Title: Francis Groshek v. Michael G. Trewin
Citation: 2010 WI 51
Docket Number: 2008AP000787
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: June 24, 2010

2010 WI 51 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2008AP787 
COMPLETE TITLE: 
 
 
Francis Groshek and Karen Groshek, 
          Plaintiffs-Respondents-Petitioners, 
     v. 
Michael G. Trewin, 
          Defendant-Appellant-Cross Petitioner. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at: 317 Wis. 2d 730, 768 N.W.2d 62 
(Ct. App. 2009-Unpublished) 
 
 
OPINION FILED: 
June 24, 2010   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
February 9, 2010   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Portage   
 
JUDGE: 
Thomas T. Flugaur   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
CONCUR & DISSENT: 
ABRAHAMSON, C.J., concurs in part/dissents in 
part (opinion filed). 
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For 
the 
plaintiffs-respondents-petitioners 
there 
were 
briefs by Gary L. Dreier, Eric R. Johnson, and First Law Group 
S.C., Stevens Point, and oral argument by Gary L. Dreier. 
 
For the defendant-appellant-cross petitioner there were 
briefs by Mark J. Steichen and Boardman, Suhr, Curry & Field, 
LLP, Madison, and oral argument by Mark J. Steichen. 
 
 
 
 
2010 WI 51
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2008AP787  
(L.C. No. 
2006CV436) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Francis Groshek and Karen Groshek, 
 
 
Plaintiffs-Respondents-Petitioners,   
 
 
v. 
 
Michael G. Trewin,   
 
 
Defendant-Appellant-Cross Petitioner.  
FILED 
 
JUN 24, 2010 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
N. PATRICK CROOKS, J.   This is a review of an 
unpublished decision of the court of appeals1 concerning 
rescission of a real estate contract on the grounds that the 
circumstances 
surrounding 
the 
transaction——an 
attorney's 
purchase of land from clients whose bankruptcy petition he 
handled——constituted a breach of fiduciary duty. 
¶2 
The two questions presented by this case are whether 
the circuit court's findings of fact concerning the transaction, 
if not clearly erroneous, and its conclusions of law satisfy the 
                                                 
1 Groshek v. Trewin, No. 2008AP787, unpublished slip op. 
(Wis. Ct. App. Mar. 26, 2009). 
No. 
2008AP787   
 
2 
 
elements of a claim for breach of fiduciary duty, and whether 
the circuit court's award of punitive damages was proper. 
¶3 
We conclude that the findings of fact are supported by 
the evidence and that they satisfy the elements of a claim for 
breach of fiduciary duty, and we therefore affirm the court of 
appeals' decision that the attorney breached his fiduciary duty 
and that rescission is therefore warranted. 
¶4 
We also affirm the court of appeals' decision that 
punitive damages are not available in this case.  The court of 
appeals' rationale focused on the equitable nature of the case; 
however, our decision is based on the rule articulated in Tucker 
v. Marcus2 that where there is no award of compensatory damages, 
punitive damages are not available.  Because no compensatory 
damages were sought or awarded in this case, we do not reach the 
question of whether, in an action in which compensatory damages 
are awarded, recovery of punitive damages would be barred solely 
on the grounds that the action is equitable in nature. 
I. BACKGROUND 
¶5 
This action arises from the circumstances surrounding 
attorney Michael Trewin's November 2004 purchase of the Groshek 
family farm and saw mill.  Trewin was the Grosheks' attorney of 
record when they filed for Chapter 13 bankruptcy in March 2004. 
In July of that year, the Grosheks fell behind on payments due 
to the bank, their major creditor, under the bankruptcy plan.  
                                                 
2 Tucker v. Marcus, 142 Wis. 2d 425, 439, 418 N.W.2d 818 
(1988) (holding that "punitive damages are not available where 
there has been no 'award' of actual damages"). 
No. 
2008AP787   
 
3 
 
Also in July, this court entered an order suspending for five 
months Trewin's Wisconsin law license, effective August 31, 
2004.3  In August, Trewin reached an agreement with the Grosheks' 
bank, which ultimately failed.  Near the end of August, Trewin 
sent the Grosheks a written proposal that involved his buying 
their land and allowing them to lease it from him with an option 
to purchase.  On August 30, the Grosheks signed two documents 
drafted by Trewin——a waiver of conflict of interest4 and an 
                                                 
