Hon. Sarah Evans Barker, of the Southern District of 

Indiana, sitting by designation.

In the

United States Court of Appeals

For the Seventh Circuit

No. 12-2976

PRO-PAC, INC.,

Plaintiff-Appellant,

v.

WOW LOGISTICS COMPANY,

Defendant-Appellee.

Appeal from the United States District Court 

for the Eastern District of Wisconsin. 

No. 11 CV 1075—J.P. Stadtmueller, Judge.

ARGUED JANUARY 24, 2013—DECIDED JUNE 26, 2013

Before MANION and WOOD, Circuit Judges, and BARKER,

District Judge.

PER CURIAM. Pro-Pac, Inc. (Pro-Pac) was a packaging

business that filed for Chapter 11 bankruptcy in 2006. ProPac then filed an adversary proceeding against WOW

Logistics Co. (WOW), a logistics service provider, for
2 No. 12-2976

aiding and abetting a Pro-Pac employee’s breach of

fiduciary duty. The bankruptcy court found that WOW

had indeed aided and abetted the Pro-Pac employee, for

which tort the court attempted to calculate the damages.

But the bankruptcy court instead thought that its

award to Pro-Pac had to rest on an independent unjustenrichment claim. On appeal, the district court ordered

the bankruptcy court to dismiss the case because the

unjust-enrichment argument had been introduced too

late in the proceeding. Pro-Pac appeals from the district

court’s ruling, arguing that the district court erred in

dismissing the case and seeking reinstatement of the

bankruptcy court’s ruling. We agree that the district court

erred in dismissing the case, but the bankruptcy court also

erred in its approach to Pro-Pac’s damages. Thus, we

reverse the judgment of the district court with instructions to remand to the bankruptcy court. On remand, the

bankruptcy court should reexamine the issues relating

to a proper remedy for WOW’s tort liability.

I. Facts

Pro-Pac decided to expand into the warehouse and

transportation industry. To do so, Pro-Pac contacted

George Chapes, an experienced and well-connected

veteran of the warehouse industry, and hired him in

June 2005 to be its vice president of sales. Chapes received a salary from Pro-Pac and a benefits package

that was worth significantly more than the packages

paid to other members of Pro-Pac’s sales team.
No. 12-2976 3

In August 2005, Pro-Pac subleased a warehouse in

East Troy, Wisconsin, from WOW, a logistics service

provider that brokers transportation services nationwide and operates public warehouses in Wisconsin,

Illinois, and Idaho. Pro-Pac met with WOW in April 2006

to consider another business deal, and WOW asked ProPac if it could use Chapes as a business consultant. Pro-Pac

expressed surprise in learning that WOW had been

talking to Chapes about being a consultant for WOW. ProPac told Chapes that “from this point forward . . . if you’re

working with WOW or there’s something going on, [ProPac] need[s] to know what’s happening. [WOW is] our

landlord. This is too close to home.”

Pro-Pac and WOW entered into negotiations that

would permit WOW to use Chapes as a consultant. These

negotiations began on July 17, 2006, when Pro-Pac sent

an email to WOW proposing that Chapes could work for

WOW in exchange for an extension of Pro-Pac’s lease

with WOW and a rebate of its rent for two months per

year for five years. Pro-Pac and WOW engaged in a

series of calls and emails in an attempt to work out the

details of an agreement. Ultimately, as the bankruptcy

court determined, WOW offered to give Pro-Pac free

rent for two months per year for five years in exchange

for Chapes’s services, provided that Chapes actually

secured a deal for WOW. On August 3, 2006, Pro-Pac

sent WOW an email “touching base” regarding the negotiations, and on August 8, 2006, Pro-Pac sent an email

indicating that the parties were unable to reach a deal.

WOW responded on August 9, 2006, agreeing to “table

the idea for now.”
4 No. 12-2976

While Pro-Pac and WOW were engaged in these negotiations, Chapes and WOW were secretly in contact

with each other about a business opportunity with

Vangard Distribution, Inc. (Vangard). Vangard was a

warehouse company, whose president had called

Chapes on August 2, 2006, with information about a

substantial business deal. Vangard had a customer who

needed storage for an overflow of sugar, but Chapes

had only 24 hours to commit to the deal. Even though

Chapes was working for Pro-Pac to secure accounts

with companies like Vangard, he informed WOW about

the deal, allowing WOW to negotiate a short-term agreement with Vangard and secure the Vangard account.

