 
Wis. 2d 339, 345, 138 N.W.2d 733 (1966) (indicating that the key 
is “not necessarily what [the parties] intended to agree to, but 
what, in a legal sense, they did agree to, as evidenced by the 
language they saw fit to use.”); see also 1 E. ALLAN FARNSWORTH, 
FARNSWORTH ON CONTRACTS § 3.6, at 168-72 (1990) (courts generally 
accept the objective theory of assent).   As one court explains: 
The premisethat a “meeting of the minds” is required 
for 
a 
binding 
contractobviously 
is 
strained. 
[citation omitted].  Most contract disputes arise 
because the parties did not foresee and provide for 
some contingency that has not materializedso there 
was no meeting of minds on the matter at issueyet 
such disputes are treated as disputes over contractual 
meaning . . . . So a literal meeting of the minds is 
not required for an enforceable contract, which is 
fortunate, since courts are not renowned as mind 
readers. 
 
Colfax Envelope Corp. v. Local No. 458-3M, 20 F.3d 750, 752 (7th 
Cir. 1994).
21  
If parties evidently intended to enter a contract, the trier 
of fact should not frustrate their intentions, but rather should 
attach a “sufficiently definite meaning” to the contract language 
if possible.  See Shetney, 49 Wis. 2d at 39; SAMUEL WILLISTON, 
WILLISTON ON CONTRACTS § 37, at 110-11 (Walter H. E. Jaeger, 3d ed. 
1957).  We have previously decided: "Even though the parties have 
expressed an agreement in terms so vague and indefinite as to be 
                                                          
 
21  It has been suggested that the term “meeting of the 
minds” should be abandoned, due to the misunderstanding it 
frequently causes.  See 1 E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS 
§ 3.6, at 168 n.2 (1990). 
incapable 
of 
interpretation 
with 
a 
reasonable 
degree 
of 
certainty, they may cure this defect by their subsequent conduct 
and by their own practical interpretation."  Nelson v. Farmers 
Mut. Auto. Ins. Co., 4 Wis. 2d 36, 51, 90 N.W.2d 123 (1958).  
Therefore, if the jury can determine the parties' intentions, 
"indefiniteness disappears as a reason for refusing enforcement.” 
1 CORBIN ON CONTRACTS § 4.1, supra, at 544.  As Judge (later 
Justice) Cardozo has stated, “Indefiniteness must reach the point 
where construction becomes futile.”  Heyman Cohen & Sons, Inc. v. 
M. Lurie Woolen Co., 133 N.E. 370, 371 (N.Y. 1921). 
Turning to the present case, we disagree with the circuit 
court's decision that the contract is void for indefiniteness.
22  
We initially emphasize that HABCO claims the contract is too 
indefinite because: "Based on the testimony given by the 
plaintiff and the defendants at the trial, it is clear that there 
was never an agreement or understanding between the parties on 
any of the essential terms of the contract." (R. 56 at 7; see 
also Respondent's brief at pp.25-31.)  The circuit court judge 
apparently accepted this argument.  In making his ruling on 
HABCO's motion after verdict, he stated, "So the breach of 
contract claim in this case . . . developed into a claim which as 
far as this court is concerned the parties never anticipated in 
their original contract.  It was never provided for under the 
original contract."  (R. 113 at 18.)   
                                                          
