H on. Sa ra h Evans B arke r, ofthe So uthe rnDis t ri c tof  I ndi ana , s i t t i ng by des i gna t i on.



## In the 

# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 12

- 2976 P RO -P AC, I NC ., Plai nt i f f

-Appe l l ant, v. W OW L O GISTICS C OMPAN Y, D efend a nt-A pp ellee.

Appeal from the United States District Court fo r the E astern Di stricto f Wisc onsin
. No . 11 CV 1075

—J. P. S tadtmuel ler , Judge .
A RG UE D J AN UA RY 24, 2013

— D ECI DE D J UNE 26, 2013

Befo re M ANI ON an d W OO D , C ircu it Judges, an d B ARKER, D istrict Judge.  P ER C UR I AM . Pr o - Pa c, I nc . ( Pr o - Pa c) was a pa ck ag i ng busi ness that fi l ed f orC hapter 11 bankr up tcy i n 2006
. Pro

Pa c then fi l e d a n a dv e r s a r y p r o c e e di nga g a i ns tWOW Logi sti cs Co. ( W OW ) , a l ogi sti cs s er vi ce pr ovi der, f or2 N o. 12

- 2976 ai ding and abett i ng a Pro

- Pac em plo yee ’ s br each o f f i du ci a r y du t y . T he b a nk r up t c y c o ur tf o un d tha tWOW had i nd eed aide d and abett ed the Pro

- Pac e m plo yee , f or w hi ch to rtthe cour t a tte m pted to cal cul ate the dam age s. Bu t the bankru p tc y c ourtinstea d thought that i ts aw ar d to Pro

- Pac had to r esto n an i nd ependent unj ustenri chm ent c l ai m . On app eal, the d istr i ct c ourto rder ed th e ba nk r upt cyc o ur t to di smi ss the c as e bec au se th e unj ust- enri c h m ent a rgum ent had be en i ntro du ced to o l ate i n the proc eedi ng. Pro

- Pac appeal s fro m the dist ri ct c ou rt ’s ru lin g, ar gu in g t h at th e d ist ric t c ou rterr ed in di smi ss i ngthe c as e an d s ee k i ngr eins tatem en t o fthe ban krup tcy cou rt’s ruling . W e agree th at th e d istri ct cou rt er re d in dism i ssing the cas e, but the b ankr up tcy cour t a l so e r r e d i n i ts ap p r o a c h t o P r o - P a c ’ s d a ma g e s . T h u s , we re ver se the j ud gm ent o fthe dist ri ct c ou rt w ith inst ructi o ns t o r emand to the b an k r upt cyc o urt
. On r emand, the ba nk r upt cy co ur t sh o ul d r ee xa m i ne th e i ss ues r el at i ng to a pro per re m edy f orW OW ’ s t or t l i abi l i ty.

I. Facts Pr o - Pa c dec i ded to e xpa nd int o the war eh o us e an d t r a ns po r t a t i o n i nd us t r y . T o do s o , P r o - Pa c c o nt acte d Georg e Chapes, an e xperi enced and w el l

- c on n ecte d ve te ra n o f th e w ar eh ou se ind u st ry , an d h ire d h im in J une 200 5 t o be i ts vi ce pr esi dent ofsa l es. Chap es r ecei ved a sa lar y fro m Pro

- Pac and a benefi ts packag e that w as w or th si gni fi cantl y m or e tha n the packag es p a i d t o o th e rme mb e r s o fP r o - P a c ’ s s a l e s t e a m.N o. 12

- 2976 3 I n A ugust 2005 , Pro

- Pac subl eas ed a w ar ehous e in E astTro y, W i sco nsi n, fro m W OW , a l ogi sti cs s er vi ce pr o vi dertha t broker s tr an spo r ta ti o n s er vi ce s na ti o nwi de an d o per at es pub l i c war ehouse s i n W i sc o ns i n, I l l i no i s , a nd I da ho
. Pr o - Pa c met wi th W OW in Apr i l 20 06 to consi der a notherbusi ness dea l, and W OW as ked Pr oPac i fi t coul d use Ch apes as a business consul tant. Pro

- Pac express ed surpr i se i n l earni ng that W O W had bee n tal ki ng to Chapes abo ut bei ng a consul tant f or W OW
. Pro

Pa c told C ha p es th at “from this poin t forw ard
. . . i f you ’re w or ki ng with W OW o r ther e’ s s om ethi ng g oing on, [ Pro

Pa c] ne ed[ s] t o kno w w ha t’ s ha ppen i ng . [ W OW i s] o ur lan d lord . Th is is t oo clo se to h om e.” Pro

- Pa c a nd WOW e nt e r e d int o n e g o t i a t i o ns that w oul d perm i t W OW to use Ch apes as a consul tant. These ne g o ti at i o ns b eg ano n J ul y 1 7, 2 00 6, whenPr o - Pa c se nt an em ail to W OW pro posi ng tha t Chapes co uld workf or W OW i n exchange f oran ex te n si on o fPro

- Pac’ s l eas e w i th W OW and a r ebat e o fi ts re nt f ortwo m onths per y ea rf o rfi ve y ea r s. Pr o - Pa c an d W OW eng ag ed i n a se r i es o fc al l s an d e m ai l s i n a n a tt empt t o wor ko utthe detai l s o fan a gr eem ent. U l ti m at el y, as the bankr up tcy cour t dete rm i ned, W O W o ffer ed to gi ve Pro