Chapes and WOW remained in contact after the

Vangard deal. Throughout August 2006, Chapes and

WOW called each other numerous times and WOW

began to issue checks to Chapes for his commission on

the Vangard deal. In November 2006, Pro-Pac reminded

WOW that Pro-Pac should be included in any communication between WOW and Chapes. WOW, however, had

purchased a disposable cell phone for Chapes to use

for its calls to him. WOW representative(s) also accompanied Chapes on a trip to Idaho to meet a substantial

client at about the same time. WOW continued to pay

Chapes for the Vangard deal in amounts totaling $6,490,

and in early 2007, WOW hired Chapes.

Pro-Pac filed for Chapter 11 bankruptcy on November 20, 2006, and filed an adversary proceeding against

WOW and Chapes on May 19, 2007. Among other allegations, Pro-Pac alleged that Chapes, aided and abbetted
No. 12-2976 5

by WOW, breached his fiduciary duty to Pro-Pac by

diverting business to WOW. Pro-Pac remained unaware

of the full extent of the ongoing relationship between

WOW and Chapes until WOW released documents

during discovery that revealed the amount of revenues

from the Vangard account. Pro-Pac presented several

claims in its initial complaint, on some of which the

bankruptcy court granted partial summary judgment,

and Pro-Pac abandoned others. Ultimately, Pro-Pac

proceeded with a single claim: for breach of fiduciary

duty based on Chapes’s diversion of the Vangard deal

to WOW, and for WOW’s aiding and abetting of

Chapes’s breach of fiduciary duty.

The bankruptcy court conducted a bench trial on

June 7-8, 2011, during which Pro-Pac presented evidence

to support its claims and its theory of damages. Pro-Pac’s

theory of damages was based on the lost brokerage commission it would have received if Chapes had informed

Pro-Pac of the Vangard deal and Pro-Pac had acted as a

broker between Vangard and WOW. Pro-Pac claimed

that it would have received a 10% commission on the

Vangard account and calculated that this 10% commission was worth $467,220. Pro-Pac did not seek to add

any other causes of action, and, in any event, WOW

specifically withheld its consent to the addition or consideration by the court of any new claims:

Your Honor, as long as you’re on a little hiatus here,

I also want to make clear that I am [in] no way consenting to the trial [of] claims that have [not] been

[pled]—such that there is a potential amendment to
6 No. 12-2976

the pleadings or anything like that. I’ve said that

before, I’ll reiterate it now.

At the conclusion of the witnesses’ testimony and exhibits, the parties agreed that the remaining evidence and

arguments could be presented through deposition transcripts and post-trial briefs.

In its post-trial brief, Pro-Pac stated that “an alternative

application of the facts under the doctrine of unjust

enrichment would result in damages of $385,000.” Pro-Pac

supported this contention by arguing that it would

have received two months of free rent per year for five

years if its negotiations with WOW for Chapes’s services

had been completed. Even though the negotiations for

Chapes’s services were not consummated, WOW received Chapes’s services without having to pay anything

for them to Pro-Pac, e.g., the two months of free rent per

year for five years. Based on its rent payment of $38,500

per month, Pro-Pac calculated that WOW was thus unjustly enriched in the amount of $385,000. In its response, WOW argued that “Pro-Pac’s unjust enrichment theory must be rejected” because Pro-Pac never

pled it. In reply, Pro-Pac did not offer further argument

on the theory of unjust enrichment.

In a memorandum opinion dated September 27, 2011,

the bankruptcy court determined that Chapes had

breached his fiduciary duty to Pro-Pac and that WOW

had aided and abetted that breach. Determining the

damages was more complicated. The bankruptcy court

rejected Pro-Pac’s argument that it was entitled to a

10% commission on the Vangard deal, reasoning that “the
No. 12-2976 7

Vangard deal was far from finalized” and that Pro-Pac

“provided no industry expert testimony in support” of

its assertion that a 10% commission was an industry

standard.