3 In re Disciplinary Proceedings Against Trewin, 2004 WI 
116, ¶¶ 47, 50, 275 Wis. 2d 116, 684 N.W.2d 121. 
4 The waiver read as follows: 
WRITTEN WAIVER OF CONFLICT OF INTEREST.  We, Francis 
and 
Karen 
Groshek, 
hereby 
acknowledge 
that 
we 
contacted Michael Trewin regarding purchasing our real 
estate to pay the claim of F&M Bank.  Prior to 
entering into this agreement, Atty. Trewin told us the 
terms of the agreement, that he would profit on this 
arrangement by hopefully paying F&M Bank less than the 
$239,585.00 that is there [sic] secured claim, and by 
renting the real estate to us for 5 years, or until we 
buy 
the 
property 
back; 
further, 
we 
shall 
be 
responsible for all legal fees required to contemplate 
(sic) the agreement, and any charges charged by 
Trewin's 
lender, 
but 
in 
no 
event 
shall 
those 
fees/charges 
exceed 
$1,500.00. 
 
These 
fees 
are 
separate from the legal fees owed for the Chapter 13 
bankruptcy.  We further agree that we have received a 
copy of the agreement, as Trewin provided me with a 
draft of the agreement, and advised us that we should 
review this with counsel of my [sic] choice.  We were 
also informed that by becoming a creditor of ours, 
Atty. Trewin may be put in a position where he might 
have to stop representing us if (1) we stop making 
payments on this lease, and he is forced to try to 
collect it, or (2) if his simply being a creditor 
raises a conflict of interest in any manner [sic] in 
which he is representing us. 
No. 
2008AP787   
 
4 
 
agreement to sell the property to him.5  There was testimony from 
the Grosheks at trial that Trewin rushed the signing of the 
                                                                                                                                                             
We hereby waive any conflict of interest voluntarily, 
and acknowledge that the terms of this transaction are 
fair and reasonable.  [Dated August 30, 2004.  Signed, 
Francis R. Groshek, Karen Groshek]. 
5 The agreement read as follows: 
Agreement. This agreement, made by and between Francis 
and 
Karen 
Groshek (Groshek), and Michael Trewin 
(Trewin), provides as follows: 
WHEREAS, Groshek is involved in a foreclosure action 
and bankruptcy wherein their real estate and equipment 
is being foreclosed by F&M Bank, and  
WHEREAS Trewin has proposed buying the land owned by 
Groshek, paying off the claim of F&M Bank, selling 
roughly 40 acres of said land to John Piesek, and 
leasing the remaining land and buildings back to 
Groshek; and 
WHEREAS Trewin has advised Groshek that should he 
purchase the land, that he will become a creditor of 
Groshek and that future representation in legal 
matters may or may not constitute a conflict of 
interest which would cause him to not be able to 
represent them, and 
WHEREAS Groshek has had the opportunity to review this 
agreement prior to the execution of this agreement, 
and has been advised to review the agreement with 
another attorney of their choosing, which they have 
done, 
NOW 
THEREFORE, 
in 
consideration 
of 
the 
mutual 
covenants contained herein, the parties agree as 
follows: 
1. Trewin shall purchase the real estate from Groshek 
on which F&M Bank holds a mortgage, in return for a 
full release of any claim against Groshek, and shall 
lease said property back to Groshek according to the 
terms of the attached lease, after selling roughly 40 
acres of land to John Piesek and his brother. 
No. 
2008AP787   
 
5 
 
documents; they testified that their understanding was that it 
was necessary to sign the paperwork prior to Trewin's license 
suspension.   
¶6 
The conveyance of the property to Trewin occurred in 
November; he paid $94,5006 for the home and 34 acres.  After 
that, the Grosheks continued to live on the property and to pay 
rent to Trewin under a lease agreement, but they eventually 
stopped making rent payments, which resulted in Trewin's 
canceling of the lease.   
¶7 
The Grosheks subsequently sued Trewin for breach of 
fiduciary duty and sought rescission of the conveyance.  The 
complaint was amended prior to trial to add a claim for punitive 
damages.  Trewin counterclaimed for eviction and for the money 
he was owed for rent and moved for summary judgment on the 
Grosheks' claim. 
¶8 
The Portage County Circuit Court, the Honorable Thomas 
T. Flugaur presiding, denied Trewin's motion for summary 
judgment.  After a three-day trial to the court, the circuit 
court determined that Trewin had breached his fiduciary duty to 
the Grosheks; it then granted rescission of the conveyance of 
                                                                                                                                                             