- Pac fre e re nt f ortwo m onths p er yearf orfi ve yea rs i n exchange for Chapes’ s s er vi ces, pro vi ded thatChapes actua lly secur ed a dealf orW OW
. On A ugust 3 , 20 06, Pro

- Pac sent W OW an e m ai l“t ouchi ng ba se” r ega rdi ng the nego tia tio n s, an d on A u gu st 8, 20 06 , P ro -P ac se n t an e m ail i n d i c a t in g t h at th e p ar tie s w er e u n ab le t o re ac h a d ea l. W O W re sp on d ed on A u gu st 9, 20 06 , ag re ein g t o “ t a b le th e id ea for n ow .”4 N o. 12

- 2976 W hi l e Pr o- Pac and W OW were engag ed in thes e neg oti ati ons, Chapes a n d W OW were secr etl y in conta ct w i the a c h o the rab o uta b us i ne s s o pp o r t un i t y wi th Vang ar d Dis tr ibuti on, Inc. ( Vangard)
. Vangar d w as a w ar ehouse c om pany, wh ose pre si dent had cal l ed Ch apes o n A ugust 2 , 20 06, w ith inf or m ati on about a substa nti alb us i ne ss de al
. Va ng ar d ha d a c us to m erwho needed stora ge f oran o ver fl ow ofsuga r, but Ch apes had onl y 2 4 ho u rs t o com m i t t o the deal
. Even tho ugh Ch apes was working fo r Pro

- Pac t o secur e a ccounts wi thc o m pan i es l i k e V ang ar d, he i nf o r m ed W OW abo ut the deal, al l owing W O W to neg oti ate a shor t- ter m ag re em ent with Vangar d and secure the Vangard a ccount. Cha pes a nd W OW r em ained i n c o nt ac t afte rthe Van g ar d de al
. Thr o ug ho utAu gu st2 00 6, Cha pes a nd W OW c a l l e d e a c h o the rn ume r o us t i mes a nd WOW bega n to i ssue ch ec ks t o Ch apes forhi s co m m i ssi on o n the Vanga rd deal
. In N ove m ber2 00 6, Pro

- Pac r em i nd ed W OW thatPro

- Pac sho uld be incl ud ed i n any com m unica

ti on be tw een W OW and Chap es. W OW , how eve r, had pu rc h as ed a dispos abl e ce l lphone f orChapes to use f o ri t s c a l l s t o h i m. WO W r e p r e s e n t a t i v e ( s ) a l s o a c c o mpanie d C hapes o n a t ri p to I daho to m eeta substa nt i al cl i ent a t about the s am e t i m e. W O W co nti nued to pay Ch apes forthe Vangard deali n am ounts to taling $6 , 490, and i n ear l y 2 007, W OW hi re d C hapes. P r o - P a c fi l e d f o rC h a p t e r1 1 b a n k r u p t c y o n N o v e mber20 , 20 06, and fi l ed an adver sar y p ro ceedi ng ag ai nst W O W a n d C h a p es on M ay 19 , 200 7. A m on g ot h er all ega ti ons, Pro

- Pac al l ege d that Chapes, ai ded and abbe tte dN o. 12

- 2976 5 by W OW , br eached hi s fi du ci ar y duty to Pro

- Pac by d iv e r ting bu siness to W O W
. Pro-Pac rem ained un aw are ofthe fullex tent ofthe ongo i ng r el ati onshi p between W OW and Chap es unti lW OW r ele as ed docum ents du ring disc overythatr eve al ed the am ount o fr eve nues fro m the Vangar d account. Pro

- Pac pre sente d seve ra l cl ai m s i n i ts i ni ti alc o m pl aint, o n s o m e o fwhi chthe bankr up tcy cour t g ra nted part i al s um m ar y j ud gm ent, and Pro- Pac ab andoned other s. U l ti m atel y, Pro

- Pac p rocee ded wi tha s i ng l e cl ai m : f o rb r ea cho ffi duci ary du ty base d on C hapes’ s di ver si on o fthe Vangard deal to W OW , and f orW O W ’s aidi ng and abe tting o f Ch apes’ s br each offi du ci ar y duty. The bankr up tcy cour t co nd ucted a bench trialo n J une 7- 8, 20 11, duri ng wh i ch Pro

- Pac pre sente d evi dence to su p p o rt i ts claim s and i ts th eory of d am ages. Pro-Pac ’s th e o r y o fd a ma g e s w a s b a s e d o n the l o s t b r o k e r a g e c o mm i ssi on i t would have r ecei ved i fChapes h ad i nfo rm ed Pro

- Pac o fthe Vangard d ealand Pro

- Pac had act ed as a bro kerbetw een Vangard and W OW
. Pro

- Pac cl ai m ed th at i t woul d ha ve r ec ei ve d a 1 0% co m m i ss i o n o n the Vangard a ccount and cal culat ed thatthi s 1 0% co m m i ss i o n wa s wo r th $ 4 6 7, 2 2 0
. P r o - Pa c di d n o ts e e kt o a dd a nyo the rc a us e s o fa c t i o n, a nd , i n a nye v e nt, WOW spe ci fi ca l l y wi thhe l d i ts c o ns en t to the a ddi ti o n o rconsi derat i on bythe cour t o fany new cl ai m s: Your Honor, as l ong as yo u ’re on a l i ttl e hi atus here , Ia l so wantt o make c l ea rtha t I a m [ i n] no wayc o nsenting to the tr i al[ of ] cl ai m s th at have [ not] bee n [ pl e d]