 
22  We do, however, agree with the circuit court that the 
contract was ambiguous, and therefore conclude that the circuit 
court properly sent the question of contract interpretation to 
the jury. 
However, the contradictory testimony presented by the 
parties, in particular that of Sierp and Ash, does not support a 
conclusion that the contract is void for indefiniteness for two 
reasons.  First, parties do not need to agree subjectively to the 
same interpretation at the time of contracting in order for there 
to be a mutual assent, because a literal “meeting of the minds” 
is not required.  See Colfax Envelope Corp., 20 F.3d at 752.  
Instead, mutual assent is judged by an objective standard, 
looking to the express words the parties used in the contract.  
See Marion, 29 Wis. 2d at 345; FARNSWORTH § 3.6, supra, at 168-72.  
Second, when parties disagree about their intentions at the time 
they entered into a contract, the question is one of contract 
interpretation for the jury, not mutual assent or contract 
formation.  Patti, 72 Wis. 2d at 353; Lemke v. Larsen Co., 35 
Wis. 2d 427, 431, 151 N.W.2d 17 (1967).  In fact, if a 
disagreement between parties as to their intent could support a 
claim of indefiniteness, juries would rarely be called upon to 
interpret a contract, because nearly every contract challenged in 
court would be void for indefiniteness.  
HABCO also claims its contention that the contract is too 
indefinite is supported by the letter attorney O’Flaherty sent to 
MCS indicating that Attachment C should be re-drafted because of 
its “loose construction."  Yet, HABCO knew that an attorney had 
been retained to review the contract, knew that he had commented 
on the contract, and in fact paid half O'Flaherty's fees.  It 
appears from the record that HABCO made no effort to find out the 
content of those comments.  Parties often agree to a contract 
provision that is ambiguous and thereby gamble on a favorable 
interpretation should a dispute arise, rather than take the time 
to work out all their possible disagreements, especially since 
such disagreements may never have any consequence.  Colfax 
Envelope Corp., 20 F.3d at 754.  When this occurs, the entire 
contract is not void for indefiniteness; instead, the parties 
submit to have any dispute over interpretation resolved by a 
jury.  Id.   This is the function of a jury in a contract case -- 
to resolve interpretive questions founded on ambiguity.  Id.  
We therefore conclude that the evidence does not support 
HABCO's claim and the circuit court's determination that the 
contract was void for indefiniteness.  In fact, the contradictory 
testimony presented by the parties, along with the O'Flaherty 
letter, only further illustrates that the relevant issue in this 
case was one of interpretation of the parties' intent, not one of 
mutual assent or indefiniteness.  
Furthermore, we emphasize that the jury was able to attach a 
sufficiently definite meaning to the contract language, and 
therefore "indefiniteness disappears as a reason for refusing 
enforcement."  1 CORBIN ON CONTRACTS § 4.1, supra, at 544; see also 
Shetney, 49 Wis. 2d at 39; WILLISTON ON CONTRACTS, § 37, supra at 
110-11.  Specifically, the jury, by its answers to the questions 
in the special verdict, interpreted the ambiguous language of 
Attachment C as requiring HABCO to purchase additional computers 
from MCS, and forbidding HABCO from running the contract software 
on computers purchased from other vendors.
23  There was evidence 
to support this interpretation.  Sierp testified that Attachment 
C provided HABCO “could not use [contract] software on computers 
unless they were purchased through MCS,” and “the objective was 
if [HABCO] was going to use  . . . contract software, that they 
would buy a computer from us.”  (R. 120-2 at 72; R. 120-3 at 
292.)  The jury was entitled to find this evidence more credible 
than the evidence presented by HABCO.   
Accepting the facts found by the jury in the verdict to be 
true, as we are required to do in reviewing an entry of JNOV, we 
find no support for HABCO’s claim and the circuit court's 
determination that the contract is void for indefiniteness.  We 
therefore 
conclude 
that 
the 
contract 
is 
not 
void 
for 
indefiniteness. 
Accordingly, we must next consider whether HABCO was excused 
from future contract performance due to MCS's prior material 
breach, which was the alternate reason given by the circuit court 
in granting entry of JNOV.  It is well established that a 
material breach by one party may excuse subsequent performance by 
the other.  Metropolitan Sewerage Comm'n v. R. W. Constr., 72 
Wis. 2d 365, 387, 241 N.W.2d 371 (1976); Entzminger v. Ford Motor 
Co., 47 Wis. 2d 751, 755, 177 N.W.2d 899 (1970); Shy v. 
Industrial Salvage Material Co., 264 Wis. 118, 125, 58 N.W.2d 452 
(1953).  However, a party is not automatically excused from 
future performance of contract obligations every time the other 
                                                          
 
23  The jury made this determination even though it was well 
aware of the fact that Attachment C did not, in clear, 
unambiguous terms, require this. 
party breaches.  "If the breach is relatively minor and not 'of 
the essence', the plaintiff is himself still bound by the 
contract; he can not abandon performance and get damages for a 
'total' breach by the defendant."  ARTHUR LINTON CORBIN, CORBIN ON 
CONTRACTS § 700, at 310 (1960); see also Myrold v. Northern Wis. 
Coop. Tobacco Pool, 206 Wis. 244, 248, 239 N.W. 426 (1931).  In 
other words, "there must be so serious a breach of the contract 
by the other party as to destroy the essential objects of the 
contract."  Appleton State Bank v. Lee, 33 Wis. 2d 690, 692, 148 
N.W.2d 1 (1967).
24  Moreover, even where such a material breach 
has occurred, the non-breaching party may waive the claim of 
materiality through its actions.  See Entzminger, 47 Wis. 2d at 
755.
25   
The issue of whether a party's breach excuses future 
performance of the contract by the non-breaching party presents a 
question of fact.  Shy, 264 Wis. at 125.  The Restatement of 
Contracts 
lists 
several 
circumstances 
relevant 
to 
this 
determination, including the extent to which the injured party 
will be deprived of the benefit that he or she reasonably 
expected, and the extent to which the injured party can be 
                                                          