The bankruptcy court, apparently misunderstanding

Pro-Pac’s argument, viewed Pro-Pac’s theory as a new,

independent unjust-enrichment claim. Such a claim, it

observed, had not been included in Pro-Pac’s initial

pleading. The bankruptcy court therefore, in reliance

on Federal Rule of Bankruptcy Procedure 7015, addressed

Pro-Pac’s theory of unjust enrichment as a new claim.

This bankruptcy rule incorporates Federal Rule of Civil

Procedure 15, which sets out procedures for amending

a pleading based on an objection at trial. The bankruptcy court noted WOW’s objection interposed during

the trial, but concluded that WOW would not suffer

any prejudice if the pleadings were amended, thus allowing consideration of Pro-Pac’s theory of unjust enrichment.

Applying Pro-Pac’s theory of unjust enrichment to

calculate damages, the court invoked Seventh Circuit

precedent, noting that a “cause of action” contains three

elements: “(1) a benefit conferred upon the defendant

by the plaintiff, (2) appreciation by the defendant of the

fact of such benefit, and (3) acceptance and retention by

the defendant of the benefit, under circumstances such

that it would be inequitable to retain the benefit without

payment of the value thereof.” Lindquist Ford, Inc. v.

Middleton Motors, Inc., 557 F.3d 469, 477 (7th Cir. 2009)

(internal quotation marks omitted). The court found
8 No. 12-2976

that Pro-Pac had established each of these three elements and proceeded to calculate the damages. Regarding the claim against Chapes, the court ruled that

“[t]he actual damages against Chapes are computed as

the $6,490 referral fee he received from WOW.”

Regarding the claim against WOW, the court ruled that

“[t]he actual damages against WOW are $385,000, representing two months’ rent . . . for a total of five years.”

Additionally, because of Chapes’s and WOW’s “proven

intentional disregard of Pro-Pac’s rights,” the bankruptcy

court imposed punitive damages in the amount of

$50,000 against Chapes and $50,000 against WOW.

Chapes and WOW appealed separately to the district

court, and the district court issued two separate rulings

resolving their appeals. On May 30, 2012, the district

court affirmed the bankruptcy court’s decision against

Chapes for breach of his fiduciary duty and ruled that

the punitive damages award was not excessive on the

ground that even though “the actual damages against

Chapes equaled a mere $6,490—representing the referral

fee he received from WOW—the actual damages

against WOW equaled $385,000.” Therefore, “taking

into account the entirety of the circumstances of this

case,” the court upheld the punitive damages award of

$50,000 against Chapes. This ruling has not been appealed and thus is final.

A few months later, on August 14, 2012, the district

court issued a ruling reversing and remanding the bankruptcy court’s verdict against WOW. The district court

held that Federal Rule of Civil Procedure 15(b)(1) was not
No. 12-2976 9

The district court did not reexamine this ruling against 1

Chapes when it reversed and remanded the determination

of the bankruptcy court against WOW, and Chapes has not

sought reconsideration of the ruling against him. Thus, we

do not address any issues relating to Chapes’s case.

applicable and that the bankruptcy court had no other

basis for considering Pro-Pac’s theory of unjust enrichment. This led the court to the conclusion that Pro-Pac

was not entitled to damages based on unjust enrichment,

and, without those damages, punitive damages were

also improper. The district court thus reversed and remanded the appeal “with instructions to dismiss the

claims against [WOW].” Pro-Pac filed a timely appeal

of this ruling.1

II. Discussion

We review the factual findings of the courts below for

clear error but review their legal conclusions de novo.

Rivinius, Inc. v. Cross Mfg., Inc. (In re Rivinius, Inc.), 977

F.2d 1171, 1175 (7th Cir. 1992). Although the bankruptcy court and the district court both analyzed Civil

Procedure Rule 15 to address Pro-Pac’s theory of unjust

enrichment, we see no need to amend the pleadings to

include this theory of damages. We hold that the bankruptcy court and the district court erred by not considering Bankruptcy Rule 7054. The bankruptcy rule

incorporates Civil Procedure Rule 54(a)-(c), which

provides that a trial court “should grant the relief to

which each party is entitled, even if the party has not
10 No. 12-2976

demanded that relief in its pleadings.” See also Heitmann

v. City of Chi., 560 F.3d 642, 645 (7th Cir. 2009) (“Prevailing

parties get the relief to which they are entitled, no

matter what they ask for.”). To ensure that prevailing

parties receive an appropriate recovery of damages

when liability has been established, the appellate court

ordinarily remands the case with instructions to the

trial court to properly calculate the damages. See, e.g.,

Peabody v. Davis, 636 F.3d 368, 374-79 (7th Cir. 2011).