— such thatther e i s a pote nti ala m en dm ent t o6 N o. 12

- 2976 the pl eadi ngs o r anythi ng l i ke that. I ’ ve s ai d that b e f o r e , I ’ l lr e i t e r a t e i tn o w. At the c o nc l us ion o fthe wi tn es se s’ t es ti m o ny a nd e xhibi ts , the pa r ti es a g r ee d tha t the re m aini ngev i den ce a nd ar gum en ts c o ul d b e pr es en te d thr o ug h de po si ti o n t r an scr i pts and post

- tr i albr i ef s. I n i ts post- tr i al bri ef, Pro

- Pac st ate d that “ an al ternati ve appli cati on o fthe fac ts under the doctr i ne o funj ust enri chm ent woul d res ulti n dam age s of$3 85, 000. ” Pr o- Pac su p p or te d th is c on te n tio n by arg u in g t h a t itw ou ld have re cei ved two m onths offre e r ent peryear forfi ve yea rs i fi ts nego ti ati ons w i th W OW f orCha p es ’s ser vi ces had been c om ple ted. Even tho ugh the nego ti ati ons f or Ch a pe s ’ s s e r v i c e s we r e no t c o ns ummat e d, W OW rece i ve d Chap es’ s se r vi ce s wi th o utha vingt o pa y a ny th i ng fo r t h em to P ro -P ac , e . g. , the tw o m onths offre e r ent per yea r f orfi ve yea rs . Based o n i ts re nt paym en t of$3 8, 500 permonth, Pr o - Pa c ca l cul ated tha t W OW was thus unj ustl y e n ric hed i n the am ount o f$3 85, 000. In i ts re spo ns e, W OW ar g ue d th at “P r o - Pa c’ s unj ust e nr i ch

m ent theor y m ust be r ej ecte d” beca use Pr o- Pac neve r pl ed i t. In r eply, Pr o - Pa c di d no t o fferfur th era r g um en t on the the or y o funj ust e nri chm ent. I n a m em or andu m o p in ion dated S eptem ber27, 20 11, the b ankr up tcy cour t dete rm i ned that Ch apes had b r e a c he d h i s fi du c i a r y du t y t o P r o - Pac a nd tha tWOW ha d a i ded an d abe tt ed th atb r ea ch
. D eterm i ni ngthe d am ages w as m o r e com p li cate d
. Th e ban krup tcy cou rt rej ecte d Pro- Pac’ s a rgum en t that i t was ent i tl ed to a 10 % co m m i ss i o n onthe Vang ar d deal, re as o ni ngtha t “theN o. 12

- 2976 7 Vangard dealwas f arfro m fi nal i zed” a nd thatPro

- Pac “pro vi ded no i nd ustr y e xpert tes ti m ony i n supp or t” of its assertion th at a 10% com m is sion w as an i nd us try s t a nd a r d. The b an k r upt cy co ur t, a ppar en tly mis unde r st an di ng P r o - P a c ’ s a r g u me n t, v i e we d P r o - P a c ’ s th e o r y a s a n e w, i nd ependent unj ust- enri chm ent c l ai m . S uch a cl ai m , it obs er ved, had not been i ncl ud ed i n Pro

- P ac’ s ini ti al ple ading
. The bankr up tcy cour t ther ef or e, i n re li ance on Federa lR ule of Bankruptcy Pro cedure 7015 , address ed P r o - P a c ’ s th e o r y o fu nj u s te n r i c h me n tas a n e w c l a i m. T h is b an kr u p tc y ru le in c or p or at es Fe d er al R u le of C ivil Pr o ce dur e 15, whi chs et s o utpr o ce dur es f o ra m en di ng a pl eadi ng ba sed o n an o bj ecti on at t ri al
. The bank

r upt cyc ou rtno te d W OW ’ s o bj ec ti o n int er po se d dur i ng the t ri al, but c oncluded that W OW would not suffer an y p rej u d ice if t h e p lea d in gs w er e a m en d ed , th u s a ll o wi ngc o ns i der at i o n o fPr o - Pa c’ s th eo r y o funj us t en ri chm ent. A pp l yi ng Pr o- Pac’ s theor y o funj ust e n ric h m ent t o c al cul ate dam age s, the cour t invoke d Sev enth Ci rcuit pr ecedent, not i ng tha t a “ca use o fact i on” conta i ns thr ee el ement s: “ ( 1) a b en efi t co nfer r ed upo n the de fen dan t bythe pl aint i ff, ( 2) a ppr ec i at i o n b y the de fen d an t o fthe f act ofsuch be nefi t, and ( 3) acc eptance and ret en ti on by th e d efendant ofthe benefi t, under ci rcum sta nces such th ati t woul d b e i ne qui tabl e t o reta i n the b en efi t wi th o ut paym ent o fthe val ue ther eof
. ” Li ndq ui s t For d, Inc . v . M iddle ton M otors, Inc. , 5 5 7F
. 3 d 4 6 9 , 4 7 7( 7 th Ci r . 2 009) ( i nt erna lquo ta ti o n mar k s o m i tt ed)
. The c o ur t f o und8 N o. 12