 
24  Appleton State Bank involved the similar issue of 
rescission, and therefore the court's definition of "material 
breach" is helpful in this case. 
25  For example, a non-breaching party may waive the 
materiality by continuing to live with the contract as if it 
existed.  See Entzminger v. Ford Motor Co., 47 Wis. 2d 751, 755, 
177 N.W.2d 899 (1970). 
adequately compensated for his or her loss.  RESTATEMENT (SECOND) OF 
CONTRACTS §§ 241, 242 (1981).
26  
We initially note that, in this case, the only way in which 
the material breach issue was presented to the jury was through 
the following questions in the special verdict: 
Question #3:  Did the plaintiff (MCS) materially breach 
the June 1, 1979, contract by:  
 
 
(a) failing to pay the defendants (HABCO, HABINC) 
10% of the program value for contract software provided 
and installed for the defendants' clients? 
 
 
 
 
 
 
 
ANSWER:  Yes 
 
 
(b) inserting Class II software into the Class III 
and Class IV software so as to make that software 
unusable? 
 
 
 
 
 
 
 
ANSWER:  No 
 
 
(c) using school payroll software (SPR) for 
preparing other payroll software? 
 
 
 
 
 
 
 
ANSWER:  No 
 
(R. 52 at 4.)  The court did not instruct the jury on the 
definition of "material breach," or in any way explain to the 
jury the type of breach that is necessary to excuse future 
contract performance by the non-breaching party.  Furthermore, 
HABCO did not request such an instruction, nor did it request a 
question in the special verdict asking the jury if the breach by 
MCS was so substantial as to destroy the essential objects of the 
contract.  We disagree with the circuit court's determination 
that "this jury in considering the evidence that was presented 
without doubt found that the plaintiff's breach . .   . was a 
material breach of the contract."  (R. 113 at 19.)  The jury's 
                                                          
 
26  See RESTATEMENT (SECOND) OF CONTRACTS §§ 241, 242 (1981) for a 
full listing of the relevant considerations.     
affirmative answer to question #3 in the special verdict is not 
sufficient to support this determination, particularly in light 
of the lack of instruction the jury received on the issue.
27   
Since this issue was not adequately presented to the jury, 
we must consider whether MCS's breach was so substantial as to 
destroy the essence of the contract and thereby excuse HABCO from 
subsequent performance.  We determine that it was not.  First, we 
conclude that MCS's breach did not significantly deprive HABCO  
of the benefit it reasonably expected under the contract, because 
the contract was substantially performed by each of the parties, 
as indicated by the circuit court.  (R. 113 at 15.)  Second, we 
conclude that HABCO can be adequately compensated for its loss 
through money damages, as was also determined by the circuit 
court.  (R. 120-10 at 1424.)  
We additionally conclude that HABCO waived this claim 
through its actions during the trial.  Specifically, when it 
brought its motion at the close of the evidence, HABCO stated, 
"We don't contend that the evidence that's been presented in this 
court regarding the plaintiff's failure to pay ten percent of the 
program value on three occasions is the kind of breach that 
justifies excusing the defendant from performance . . . ."  (R. 
120-10 at 1408.)  Instead, HABCO contended that MCS's two other 
alleged breaches were so substantial as to excuse HABCO from 
                                                          
 
27  In addition, a jury award of $5,140.00 in contract 
damages to HABCO does not, on its face, support a determination 
that the jury had found MCS's breach was so substantial that it 
destroyed the essential objects of the contract, especially since 
the jury assessed a total of $1,520,750.00 in damages against 
HABCO for breach of contract. 
future performance.  However, the jury found that the only way in 
which MCS had breached the contract was by failing to pay ten 
percent of the program value for contract software provided and 
installed for the defendants' clients.  (R. 52 at 4.)  HABCO's 
concession, that this particular breach by MCS was not a material 
breach 
excusing 
its 
subsequent 
performance, 
waived 
the 
materiality claim it now makes.  See Entzminger, 47 Wis. 2d at 
755.         
For all of these reasons, we conclude that HABCO was not 
excused from future performance because of MCS's breach.  Thus, 
the jury verdict for both parties regarding breach of contract 
should be reinstated.
28 
III.  
We next consider the circuit court’s decision to change the 
jury answers in order to reduce the conversion award from $65,000 
to $62,000, and reduce the unjust enrichment award from 
$1,000,000 to $0.  “The rule to guide the trial court and this 
court, when requested to change an answer in a jury verdict, is 
the evidence will be viewed in the light most favorable to the 
verdict and the verdict will be affirmed if supported by any 
credible evidence.”  Nelson v. Travelers Ins. Co., 80 Wis. 2d 
272, 282-83, 259 N.W.2d 48 (1977); see also Wis. Stat. 
                                                          