2. This is the entire agreement between the parties, 
and Groshek has agreed to review this proposal with an 
independent attorney of their choosing, and freely and 
voluntarily enter into this agreement after meeting 
with said attorney.  [Dated August 30, 2004.  Signed, 
Francis R. Groshek, Karen Groshek, Michael G. Trewin] 
6 A separate conveyance of 40 acres was made to the 
Grosheks' neighbors at around that time; the details concerning 
that conveyance are not relevant to the issues presented here. 
No. 
2008AP787   
 
6 
 
the property upon payment of $96,872.7  The circuit court 
dismissed Trewin's counterclaim.  The circuit court based its 
conclusion on the following findings of fact: 
The idea for the whole transaction was Trewin's, not 
the Grosheks'. 
The Grosheks did not want to sell their property, but 
Trewin portrayed the sale to them as the only option 
they had. 
The Grosheks did not understand the transaction and 
did not understand Trewin would have the ability to 
sell their property "out from underneath them." 
Trewin told the Grosheks the deal had to be done right 
away, and both of the Grosheks felt it was a rush deal 
because he was losing his license on August 31. 
Although the signed August 30 agreement stated that 
the Grosheks "ha[ve] had the opportunity to review 
this 
agreement 
prior 
to 
the 
execution 
of 
this 
agreement, and ha[ve] been advised to review the 
agreement with another attorney of their choosing, 
which they have done," the Grosheks had not done this 
when they signed it because Trewin had not given them 
a reasonable opportunity to do so.  
Trewin did not make full disclosure in that there was 
no purchase price specified, the profit he was going 
to make was not disclosed, and the buy-back process 
was not specified. 
Trewin knew of the Grosheks' financial situation 
because he represented them in the bankruptcy, he knew 
it would be difficult for them to make the rental 
payments under the lease, and he expected that he 
would benefit from their default under the lease——if 
they defaulted in the first year, the lease would be 
terminated, as would the option to buy their property 
back. 
                                                 
7 This amount was the total that Trewin testified he had 
paid the bank for the property, including interest and fees for 
late payments.   
No. 
2008AP787   
 
7 
 
Trewin's letter to his own bank on August 24, 2004, 
seeking a loan to buy the property—in which he 
described his plans to subdivide twenty-four acres and 
sell the lots for a total of between $175,000 and 
$200,000—showed . . . his "predatory" intent toward 
the property. 
 . . . [T]he terms of the transaction were unfair 
because the property was valued at $180,000 and Trewin 
purchased it for $94,500; even if the Grosheks had 
been able to buy it back at $127,500, the terms were 
still not fair to them. 
Groshek v. Trewin, No. 2008AP787, unpublished slip op., ¶¶19-20, 
(Wis. Ct. App. Mar. 26, 2009).  The circuit court went on to 
determine that punitive damages were appropriate, citing the 
vulnerability of the Grosheks, the access the defendant had 
gained as counsel for the Grosheks, and the defendant's repeated 
discipline for improperly making similar transactions with other 
clients. 
¶9 
Trewin appealed.  The court of appeals affirmed the 
denial of summary judgment, the dismissal of the counterclaim, 
and the determination that Trewin had breached his fiduciary 
duty to the Grosheks.  It acknowledged the arguments of the 
parties about whether punitive damages could be awarded in the 
absence of compensatory damages; however, it held that the case 
was governed by Karns v. Allen,8 which holds that punitive 
damages are not available in an action that seeks equitable 
relief. 
¶10 Trewin petitioned for review of the court of appeals' 
affirmance on the issue of breach of fiduciary duty; the 
                                                 