- 2976 that Pro

- Pac had es tabli sh ed ea ch ofthes e three el em ents and procee d ed t o cal cul ate the dam age s. Regar ding the claim ag ai nst Chapes, the cour t r ule d that “[ t] he actual dam age s a gainst Chapes a re co m pu te d as th e $ 6,4 90 refe rra l fee h e re c e i ve d from W O W .” Regar ding the c l ai m ag ai nst W OW , the co urt rul ed that “[ t] he actual dam age s a gainst W OW ar e $ 385, 000, r eprese n tin g t w o m on th s’ re n t . . . f o r a to ta l of five ye ar s.” A dd i ti onal l y, bec ause ofChapes’s and W O W ’ s “ prove n i ntenti onaldi sr ega rd o fPro

- Pac’ s ri ghts, ” the bank ruptcy cour t i m posed puniti ve dam ages in the am ount o f $ 5 0 , 0 0 0 a g a i n s tC h a p e s a n d $ 5 0 , 0 0 0 a g a i n s tWO W. Ch apes a nd W OW appeal ed separate l y t o the di str i ct cour t, and the di str i ct c ourti ssued two se parat e r ulings re sol vi ng the i r appeal s. On M ay 30, 20 12, the dis tr i ct cour t a ffi rm ed t he bank ruptcy cour t’ s deci si on a gainst Ch apes forbr each o fhi s fi du ci ary duty a nd r ule d that th e puni ti ve da m ag es a war d was no t ex ce ss i ve o n the gr ou nd thatev en tho ugh “the actual dam age s a gainst Ch apes e quale d a m er e $ 6, 490

— re prese nti ng t h e r efer ra l fe e h e r e c e i v e d fr o m W OW

— the actual d am age s agai ns t W OW e qua l ed $3 85 , 00 0. ” The r efo r e, “ ta k i ng in to ac c ou n t t h e e n tir et y of t h e c irc u m st an c es of th is case , ” the co urt up h eld the pu ni ti ve dam age s a w ar d of $ 5 0 , 0 0 0 a g a i ns tCh a pe s . T hi s r ul i ngh a s n o tb e e n a pp ea led an d th u s is fina l. A few m onths l ate r, o n A ugust 1 4, 20 12, the d ist rict cour t i ssued a rul i ng r eve rs i ng and rem an ding the b ankrup tcy cou rt’s verd ict against W O W
. Th e d istri ct cou rt hel d that F edera lRule o f Civi l Pro cedure 15(b) ( 1) was notN o. 12

- 2976 9

T he d istrict cou rt d id no t reexa m ine th is rulin g ag ain st 1 Chape s when itr eve rs ed a nd r em ande d the det er m i nat i on ofthe ban kr upt c y c our tag ai ns tW OW , an d Chape s ha s no t s o u g h tr e c o n s i de r a t i o n o fth e r u l i n g a g a i n s th i m. T h u s , we do not add res s any is sues rel ati ng to Chap es ’ s cas e. appli cabl e a nd thatthe bankr up tcy cour t had no othe r ba si s f o rc o ns i der i ngPr o - Pa c’ s th eo r y o funj us t en richm ent. Thi s le d the co urt to the c oncl usi on that Pr o- Pac w as not enti tl ed to dam age s ba sed o n unj ust e nri chm ent, an d , w ithou t t h o se d am ages, pu nitive d am ages w ere al so i m proper . T h e dist ri ct c ourtthus r eve rs ed and re

m an ded th e appe al“ wi thins truct i ons to di smi ss the cl ai m s aga i nst [ W OW ]
. ” Pro

- Pac fi l ed a ti m ely appeal ofthi s r uling. 1

I I . Discussi on W e r evi ew the f actualfi nd i n gs o f the cour ts bel ow fo r cl earer ro r but r evi ew th ei r l ega lco ncl usi ons deno vo . R ivi niu s, Inc . v. Cro s s M f g., Inc. ( In re R ivini us, Inc. ) , 97 7 F. 2 d 1 1 7 1 , 1 1 7 5 ( 7 th Ci r . 1 9 9 2 )
. Al tho ugh the bank

ru p tc y c ou rtan d th e d ist ric t co u rtbo th an aly ze d C ivil Pro cedure Rule 15 to add re ss Pro

- Pac’ s theo ry of u nj ust enri chm ent, we see no need to a m en d the pl eadi ngs t o i ncl ud e thi s theory o f dam age s. W e ho l d that the bank

r upt cyc o ur t an d the di st r i ctcour t er r ed byno t co nsid er in g B an k r u p tc y R u le 7 05 4. T h e b an kr u p tc y ru le i ncor pora tes Ci vi lPro cedure Rule 54( a)

- ( c) , wh i ch pro v i de s tha t a t r i a l c o ur t “ s ho ul d g r a nt the r e l i efto w hi ch eac h party is enti tl ed, ev en i fthe partyhas not10 N o. 12