In its memorandum opinion, the bankruptcy court

ruled that WOW was liable to Pro-Pac for aiding and

abetting Chapes’s breach of fiduciary duty. Chapes’s

breach of fiduciary duty is recognized as a tort under

Wisconsin law. See Zastrow v. Journal Commc’ns, Inc.,

718 N.W.2d 51, 62 (Wis. 2006). WOW is also liable in

tort for aiding and abetting Chapes’s breach of fiduciary

duty. Restatement (Second) of Torts § 874 cmt. c (1979)

(“A person who knowingly assists a fiduciary in committing a breach of trust is himself guilty of tortious

conduct . . . .”); see also Loehrke v. Wanta Builders, Inc.,

445 N.W.2d 717, 721 (Wis. Ct. App. 1989) (citing § 874).

Despite the bankruptcy court’s liability determination

against WOW, the district court instructed the bankruptcy court to dismiss those claims, thus vacating

the basis for any damages in Pro-Pac’s favor. We hold

that Pro-Pac is entitled to damages, however. Given the

bankruptcy court’s improper calculation of damages,

remand is appropriate.

On remand, the bankruptcy court has a variety of

options under Wisconsin law in crafting a remedy based

on WOW’s liability. Restitution may be available as an
No. 12-2976 11

Although the Restatement uses the phrase “unjust enrich- 2

ment” in this excerpt, Link clarified in a footnote that

this phrase “refers to unjust enrichment as a concept in

(continued...)

equitable remedy in tort under Wisconsin law to

offset WOW’s unjust enrichment. Puttkammer v. Minth,

266 N.W.2d 361, 363 (Wis. 1978); Gross Common Carrier

v. Quick-N-Clean Corp., 132 N.W.2d 576, 578 (Wis. 1965).

While one recognized measure of damages is based

on the harm inflicted on the plaintiff, restitution is

another recognized option, which is measured by “the

defendant’s gain or benefit.” Ludyjan v. Cont’l Cas. Co., 747

N.W.2d 745, 749 (Wis. Ct. App. 2008) (quoting 1 Dan B.

Dobbs, Dobbs Law of Remedies: Damages, Equity, Restitution § 3.1, at 280 (2d ed. 1993)) (internal quotation

marks omitted).

Wisconsin law does not limit restitution to merely

unjust enrichment claims, but also allows plaintiffs to

receive restitution as compensation for tort claims:

In cases in which a tortfeasor has received from the

commission of a tort against another person a benefit

that constitutes unjust enrichment at the expense of

the other, he is ordinarily liable to the other, at the

latter’s election, either for the damage done to the

other’s interests or for the value of the benefit

received through the commission of the tort.

N. Air Servs., Inc. v. Link, No. 2008AP2897, 2012 WL 130531,

at *4 (Wis. Ct. App. Jan. 18, 2012) (footnote omitted)

(quoting Restatement (Second) of Torts § 903 cmt. b

(1979)).2
12 No. 12-2976

(...continued) 2

damages law, not as a formal legal claim.” 2012 WL 130531,

at *4 n.6. 

Wisconsin courts have also recognized restitution as

an appropriate remedy for a tortious breach of fiduciary

duty. In Hartford Elevator, Inc. v. Lauer, the Wisconsin

Supreme Court ruled that restitution was an appropriate

remedy for an employee who breached his fiduciary

duty to his employer. 289 N.W.2d 280, 281-82 (Wis. 1980).

Although the complaint alleged a cause of action based

on the employee’s contract, the court analyzed the issue

in terms of the employee’s breach of fiduciary duty. Id.

at 284-85. Regardless of whether a breach of a fiduciary

duty is pled as a tort or contract claim, the same legal

analysis applies to both types of claims when they overlap. See Loehrke, 445 N.W.2d at 720 (“If, however, a

tort duty coincides with a contract obligation, either

a contract or a tort action will lie for its breach. A tort

duty coincides with a contractual obligation when the

breaching party has a fiduciary duty to the other party.”

(internal citation omitted)).