 
28 Accordingly, MCS will receive the amount of $1,270,000 
awarded by the jury for its breach of contract claim, and HABCO 
will receive the jury award of $5,140 for its breach of contract 
claim.    
§ 805.14(1)
29; Giese v. Montgomery Ward, Inc., 111 Wis. 2d 392, 
408-09, 331 N.W.2d 585 (1983).  Therefore, in order to uphold the 
decision of the circuit court, we must conclude that there is no 
credible evidence to support the jury verdict regarding MCS’s 
damages for conversion and unjust enrichment.  Hall v. Arthur 
Overgaard, Inc., 55 Wis. 2d 247, 250-51, 198 N.W.2d 605 (1972).  
We have also indicated, “When the jury hears conflicting 
testimony about unliquidated damages, its verdict should not be 
disturbed on review when it is clear that the award arrived at is 
well within the range of figures placed in evidence, and that 
there is credible evidence to sustain the jury’s finding.”  
Carlson & Erickson Builders, Inc. v. Lampert Yards, Inc., 190 
Wis. 2d 650, 674, 529 N.W.2d 905 (1995).
30  
This court has defined conversion as “the wrongful exercise 
of dominion or control over a chattel.” Production Credit Ass’n 
v. Nowatski, 90 Wis. 2d 344, 353-54, 280 N.W.2d 118 (1979).  
Conversion damages are intended to compensate a wronged party for 
the loss sustained because his or her property was wrongfully 
taken.  Traeger v. Sperberg, 256 Wis. 330, 333, 41 N.W.2d 214 
                                                          
 
29  Section 805.14(1) provides: “No motion challenging the 
sufficiency of the evidence as a matter of law to support a 
verdict, or an answer in a verdict, shall be granted unless the 
court is satisfied that, considering all credible evidence and 
reasonable inferences therefrom in the light most favorable to 
the party against whom the motion is made, there is no credible 
evidence to sustain a finding in favor of such a party.” 
30  Although Carlson is a case involving an order of 
remittitur, it is relevant to this issue because the circuit 
court judge changed the jury answers to reduce the amount of the 
awards for conversion and unjust enrichment.  Therefore, the 
effect of this action was similar to that of an order of 
remittitur. 
(1950).  Thus, an owner of converted property generally may 
recover its value at the time of the wrongful taking, plus 
interest to the date of trial.  Id.; Nowatski, 90 Wis. 2d at 354. 
Conversion is distinct from unjust enrichment.  “[A]n 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.”  
Watts v. Watts, 137 Wis. 2d 506, 530, 405 N.W.2d 303 (1987); 
accord Arjay Inv. Co. v. Kohlmetz, 9 Wis. 2d 535, 539, 101 N.W.2d 
700 (1960).  Accordingly, unjust enrichment is based on equitable 
principles, with damages being measured by the benefit conferred 
upon the defendant, not the plaintiff’s loss.  See Ramsey v. 
Ellis, 168 Wis. 2d 779, 785, 484 N.W.2d 331 (1992) (noting 
measure of damages for unjust enrichment); Graf v. Neith Coop. 
Dairy Prods. Ass’n, 216 Wis. 519, 522-23, 257 N.W. 618 (1934).  
As this court has determined, “Establishing a loss of profit by 
the plaintiff does not prove unjust enrichment of the defendant.”  
Graf, 216 Wis. at 523. 
In addition, damages must be proven with reasonable 
certainty.  See, e.g., Nowatski, 90 Wis. 2d at 356; Cutler 
Cranberry Co. v. Oakdale Elec. Coop., 78 Wis. 2d 222, 233, 254 
N.W.2d 234 (1977).  However, this does not mean that a plaintiff 
must prove damages with mathematical precision; rather, evidence 
of damages is sufficient if it enables the jury to make a fair 
and reasonable approximation. Carlson & Erickson Builders, 190 
Wis. 2d at 673; Cutler Cranberry Co., 78 Wis. 2d at 233. 
Turning to the case at hand, we conclude that there is 
credible evidence to support the jury award for conversion. 
Specifically, MCS introduced evidence that HABCO paid $62,000 in 
1989 and 1990 to replace the software copied from the back-up 
tapes.  Furthermore, as the court of appeals concluded, “The jury 
could have taken into account that between the conversion in the 
early 1980’s to the date of trial in 1991, the value of the use 
of $62,000 amounts to some $3,000.” Management Computer Servs., 
196 Wis. 2d at 598-99.  Accordingly, the jury award is supported 
by credible evidence.  See Carlson Erickson Builders, 190 Wis. 2d 
at 674. We therefore affirm the court of appeals’ decision to 
reinstate the $65,000 award for conversion.  
Second, we conclude that there is no credible evidence to 
support the jury award for unjust enrichment.  During the trial, 
MCS attempted to prove its damages for unjust enrichment by 
introducing evidence of the gross revenues HABCO derived from 
licensing the accounts payable and payroll programs to PHAs under 
HABCO's turnkey program.  However, in order to sufficiently prove 
damages for unjust enrichment, MCS needed to establish the net 
profits HABCO received from its wrongful act.  MCS failed to do 
this.  Evidence of gross revenues is insufficient to establish 
HABCO's net profits because it does not account for the sales 
expenses and software updating costs HABCO incurred. 
In addition, MCS attempted to prove its damages for unjust 
enrichment by introducing evidence of the amount it would have 
charged HABCO for processing its accounts receivable and payroll. 
However, this evidence is also insufficient, because unjust 
enrichment is not measured by the plaintiff's loss.  Therefore, 
contrary to MCS's contention, the jury cannot make a fair and 
reasonable 
approximation 
of 
unjust 
enrichment 
damages 
by 
considering the amount of MCS's lost profits. 
 