- 2976 de man de d tha tr e l i e fi n i t s p l e a di ng s . ” S e e al so H ei t m ann v. C ity of Chi. , 56 0 F
. 3d 64 2, 64 5 ( 7th Ci r . 2 00 9) ( “P r ev ai l i ng par ti es g etthe r el iefto whi chthe y a r e en ti tl ed, no m at te rwhatthe y a skf o r . ”)
. To e ns ur e t ha t pr ev ai l i ng part i e s r e c e i v e a n a pp r o pr i a t e r e c o v e r y o fda mag es w he n li abilit y h a s been established , the ap p ell ate cou rt o r di na r i l y r emands the c ase wi thi ns truct i o ns t o the tr i alco urt to proper l y c al cul ate the dam age s. S ee, e . g. , P eabody v. D avis , 636 F.3d 368 , 374-79 (7th C ir. 2011). I n its m em oran d um opinion, the ba nk rup tcy cou rt r ul e d th a t WOW wa s l i ab l e t o P r o - P a c f o r a i d i n g a nd abet ting C ha p es’s breac h of fi d uc iary d ut y. C h ap es’s bre ach o ffid uci ar y duty i s r eco gni zed as a tor t under W i sco nsi n law. Se e Za st row v. Journal Co m m c’ns, Inc. , 71 8 N .W .2d 51 , 62 ( W is. 20 06 ). W O W is als o liab le in tort for aidin g and abettin g C ha p es’s breach of fi d uc iary du ty. Res tatem ent ( Se cond) ofTor ts § 8 74 cm t. c ( 1979 ) ( “ A p e r s o n w h o kn o win g l y a s s i s t s a fi d u c i a r y i n c o mm i tt i ng a br ea ch o f trus t i s hi m se l f gui l ty o f torti o us conduct .
. . .”); s ee al so Loehrke v. Wanta B uilde rs, Inc. , 445 N
. W
. 2d 717, 721 (W is. Ct
. A p p . 1989) (ci ting § 874). Despit e the bankr up tcy cour t’ s l i abi l ity deter m i nati on aga i nst W O W , the dist ri ct c ourti nstr ucted the bankr upt cyc o ur t to di smi ss tho se c l ai m s, thus vacat i ng th e ba si s forany dam age s in Pro

- Pac’ s f avo r. W e hold th atPr o - Pac i s en ti tl ed to da m ag es , ho wev er . Gi ve n the bankr up tcy cour t’ s i m pr op ercal cul ati on o fdam age s, re m and i s a pp ro pri ate
. On rem and, the b ankr up tcy c ou rthas a va ri etyo f opti ons und erW i sco nsi n l aw i n cr afti ng a re m edy ba sed on W OW ’s l i abi l i ty. Rest i tuti on m ay be a vai l abl e a s a nN o. 12

- 2976 11

Althoug h the Res t at em en tus es the phr as e “unj us te nr i c h- 2 m en t” in th is e x ce rp t, Li nk cl ari fie d in a f ootnote that this p hr ase “r efers t o u nju st enrich m en t as a con cep t in (co n tin u ed ...) equi tabl e r em edy i n to rtunder W i sco nsi n l aw to offs etW O W ’s u nj u st en ric h m en t. P uttkam m erv. M inth , 266 N
. W
. 2d 361, 363 (W is. 1978); G ross C o m m o n C a rrier v. Q ui ck

- N

- Cle an Corp
. , 132 N
. W
. 2d 576, 578 (W is. 1965). W hi l e o ne r eco gni zed m eas ure ofdam age s i s ba sed on th e h ar m inflic te d on th e p l a in tiff, re st itu tio n is an o th err ec o g ni ze d o pti on, whi chi s m ea su r ed by“ th e defe nd ant’ s g ai n orbene fi t. ” Ludyj an v. Cont ’ l Cas
. Co. , 74 7 N. W
. 2 d 74 5 , 74 9 ( W i s . Ct
. App
. 2 0 0 8 ) ( quo t i ng1 Da n B. Dobbs, Dobbs Law o fR em edi es: Dam age s, Equity, Resti tuti on § 3. 1, at28 0 ( 2d ed. 19 93) ) ( i nter nalquotat i on m arks om itted ). W isc on sin law d oe s n otlim it re st it u t i on to m er ely unj u st e n ri chm ent c l ai m s, but al so al l ows plainti ff s t o re cei ve re sti tuti on a s co m pensati on f orto rtcl ai m s: I n c as es i n whi cha t o r tfea so rha s r ecei ve d fr o m the c om m iss ion of a t or t a ga in stan o t h er p er so n a b en efit that const i tutes unj ust e nri chm ent a t the expense of th e o th er, he i s o r di na r i l y l i ab l e to the othe r, a t th e l at te r ’ s el ec ti o n, ei th er f o r th e damag e do ne to the ot h er ’s in te re st s o r for th e v alu e o f th e b en efit re cei ved thr ough the co m m i ssi on o fthe tor t. N
. Ai rSe r vs . , Inc . v. Li nk, N o. 2008 A P2897, 2012 W L 13053 1, a t* 4 ( W i s . Ct
. App
. J a n. 1 8 , 2 0 1 2 ) ( f o o tno t e o mi t t e d) (q u ot in g R es ta te m e n t ( S ec on d ) of T or ts § 90 3 c m t. b (1979)). 212 N o. 12