8 Karns v. Allen, 135 Wis. 48, 115 N.W. 357 (1908). 
No. 
2008AP787   
 
8 
 
Grosheks cross-petitioned the denial of punitive damages.  This 
court granted the petition and cross-petition.   
¶11 In reviewing the circuit court's findings of fact, we 
will not disturb them unless they are clearly erroneous.  Wis. 
Stat. § 805.17(2).9  "The trial court is the ultimate arbiter of 
the credibility of witnesses and a reviewing court will accept 
the inference drawn by the trier of fact."  Rivera v. Eisenberg, 
95 Wis. 2d 384, 388, 290 N.W.2d 539 (Ct. App. 1980).  Whether 
the facts as found satisfy the elements of a claim for a breach 
of fiduciary duty is a question of law reviewed de novo.  
Jorgensen v. Water Works, Inc., 2001 WI App 135, ¶8, 246 
Wis. 2d 614, 630 N.W.2d 230.  See also Beloit Liquidating Trust 
v. Grade, 2004 WI 39, ¶¶40-42, 270 Wis. 2d 356, 677 N.W.2d 298 
(treating the question of whether a fiduciary duty existed as a 
question of law).  Whether punitive damages are available is a 
question of law and is thus reviewed de novo.  Tucker, 142 
Wis. 2d at 432. 
II. WHETHER TREWIN BREACHED HIS FIDUCIARY DUTY TO THE GROSHEKS 
¶12 To support their claim for breach of fiduciary duty, 
the Grosheks must satisfy three elements:  (1) that Trewin owed 
the plaintiffs a fiduciary duty, (2) that Trewin breached that 
duty, and (3) that that breach caused the Grosheks damage.  See 
Berner Cheese Corp. v. Krug, 2008 WI 95, ¶ 40, 312 Wis. 2d 251, 
752 N.W.2d 800.  The circuit court held that the Grosheks had 
                                                 
9 All references to the Wisconsin Statutes are to the 2007-
08 version unless otherwise noted. 
No. 
2008AP787   
 
9 
 
proved that Trewin breached his fiduciary duty, and the court of 
appeals determined that the circuit court's findings in support 
of that determination were not clearly erroneous, and were 
sufficient to establish that breach.   
¶13 Trewin maintains that the elements are not met because 
nothing he did while he had an attorney-client relationship with 
the Grosheks constituted a breach of fiduciary duty, and because 
such a duty no longer existed at the time he purchased the 
Grosheks' land because the attorney-client relationship ceased 
when his law license was suspended on August 31, 2004.  
Specifically, he argues that an attorney has no fiduciary duty 
to former clients, and at the time of the property sale, the 
Grosheks were former clients.  Because the bankruptcy filing 
made the Grosheks' financial distress a matter of public 
knowledge, Trewin argues that there is no basis for concluding 
that he used confidential information gained as the Grosheks' 
counsel in negotiating the purchase.  He further argues that 
there was no injury to the Grosheks because the underlying cause 
of the sale of their land——their financial difficulties——did not 
result from his actions; in other words, they would have lost 
the farm whether he bought it or not.  As for the documents 
signed by the Grosheks on August 30, 2004, Trewin argues that 
they imposed no legal obligation on the Grosheks and that he 
never sought to enforce them; therefore, they cannot serve as 
the basis for a finding of breach of fiduciary duty. 
¶14 The Grosheks argue that Trewin remained their attorney 
and thus retained a fiduciary duty to them well beyond August 
No. 
2008AP787   
 
10 
 
31, 2004, the date upon which his law license was suspended.  
They point to subsequent bills for legal services and the 
language of the waiver of conflict of interest, which they 
construe as implying that the attorney-client relationship would 
be ongoing and would be affected in the future only if they 
failed to make lease payments.  They alternatively argue that 
agency 
law 
and 
rules 
of 
professional 
conduct 
impose 
an 
obligation on Trewin not to use information against a former 
client, and that those principles support a finding that Trewin 
had a continuing fiduciary duty to the Grosheks even if the 
attorney-client relationship had ended.  Additionally, they 
argue that the information Trewin used did indeed include 
confidential information about the Grosheks far beyond what 
would have been publicly disclosed in bankruptcy filings, such 
as their neighbors' interest in purchasing part of the property, 
their own understanding of related tax liabilities, and other 
factors that ultimately played a role in the sale of the land. 
¶15 As the court of appeals did, we focus on the findings 
of fact the circuit court made, and like the court of appeals, 
we conclude that they are supported by the evidence and 
reasonable inferences, and are not clearly erroneous.  For 
purposes of determining whether Trewin breached his fiduciary 
duty to the Grosheks, we need not determine precisely when the 
attorney-client relationship ceased to exist because Trewin 
acknowledges that an attorney has a fiduciary duty to an 
existing client, and until at least August 31, 2004, the 
Grosheks were undisputedly Trewin's clients.  The circuit court 
No. 
2008AP787   
 