IV.   
Finally, we consider whether the circuit court correctly 
ordered a new trial on punitive damages unless MCS accepted a 
reduced award of $50,000.  This court established the standard 
for appellate review of a circuit court’s remittitur order in 
regard to compensatory damages in Powers v. Allstate Ins. Co., 10 
Wis. 2d 78, 102 N.W.2d 393 (1960), and extended the Powers rule 
to punitive damages in Malco, Inc. v. Midwest Aluminum Sales, 
Inc., 14 Wis. 2d 57, 109 N.W.2d 516 (1961).  Today, we once again 
reaffirm the Powers rule.
31  Under the Powers rule, a reviewing 
court will reverse a circuit court’s remittitur order only if it 
determines that the circuit court erroneously exercised its 
                                                          
 
31  In so doing, we reject MCS’s invitation to adopt a 
standard that would require courts to affirm a jury verdict 
unless there is no credible evidence to support it.  See Hon. 
Thomas Cane & Suzanne D. Strater, “Blurring the rules of judge 
and jury: The circuit court’s discretion in additur and 
remittitur,” Wisconsin Lawyer 5, 6 (July 1995) (generally 
discussing additur and remittitur without specific reference to 
the issue of punitive damages).  “Judicial review of the size of 
punitive damage awards has been a safeguard against excessive 
verdicts for as long as punitive damages have been awarded.”  
Honda Motor Co. v. Oberg, 114 S. Ct. 2331, 2335 (1994).  However, 
if we adopted MCS’s proposed standard of review, we would 
effectively 
eliminate 
this 
well-established 
safeguard.  
Accordingly, MCS’s proposed standard of review violates due 
process.  See id. at 2334 (holding that an amendment to the 
Oregon Constitution prohibiting judicial review of a jury award 
of punitive damages “unless the court can affirmatively say there 
is no evidence to support the verdict” violates due process).    
discretion. Carlson & Erickson Builders, 190 Wis. 2d at 669; 
Fahrenberg v. Tengel, 96 Wis. 2d 211, 229-31, 291 N.W.2d 516 
(1980).  Furthermore, a reviewing court must not find an 
erroneous exercise of discretion if the “record shows that 
discretion was in fact exercised and there exists a reasonable 
basis for the circuit court’s determination after resolving any 
direct conflicts in the testimony in favor of the prevailing 
party, even if the reviewing court would have reached a different 
conclusion than the circuit court.”  Carlson & Erickson Builders, 
190 Wis. 2d at 669; accord Fahrenberg, 96 Wis. 2d at 229-30. 
However, where a circuit court fails to analyze the evidence 
or set forth the reasons supporting its decision, the reviewing 
court should give no deference to the circuit court’s decision.  
Carlson & Erickson Builders, 190 Wis. 2d at 669; Fahrenberg, 96 
Wis. 2d at 230.  Instead, in such a case, the reviewing court 
must examine the entire record ab initio to determine whether the 
jury award is excessive, and if so, what amount of damages is 
reasonable.  Carlson & Erickson Builders, 190 Wis. 2d at 669; 
Fahrenberg, 96 Wis. 2d at 230-31.  In making its determination, 
the reviewing court must view the evidence in the light most 
favorable to the jury verdict.  Carlson & Erickson Builders, 190 
Wis. 2d at 669-70; Fahrenberg, 96 Wis. 2d at 231.  As we have 
indicated, “The amount [of punitive damages] rests initially in 
the discretion of the jury.  We are reluctant to set aside an 
award because it is large or we would have awarded less.”  
Fahrenberg, 96 Wis. 2d at 236.