- 2976

(
. . . c on t i nu e d) 2 dam ages law, not as a f orm al le gal c lai m . ” 2012 W L 130531, a t *4 n .6. W i sco nsi n cour ts have als o re cogni zed r est i tuti on a s an appr o pr i at e r emedy f o ra t o r ti o us b r ea cho ffi duciary duty . In Ha rtfo rd E leva to r, Inc . v. Lau er, th e W isc on sin Suprem e Cour t r ule d that r est i tutio n w as an appropr i ate rem ed y for an e m p lo yee w ho bre ach ed his fidu ciary d ut y to his em p loyer. 289 N
. W
. 2d 280, 281-82 (W is. 1980). A l though the com pla i nt al l ege d a cause of action based o n the e m pl o y ee ’ s co nt r ac t, the c o ur t an aly zed th e i ss ue inte rm s o fth e e m p loy ee ’s b re ac h of fid u c iar y d u ty
. Id. at 284-85. Rega rd less of w h e th er a breach of a fi d uc iary du ty i s pl ed as a t or t o r contr act cl ai m , the sam e l ega l an alysis ap p li es to both typ es of cl aim s w he n th ey overl ap. S ee Lo e hrke, 4 4 5 N .W .2d at72 0 (“ If, h ow ev er , a tor t duty coinci des with a co ntra c t obl i gat i on, ei ther a con tract or a tort action w il l li e for its breach
. A tort duty coinc i des wi tha c o nt r ac tu alo bl i g at i o n whe n the b re a c h in g p ar ty h as a fid u c iar y d u ty to th e o th er p ar ty .” (i nt erna l citation om itted ))
. T he W iscons in Sup rem e C ou rt also up he ld an aw ard o fr es ti tu ti o n fo ra b r ea cho ffi duci ary duty i n D i ck& Reu t e m an Co. v. D ohe r ty Re al ty Co. , 11 4 N
. W
. 2d 475 ( W i s. 19 62)
. There i t r ule d that a n in sura nce br oke r sh o ul d pa y b ac ki ns ur an ce c o m m i ss i o ns b ec au se the bro kerhad w ro ngfully a cquir ed the com m i ssi ons by b re ac h in g a fid u c iar y d u ty c re at ed b y a t ru st
. Id. at48 2- 83. Thi s ca se l at era ppea r ed as I l l us tratio n 1 9 o f§ 4 3 o ftheN o. 12

- 2976 13 Re st at ement( Thi r d) o fRes ti tu ti o n & Unj us t Enr i ch m en t ( 2011 ) , wh i ch st ate s: A p er so n w h o ob ta in s a be n efit (a) in br ea c h of a fid u c iar y d u ty , ( b) i n br each o fan e quiva l ent duty i m pose d by a r el ati on o ftr ust a nd co nfi dence, o r ( c) i n conse quence ofano ther ’ s br each o fsuch a duty, i s l i abl e in re sti tuti on t o the per son to w hom t h e duty i s o we d. Id. at§ 43. F i na l l y, the Re st at ement( S ec o nd) o fTo r ts e xpl ains i n detai lthe m anner i n w hi ch r est itu tion f ora bre ach o ffi du c i a r y du t y c a n b e c a l c ul a t e d: I n additi on t o ori n substi tuti on f or. . . dam age s [ f or harm , ] the benefi ci ar y m ay be enti tle d to re sti tuti onary re cove ry, since noto nl y i s he enti tl ed to re cove r f orany harm done t o hi s l ega l l y pr otec te d i nt er es ts b y the wro ng fulc o nduc t o fthe fi duci ar y, but or dinar i l y he i s e nti tl ed to pro fi ts that r es ul t to the fiduc i ary fr o m hi s br ea cho fduty a nd to b e th e be ne fi ci ary o fa c o ns truct i ve t r us t i n the p ro fits
. . . .

. . . The meas ur e o f
. . . l i ab i l i ty[ f o ra d efe nda ntwho assisted i n th e breac h of a fidu ciary du ty], how ever, m ayb e di ffer en t fr om tha t o fthe fi duci ary s i nc e he i s r es po ns ibl e o nl y f o rha r m c au se d o rpr o fi ts tha t he h im se lf ha s m ad e fro m th e t ra n sa c tio n, an d h e is14 N o. 12

- 2976 not nec essarily l iable for the p rofi ts t h a t t he fidu ciary has m ade norf ortho se that he sho uld have m ade. Restat em en t ( Se cond) ofTor ts § 8 74 cm t. b- c ( 1979 ) ; se e al so Lo e hrke, 445 N
. W
. 2d at 721 (citi ng § 874). To award re sti tuti on dam age s in f avo r ofPro

- Pac r equ i r e s a n e x a mi n a t i o n o fWOW’ s p r o fi t s fr o m t he Vangard d eal
. The bank ruptcy cour t dete rm i ned that by encour aging Chapes to br each hi s fi du ci ar y duty, W OW hel ped d ire c t the Vanga rd dealfro m Pro

- Pac t o i ts el f, fr o m whi chW OW pres um ab l y b en efi tt ed. The re c or d is u n d er d ev elo p ed on th is p oin t, in d ica t i n g on ly that W OW ’ s r eve nues o n the V an gar d deal ave ra ged $ 62 ,67 0 p er m on th . E ve n if th is n u m b er is ac c u ra te , i t does not l i kel y r efl ect p rofi ts, wh i ch w oul d be ba sed o n a dete rm i nati on o fr eve nues as wellas co sts
. If the b ankruptcy cour t pursues thi s r em edy , u nl ess the parti es st i pu lat e to W OW ’ s pr o fi t fr o m the Va ng ar d de al, the b an kr u p tc y c ou rtm u st d ire c t t h e p ar tie s t o p ro p er ly devel op thes e f acts
. A l ternati vel y, the “val ue of the benefi t rece i ved thro ugh the com m i ssi on o f t h e tor t” ( i.e. , Cha pes ’ s co nsu l tings er vi ce s) c o ul d b e m easur ed bye xa m i ni ng w hat W OW w as w i l l i ng to exchange f ortho se ser vi ces i m m edi ate l y pr ior to i ts tor ti ous c onduct. Duri ng neg oti ati ons i n t h e s um m ero f20 06, W OW o ffer ed Pro