The Wisconsin Supreme Court also upheld an award

of restitution for a breach of fiduciary duty in Dick &

Reuteman Co. v. Doherty Realty Co., 114 N.W.2d 475

(Wis. 1962). There it ruled that an insurance broker

should pay back insurance commissions because the

broker had wrongfully acquired the commissions by

breaching a fiduciary duty created by a trust. Id. at 482-83.

This case later appeared as Illustration 19 of § 43 of the
No. 12-2976 13

Restatement (Third) of Restitution & Unjust Enrichment

(2011), which states:

A person who obtains a benefit

(a) in breach of a fiduciary duty, 

(b) in breach of an equivalent duty imposed by

a relation of trust and confidence, or

(c) in consequence of another’s breach of such

a duty,

is liable in restitution to the person to whom the duty

is owed.

Id. at § 43.

Finally, the Restatement (Second) of Torts explains

in detail the manner in which restitution for a breach

of fiduciary duty can be calculated:

In addition to or in substitution for . . . damages

[for harm,] the beneficiary may be entitled to

restitutionary recovery, since not only is he entitled

to recover for any harm done to his legally protected interests by the wrongful conduct of the fiduciary, but ordinarily he is entitled to profits that

result to the fiduciary from his breach of duty and

to be the beneficiary of a constructive trust in the

profits. . . .

. . . The measure of . . . liability [for a defendant who

assisted in the breach of a fiduciary duty], however,

may be different from that of the fiduciary since he

is responsible only for harm caused or profits that he

himself has made from the transaction, and he is
14 No. 12-2976

not necessarily liable for the profits that the fiduciary

has made nor for those that he should have made.

Restatement (Second) of Torts § 874 cmt. b-c (1979); see

also Loehrke, 445 N.W.2d at 721 (citing § 874).

To award restitution damages in favor of Pro-Pac

requires an examination of WOW’s profits from the

Vangard deal. The bankruptcy court determined that

by encouraging Chapes to breach his fiduciary duty,

WOW helped direct the Vangard deal from Pro-Pac to

itself, from which WOW presumably benefitted. The

record is underdeveloped on this point, indicating only

that WOW’s revenues on the Vangard deal averaged

$62,670 per month. Even if this number is accurate, it

does not likely reflect profits, which would be based on

a determination of revenues as well as costs. If the bankruptcy court pursues this remedy, unless the parties

stipulate to WOW’s profit from the Vangard deal, the

bankruptcy court must direct the parties to properly

develop these facts.

Alternatively, the “value of the benefit received

through the commission of the tort” (i.e., Chapes’s consulting services) could be measured by examining

what WOW was willing to exchange for those services

immediately prior to its tortious conduct. During negotiations in the summer of 2006, WOW offered Pro-Pac

free rent for two months per year for five years in exchange for Chapes’s services, but following Chapes’s

referral of the Vangard deal to WOW, the negotiations

between Pro-Pac and WOW ceased. As a result, WOW

obtained access to Chapes’s contacts without providing
No. 12-2976 15

Pro-Pac any payment, including the free rent. Pro-Pac

calculated the value of this free rent as $385,000. But this

value does not reflect a present-value calculation, which

would discount the rent amount over the five-year

time period. It is also debatable whether $385,000, the

value WOW placed on five years of Chapes’s services,

represents a fair approximation of the value of the

(much briefer) services wrongfully obtained. On the

other hand, we note that WOW initially offered Pro-Pac

significant rent concessions over a shorter period of

time for the privilege of speaking with Chapes, regardless

of whether Chapes’s contacts helped WOW to secure

any new business opportunities; this suggests a “floor”

on the value of the services wrongfully obtained. If the

bankruptcy court wishes to pursue this remedy, unless

the parties are able to stipulate to the value of services

that WOW received when the negotiations fell apart,

the bankruptcy court must require the parties to

properly develop these facts.

The bankruptcy court could also choose to award

compensatory damages that address the harm sustained

by Pro-Pac. This compensatory measure of liability and

restitution often overlap, such that “the benefit to the

one and the loss to the other are co-extensive.” Restatement (First) of Restitution § 1 cmt. d (1937); see also

Lawlis v. Thompson, 405 N.W.2d 317, 320 (Wis. 1987) (citing

§ 1). Under a compensatory damages theory, Pro-Pac

would be entitled to receive the benefit of the free rent

that it lost when WOW discontinued its negotiations

for Chapes’s services. As previously noted, the bankruptcy court estimated that these damages amount to
16 No. 12-2976

$385,000, but again, this does not reflect a present-value

calculation. Nor is it clear that this amount, which

reflects five years’ worth of losses, is an appropriate

measure of the harm caused by WOW’s single breach.