32 
In this case, the circuit court set forth conclusory reasons 
for reducing the jury’s punitive damages award of $1.75 million 
to $50,000.  Accordingly, because it did not analyze the evidence 
or 
set 
forth 
its 
reasons 
for 
ordering 
remittitur 
with 
particularity, we place no weight on the circuit court’s 
conclusions.  We therefore review the entire record ab initio to 
determine whether the jury’s award is excessive, and if it is, 
what amount of punitive damages is reasonable.  See Carlson & 
Erickson Builders, 190 Wis. 2d at 669; Fahrenberg, 96 Wis. 2d at 
230.  
The Due Process Clause of the Fourteenth Amendment imposes 
substantive limits on the size of punitive damage awards.  E.g., 
Honda Motor Co. v. Oberg, 512 U.S. 415, __, 114 S. Ct. 2331, 2335 
(1994); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 1043 
(1991).  As the Supreme Court has determined, “[a] general 
concer[n] of reasonableness . . . properly enter[s] into the 
constitutional calculus.”  TXO Prod. Corp. v. Alliance Resources 
                                                          
 
32  Although a reviewing court must consider the evidence in 
the light most favorable to the verdict, this does not mean that 
ab initio review is a lower standard than de novo review, as MCS 
claims. (Petitioner’s brief at 12.)  When conducting ab initio 
review of a jury award for punitive damages, the court looks at 
the entire record as a matter of first impression, giving no 
weight to the circuit court’s findings.  See Fahrenberg v. 
Tengel, 96 Wis. 2d 211, 224 n.7, 230-31, 291 N.W.2d 516 (1980).  
This is the same as de novo review.  See generally State v. 
Annala, 168 Wis. 2d 453, 460, 484 N.W.2d 138 (1992) (in applying 
de novo review, this court gives no deference to lower courts); 
Michael S. Heffernan, Appellate Practice and Procedure in 
Wisconsin § 3.6, at 3-10 - 3-11 (2d ed. 1995) (using terms “ab 
initio” and “de novo” interchangeably).   
Corp., 509 U.S. 443, 458 (1993) (quoting Haslip, 499 U.S. at 18).  
An award is excessive and therefore violates due process if it is 
more than necessary to serve the purposes of punitive damages, or 
inflicts 
a penalty 
or burden on 
the 
defendant that is 
disproportionate to the wrongdoing.  Tucker v. Marcus, 142 Wis. 
2d 425, 446, 418 N.W.2d 818 (1988); Wangen v. Ford Motor Co., 97 
Wis. 2d 260, 303, 294 N.W.2d 437 (1980); Fahrenberg, 96 Wis. 2d 
at 234; see also BMW of North America, Inc. v. Gore, __ U.S. __, 
116 S. Ct. 1589, 1595 (1996).  As we have stated, “Punitive 
damages ought to serve its purpose.”  Malco, 14 Wis. 2d at 66.  
The purpose of punitive damages is to punish the wrongdoer and to 
deter the wrongdoer and others from similar conduct, not 
compensate the plaintiff for any loss.
33  Wangen, 97 Wis. 2d at 
303 (citing Fahrenberg, 96 Wis. 2d at 234); Malco, 14 Wis. 2d at 
66.    
Accordingly, in determining whether an award of punitive 
damages is excessive, courts should consider the grievousness of 
the acts, the degree of malicious intent, whether the award bears 
a reasonable relationship to the award of compensatory damages, 
the potential damage that might have been caused by the acts, the 
ratio of the award to civil or criminal penalties that could be 
imposed for comparable misconduct, and the wealth of the 
wrongdoer.  BMW, 116 S. Ct. at 1598-1603; Tucker, 142 Wis. 2d at 
446-47; Brown, 124 Wis. 2d at 438-39; Wangen, 97 Wis. 2d at 302; 
                                                          