- Pac fr ee r en t f o rt wo months pe ry ea rf o rfi ve y ea r s i n exch an ge for C ha p es’s services, but fol low ing C ha p es’s r ef erral o fthe Va ng ar d de alt o W OW , the ne g o ti at i o ns b e t we e n Pr o - Pa c and W OW c e a s e d. As a r e s ul t, WOW o bt aine d a cc es s to Cha pes ’ s co ntacts wi th o utpr o vi di ngN o. 12

- 2976 15 Pro

- Pac anypaym ent, i n c luding the fre e r ent. Pro

- Pac c alc u lat ed th e v alu e o f th is free ren t a s $ 38 5,0 00 . B u t t h is val ue does notreflec t a pre sent- val ue cal cul ati on, wh i ch w oul d disco unt the re nt am ount overthe fi ve- yea r ti me p e r i o d
. I t i s a l s o d e b a t ab l e wh e th e r $ 3 8 5 , 0 0 0, t he val ue W OW pl aced o n fi ve yea rs o fChapes’s serv i ces, r epr es en ts a f ai ra ppr o xi m at i o n o f th e va l ue o fthe ( m uchb r i efe r ) s er vi ce s wro ng ful l y o bt aine d. On th e othe r hand , we note that W OW i n i ti al l y o ffer ed Pro

- Pac si gni fi cant r ent conces si ons ove r a s hor terper i od of ti m e forthe pri vi l ege of speaking with Ch apes, r ega rdl ess of w he th er Ch ap es’s con tact s help e d W O W to secu re an y new bu siness opp ortu nities; this s ug gests a “fl oor” o n the v alue o fthe s er vi ce s wrongful l y o bt aine d. I fthe bankr up tcy cour t wis hes t o p ursue thi s r em edy, unl ess the par ti es ar e a b le to st i pu l ate to the val ue o fse rv i ces that W OW r ecei ved w hen the nego ti ati ons fel lapart, the b ankr up tcy cour t m ust r eq u ire the parti es to proper l y deve l op thes e f acts
. T he ban krup tcy c o u r t c ou ld also choos e to aw ard c om p ensat or y dam age s that a dd re ss the har m sust ai ned byPr o - Pa c. Thi s co m pen sa to r y m ea su r e o fl i ab i l i tya nd r es ti tu ti o n oft eno ve r l ap, s uchtha t “the b en efi t to the one and the l oss to the othe r ar e co - ex te n siv e. ” Res tat em ent ( Fi rs t) o fRest i tuti on § 1 cm t. d (1937) ; se e a l so Lawl i s v. Thom ps on , 4 05 N
. W
. 2d 31 7, 32 0 ( W i s. 1 98 7) ( ci ting § 1 )
. U nd era com pensato rydam age s theor y, Pro

- Pac woul d b e en ti tl ed to r ec ei ve the b en efi t o fthe fr ee r en t th ati t l o stwhen W O W di sc o nt i nue d i ts ne g o ti at i o ns f orChapes’s se rv i ces. A s pre vi ousl y no ted, the bankruptcy cour t e sti m ate d thatthes e dam age s a m ount t o16 N o. 12

- 2976 $3 8 5 , 0 0 0 , b u ta g a i n, th i s d o e s n o tr e fl e c ta p r e s e n t
- va l ue cal c ul a t i o n. No ri s i tc l e a rtha tthi s a mou nt, wh i ch re fl ects fi ve y ea rs ’ worth o fl oss es, i s a n appropri ate m ea su r e o fthe harm c ause d b y W OW ’ s sing l e br ea ch
. I fthe ban kruptcy co urt w i shes to pu rs ue thi s r em edy, unless th e par ti es s ti pul at e to the v alue o fthe fr ee r en t th at Pro-P ac lost, t h e ban krup tcy cou rt m us t requ ire the par ti es to proper l y deve l op thes e f acts
. Re g a r dl e s s o fwh e the rthe b a nk r up t c y c ourta wa r ds d a ma g e s p r e mi s e d o n g a i n t o WO W ( i.e. , restitut ionary dam age s) o r l oss to Pro

- Pac ( i.e. , c o mp e n s a t o r y d a mag e s ) , p un i t i v e da mag e s a r e a l s o a v a i l ab l e , i fo the rwis e appropri ate
. W i sco nsi n l aw al l ows aw ar ds ofpuniti ve da mag e s wh e n “ c o mpe ns a t o r y da mag e s ” a r e i mpo s e d. G roshek v. Tre w in , 78 4 N
. W
. 2d 16 3, 1 74