If the bankruptcy court wishes to pursue this remedy,

unless the parties stipulate to the value of the free rent

that Pro-Pac lost, the bankruptcy court must require

the parties to properly develop these facts.

Regardless of whether the bankruptcy court awards

damages premised on gain to WOW (i.e., restitutionary

damages) or loss to Pro-Pac (i.e., compensatory damages), punitive damages are also available, if otherwise

appropriate. Wisconsin law allows awards of punitive

damages when “compensatory damages” are imposed.

Groshek v. Trewin, 784 N.W.2d 163, 174-76 (Wis. 2010). The

Restatement (Second) of Torts defines “compensatory

damages” as “the damages awarded to a person as compensation, indemnity or restitution for harm sustained

by him,” Restatement (Second) of Torts § 903 (1979), and

Wisconsin has adopted this definition, Link, 2012 WL

130531, at *3 n.4. Pro-Pac’s reliance on any particular

theory of tort damages does not foreclose an award of

punitive damages to deter intentional wrongdoing,

if such damages are deemed appropriate.

We leave to the bankruptcy court whatever discretion

is necessary to formulate an appropriate remedy in ProPac’s favor based on WOW’s tort liability. If the district

court is not satisfied, of course, the district court can

withdraw the reference and resolve the issues itself. 28

U.S.C. § 157(d) (“The district court may withdraw, in
No. 12-2976 17

whole or in part, any case or proceeding referred under

this section, on its own motion or on timely motion of any

party, for cause shown.”); see also Home Ins. Co. of Ill. v.

Adco Oil Co., 154 F.3d 739, 741-42 (7th Cir. 1998).

III. Conclusion

The bankruptcy court erred in its determination

that WOW must pay $385,000 in damages to Pro-Pac

based on Pro-Pac’s unjust-enrichment theory. The case is

remanded to the district court and to the bankruptcy

court to reformulate the award of damages based on

WOW’s aiding and abetting of Chapes’s breach of

fiduciary duty. The judgment of the district court is

REVERSED and the cause REMANDED with instructions

to remand to the bankruptcy court for further proceedings consistent with this opinion. 

MANION, Circuit Judge, concurring in part, dissenting

in part. I concur with the court’s per curiam opinion

with the exception of the court’s final analysis

holding that punitive damages could be available even

when the court awards only restitution based on the

defendant’s gain (as opposed to the plaintiff’s loss). As
18 No. 12-2976

I see it, Wisconsin law does not permit punitive damages

unless there has been an award of compensatory damages. Groshek v. Trewin, 784 N.W.2d 163, 176 (Wis. 2010)

(“[W]here there is no award of compensatory damages,

punitive damages are not available.”); see also Tucker v.

Marcus, 418 N.W.2d 818, 823 (Wis. 1988) (holding that

“punitive damages are not available where there has

been no ‘award’ of actual damages” (emphasis added)).

Restitution based on the defendant’s gain is not a form

of compensatory damages under Wisconsin law. For

starters, restitution and compensatory damages are not

calculated in the same way; compensatory damages are

based on the harm suffered by the plaintiff, while restitution is based on the defendant’s gain. Because these

remedies are calculated differently and do not always

produce the same value of damages, restitution based

on the defendant’s gain is treated as an alternative

remedy to compensatory damages. See Restatement

(Second) of Torts § 903 cmt. b (1979) (cited in N. Air Servs.,

Inc. v. Link, No. 2008AP2897, 2012 WL 130531, at *3 n.4

(Wis. Ct. App. Jan. 18, 2012)). Furthermore, restitution is

an equitable remedy, and Wisconsin still retains a distinction between law and equity for damages purposes.

See Groshek, 784 N.W.2d at 175.

Therefore, restitution based on the benefit that WOW

received would not be a sufficient basis for punitive

damages. If the bankruptcy court wishes to award

punitive damages, it must first award compensatory

damages based on the harm Pro-Pac suffered. 

6-26-13