 
33  In fact, this court has labeled punitive damages as 
“smart money,” because such damages are intended to hurt the 
defendant in order to punish and deter. Brown v. Maxey, 124 Wis. 
2d 426, 439-40, 369 N.W.2d 677 (1985) (quoting Fahrenberg v. 
Tengel, 96 Wis. 2d 211, 233, 291 N.W.2d 516 (1980)). 
Dalton v. Meister, 52 Wis. 2d 173, 180-81, 188 N.W.2d 494 (1971), 
cert. denied, 405 U.S. 934 (1972); Malco, 14 Wis. 2d at 66. 
Similarly, if an award is determined to be excessive, courts 
should consider these factors in determining the proper amount to 
be awarded as punitive damages.  See Tucker, 142 Wis. 2d at 446-
47; Fahrenberg, 96 Wis. 2d at 234-36.   
 In 
addition, 
a 
reviewing 
court 
must 
consider 
the 
reasonableness of punitive damages on a case-by-case basis, 
considering the relevant circumstances in each particular case.   
Tucker, 142 Wis. 2d at 447; Wangen, 97 Wis. 2d at 302-03; 
Fahrenberg, 96 Wis. 2d at 233-34.  We recognize that a reasonable 
relationship between the amount of compensatory damages, and 
criminal penalties, and the proper amount of punitive damages is 
required.  This court, however, rejects the notion that courts 
can use a multiplier, or fixed ratio of compensatory-to-punitive 
damages or criminal fines-to-punitive damages, to calculate the 
amount of reasonable punitive damages.  See Tucker, 142 Wis. 2d 
at 447-48; Fahrenberg, 96 Wis. 2d at 235-36; see also BMW, 116 S. 
Ct. at 1602-03 (“Of course, we have consistently rejected the 
notion that the constitutional line is marked by a simple 
mathematical formula, even one that compares actual and potential 
damages to the punitive award.”). As this court has indicated, 
"The test of excessiveness does not necessarily depend upon some 
arbitrary proportion."  Malco, 14 Wis. 2d at 66. 
In the present case, we consider the following facts to be 
particularly relevant.  First, HABCO’s wrongful act was both 
grievous and malicious.  HABCO copied software MCS had entrusted 
it to protect.  HABCO then used the software in competition 
against MCS.  This act was intentional, which is evidenced by the 
fact that HABCO acted in a manner that ensured no one would be 
able to tell that they had copied the software to their own 
computer, and then changed their billing format so that MCS would 
not discover the wrongdoing.  However, although HABCO’s conduct 
is reprehensible, it caused only economic injury to MCS.  As the 
United States Supreme Court has indicated, “[N]onviolent crimes 
are less serious than crimes marked by violence.”  BMW, 116 S. 
Ct. at 1599 (quoting Solem v. Helm, 463 U.S. 277, 292-3 (1983)).   
Second, HABCO’s wrongdoing resulted in $65,000 damages to 
MCS.
34  Third, the potential criminal penalty for copying computer 
programs if the damage is greater than $2,500 is a fine not 
exceeding $10,000.  See Wis. Stat. § 943.70(2).  Fourth, although 
MCS did not present evidence of HABCO’s net worth, the record 
does indicate that HABCO is a regional accounting firm with a 
relatively small number of offices.
35 
In light of these facts, we hold that the jury award of 
$1.75 million is excessive and therefore a violation of due 
process, because it is more than is necessary to serve the 
purposes of punitive damages.  Although we acknowledge that HABCO 
                                                          