- 76 ( W i s. 2 01 0)
. The R estat em en t (Second ) of Tor ts d efi ne s “com p en satory d a ma g e s ” a s “ th e d a ma g e s a wa r d e d t o a p e r s o n a s c o mpensatio n, i nd em ni ty orr est i tuti on f orhar m sust ai ned byhi m , ” Re st at ement( S ec o nd) o fTo r ts § 9 03 ( 19 79 ) , a nd W isc on sin h as ad op te d th is d efin itio n , Li nk, 2 0 1 2 WL 1305 31, at* 3 n. 4. Pro

- Pac’s re li ance o n any parti cul ar theo ryo fto rtdam age s doe s no t for ecl ose an a w ar d of pu ni ti ve dam age s t o deteri ntenti onalwr on gd oi ng, i fsuch dam age s a re deem ed appropri ate
. W e leave to the bankr uptcy co urt w hatev erdi scr eti on i s nec es sar y t o f or m ula te an appropr i ate r em edy i n Pro

Pac’ s f avo r base d on W OW ’ s t or t l i ab ility
. I fthe dist ri ct cour t i s no t s ati sfi ed, o fco urse , the distric t courtcan w i th d ra w the re fer ence and res ol ve the i ssues i tse l f
. 28 U .S .C
. § 1 57 (d ) (“T h e d ist ric t c ou rtm ay w ith d ra w , inN o. 12

- 2976 17

w hol e o r i n part, any case o r p rocee ding re fer re d und er th i s se ct i o n, o n i ts o wn m o ti o n o ro n t i m ely mot i o n o fa ny party, f orcause sho w n. ”) ; se e a l so Hom e In s. C o . of Il l
. v. Adco O i l Co. , 154 F.3d 739 , 741-42 (7th C ir. 1998).

I I I . Concl usio n The bankr up tcy cour t e rr ed i n i ts deter m in atio n that W OW m ust pay $385 , 000 i n dam age s t o Pro- Pac b as ed on P ro -P ac ’s u nj u st -en ric h m en t t h eo ry . T h e c as e is re m anded to the dist ri ct c ourtand to the bankr up tcy cour t t o re f or m ula te th e aw ar d ofdam age s ba sed o n W OW ’ s a i ding and abett i ng o f C h apes’ s br each o f fid u c iar y d u ty . Th e jud gm en t o ft h e d ist ric t c ou rtis R EVER S ED and the cause R EMAND ED wi thi ns truct i o ns to re m and to the b ankr up tcy cour t forfu rt h er pro c ee d in gs co n sis te n t w ith th is op in ion
.

M A NI ON, Cir cu i tJudg e, c o nc ur r i ngi n pa r t, di sse nt i ng i n part. Ico ncur with the cour t’ s percuri am o pini on w ith th e e x c e p tio n of th e c ou rt ’s fin al a n aly sis hol ding th at pu ni ti ve dam age s co uld be ava i l abl e e ven when th e co ur t awar ds o nl y res ti tu ti o n b as ed o n the d e fe n d an t’ s g a i n ( a s o p p o s e d t o th e p l a i n t i ff’ s l o s s )
. As18 N o. 12

- 2976 Ise e i t, W i sco nsi n l aw does notper m it puni ti ve dam age s un l e s s th e r e h a s b e e n a n a wa r d o fc o mp e n s a t o r y d a mag es . G roshek v . Trew in , 78 4 N
. W
. 2d 163, 17 6 ( W i s. 20 10) ( “[ W ] he r e the r e i s n o a wa r d o fc o mpe ns a t o r y da mages, p u n itiv e d am ag es are n otav aila b le.” ); s e eal s o Tuc k er v. M ar cu s , 41 8 N
. W
. 2d 818, 82 3 ( W i s. 19 88) ( hol ding that “puniti ve dam age s a re notava i l abl e where t here has been no ‘aw ard ’ of a ctu a l da m ages ” (em p ha sis add ed ))
. R estitu tion base d on t h e d efend an t’s gain i s not a form ofco m pensato ry d am age s under W i sco nsi n l aw . Fo r sta rt er s, r est i tuti on a nd co m pensato rydam age s a re not calcu lated i n th e sam e w ay; com p en satory d am ages are base d on the harm suffer ed by the pl ai nt iff, wh i l e r esti tuti on i s ba sed o n the defe nd ant’s ga i n. Because these re m edi es ar e ca l cul ate d differ en tly and do notal w ays produce the sa m e v al ue o fdam age s, r est itu ti on ba sed on the defendant’s ga i n i s t re ate d as a n al ternati ve re m ed y t o c om p en sa to ry d am ag es . See Re st at ement ( S ec o nd) ofTor ts § 9 03 c m t. b ( 19 79 ) ( ci te d i n N . Air S ervs., Inc . v. Li nk, N o. 20 08 A P 28 97, 201 2 W L 13 05 31 , at *3 n .4 (W i s. Ct. A pp . J an. 18, 2012 ) )
. Furtherm or e, re sti tution is an equ i t ab l e r e med y, a nd Wi s c o ns i n s t i l lr e t a i ns a di sti ncti on be tw een l aw and equi ty f ordam age s purpose s. See G rosh ek, 78 4 N
. W
. 2d at 175. Th e r e f o r e , rest i t ut i o n b a s e d o n the b e ne fi ttha tWOW re cei ved w oul d not be a su fficient basi s forpuniti ve d am ages. Ift h e ban krup tcy cou rt w ishes to aw ard p un iti ve d am ages, i t m us t firs t aw ard com p en satory d am ag es ba se d on th e h ar m P ro -P ac su ffer ed
.
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