 
34   Note that the jury could only award punitive damages on 
MCS’s tort claims. 
35   During closing arguments, the only figure suggested to 
the jury for a punitive damage award was $2.5 million, the same 
figure asked for in the complaint of MCS.  Counsel for MCS told 
the jury that HABCO was a "big accounting firm," and that there 
was a need to send it a "big message."  Counsel for HABCO did not 
suggest any figure, since he argued that punitive damages should 
not be awarded (R. 118 at 24 and 79-80.) 
engaged in affirmative acts of misconduct requiring a substantial 
penalty in order to punish and deter, we also emphasize that 
HABCO’s wrongful conduct caused only economic injuries to MCS.  
In addition, we are persuaded by the fact that the jury award of 
punitive damages is considerably greater than the amount of 
compensatory 
damages 
or 
possible 
criminal 
sanctions 
for 
comparable misconduct. Furthermore, HABCO is not a large, 
national accounting firm.  In short, under the circumstances, a 
punitive damages award of $1.75 million is shocking to the 
conscience of the court.  See Fahrenberg, 96 Wis. 2d at 236. 
The court of appeals, which also determined that the jury 
award of $1.75 million in punitive damages was excessive, set the 
amount of punitive damages at $650,000.  We likewise conclude 
that $650,000 is a reasonable award of punitive damages under the 
facts of this case.  This amount is substantial enough to serve 
the goals of punishment and deterrence.
36  In particular, $650,000 
is an appropriate amount to punish a regional accounting firm of 
HABCO’s size.  In addition, $650,000 is a significant enough sum 
that will deter HABCO and other firms of similar size from 
illegally copying software in the future.   
However, an award of $650,000 is not so large that it is 
disproportionate to the wrongdoing, which inflicted only economic 
harm.  This amount also bears a reasonable relationship to the 
amount of compensatory damages and possible criminal sanctions. 
We therefore affirm the court of appeals’ decision in this 
                                                          
 
36  An award of $50,000, which does not even equal MCS’s 
compensatory damages, is not sufficient to punish HABCO and deter 
HABCO and others from similar conduct in the future. 
regard, because we conclude that an award of $650,000 serves the 
purposes of punitive damages.   
In conclusion, we hold, as a matter of law, that the 
contract is not too indefinite to be enforced and that 
performance by HABCO was not excused by MCS's breach of contract.  
The jury verdict for both parties regarding breach of contract 
therefore should be reinstated.  Second, we conclude that 
credible evidence supports the jury award of $65,000 to MCS on 
its conversion claim, and accordingly affirm the court of 
appeals’ decision to reinstate the award.  However, we also 
conclude that there is no credible evidence to support the jury 
award of $1,000,000 to MCS for unjust enrichment damages, and 
thus affirm the court of appeals’ and circuit court’s decisions 
to eliminate the award.  Finally, we hold that the jury award of 
$1.75 million in punitive damages is excessive and therefore a 
violation of due process.  Instead, we conclude that an award of 
$650,000 is reasonable, because such an award serves the purposes 
of punishment and deterrence.  Thus, MCS should be given the 
option of accepting that amount or having a new trial limited to 
the issue of the amount of punitive damages. 
 
By the Court.The decision of the court of appeals is 
affirmed in part, reversed in part, and cause remanded. 
 
JON P. WILCOX, J., withdrew from participation. 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
 
93-0140 
 
 
Complete Title 
of Case: 
 
 
Management Computer Services, Inc., a  
 
 
 
 
Wisconsin Corporation,   
 
 
 
 
Plaintiff-Appellant-  
 
 
 
 
 
Cross Respondent-Petitioner,  
 
 
 
 
 
v.  
 
 
 
 
Hawkins, Ash, Baptie & Co., a Wisconsin  
 
 
 
 
Daley, Walter L. Leifeld, Larry E. Vangen and  
 
 
 
 
Jack E. White,  
 
 
 
 
 
Defendants-Counter Claimants-  
 
 
 
 
 
Respondents-Cross Appellants,  
 
 
 
 
 
v.  
 
 
 
 
Management Computer Services, Inc.,   
 
 
 
 
 
Counter Defendant-Appellant-  
 
 
 
 
 
Petitioner.  
 
 
 
________________________________________ 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
 
 
 
Reported at:  196 Wis. 2d 578, 539 N.W.2d 111 
 
 
 
 
 
 
 
(Ct. App. 1995) 
 
 
 
 
 
 
 
PUBLISHED 
 
 
Opinion Filed: 
 
December 20, 1996 
Submitted on Briefs: 
 
Oral Argument: 
 
September 24, 1996 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
LaCrosse 
 
JUDGE: 
ROBERT W. RADCLIFFE 
 
 
JUSTICES: 
 
 
Concurred:  
 
Dissented:  
 
Not Participating: 
WILCOX,  J., withdrew from participation 
 
 
ATTORNEYS:  
For the plaintiff-appellant-cross respondent-petitioner there 
were briefs by Thomas D. Bell, Matthew A. Biegert and Doar, Drill & Skow, S.C., 
New Richmond and oral argument by Matthew A. Biegert. 
 
 
For the defendants-counter claimants-respondents-cross appellants there 
was a brief by Daniel W. Hildebrand, Steven J. Kirschner and DeWitt Ross & 
Stevens, S.C., Madison and oral argument by Daniel W. Hildebrand.