11 
 
held that there was a fiduciary duty at that time.  The second 
element for liability is whether the duty was breached.  In 
Zastrow v. Journal Communications, Inc., 2006 WI 72, ¶30, 291 
Wis. 2d 426, 718 N.W.2d 51, this court said,  
A breach of the duty of loyalty imports something 
different 
from 
mere 
incompetence; 
it 
"connotes 
disloyalty or infidelity."  The Fiduciary Duty of 
Care, supra, at 183 (citation omitted).  At its core, 
a fiduciary's duty of loyalty involves a state of 
mind, so that a claimed breach of that duty goes 
beyond simple negligence.  For example, a lawyer can 
breach his fiduciary duty of loyalty to a client by 
entering into a contract with a client without full 
disclosure that the contract will benefit the lawyer 
and potentially disadvantage the client.  
¶16 The circuit court invoked the above language from 
Zastrow before concluding that based on the evidence presented, 
there was not full disclosure by Trewin to the Grosheks with 
regard to the agreements they signed on August 30, 2004.  The 
circuit court observed that the agreements lacked such details 
as the purchase price, expected profit, and what the buy-back 
option entailed.  The circuit court also focused on the 
information Trewin gained by virtue of his trusted position as 
the Grosheks' lawyer.  The circuit court also cited a letter 
from Trewin dated August 24, 2004, to his lender; the letter 
shows that Trewin, days before signing an agreement with the 
Grosheks, made representations that were not disclosed to the 
Grosheks on August 30, 2004, and, to say the least, are not 
No. 
2008AP787   
 
12 
 
consistent with the August 30 agreement.10  The circuit court 
also noted that at the time of the August 30 agreement, the 
Grosheks were "unaware that they could buy back their property 
at a foreclosure sale . . . [and] unaware of the concept of an 
assignment of a judgment."  As the circuit court concluded, the 
information they needed, in short, was information for which 
they would depend on an attorney.  Although a second attorney 
represented the Grosheks in the real estate transaction in 
November,11 the circuit court found that he "acted primarily as a 
scrivener in this whole thing," and  
[he] did not appear to be an actively engaged 
attorney, 
actively 
involved 
in 
the 
detailed 
representation 
that 
this 
type 
of 
a 
financial 
transaction would encounter. In fact, ultimately, his 
fees were paid through the closing transaction by Mr. 
Trewin paying $2,500 more for the property, all of 
which left the Court scratching its head on that 
testimony and that arrangement. 
                                                 
10 For example, the letter states, "I am looking to buy the 
real estate owned by the Grosheks, which I have negotiated a 
price of $195,000 for, resolving a foreclosure on the property.  
The land was appraised on January 6, 2004, for $208,000, which I 
feel is very conservative, based upon the fact that one of the 
neighbors is willing to buy 40 acres of the farmland for 
$2,700/acre——nearly twice as much as the land is appraised for 
($1,500).  Further, the farmland which is currently zoned A-1, 
is in the process of being re-classified as part of the smart 
growth plan for that area as A-2, or 5 acre lots.  My plans for 
this land are to sell off 6-7 parcels, the majority of which 
will be done within the next 24 months."  The letter goes on to 
detail how the lots were to be divided and sold. 
11 That attorney testified in the trial to the circuit 
court. 
No. 
2008AP787   
 
13 
 
¶17 The circuit court also concluded that the Grosheks did 
not clearly understand the transaction based on the following 
evidence:  one witness testified to Mrs. Groshek's shock when a 
"For Sale" sign went up on the property; and there was testimony 
that the Grosheks seemed to have understood the transaction to 
function as a lien on the property and to have a guaranteed buy-
back option.  As the court of appeals stated,12 
Trewin used his position of influence and the trust 
the Grosheks had in him to obtain a waiver of a 
conflict of interest and their signatures on an 
agreement to sell, which stated they had consulted an 
attorney. 
 
He 
did 
this 
without 
disclosing 
the 
potential benefits to him of the sale and the 
potential risks to them, and knowing they had not 
consulted another attorney. . . . If the Grosheks' 
signing of those documents on August 30 was not 
significant, why did Trewin have them do so?  Why did 
he tell them, as they testified and the [circuit] 
court found, that they had to do so on that date?  The 
reason, the court found and the evidence supports, is 
that he was taking advantage of their trust in him as 
their attorney to get as much of the transaction as 
possible 
accomplished 
before 
his 
license 
was 
suspended. 
¶18 Such conduct, while Trewin was acting as the Grosheks' 
counsel, is hard to reconcile with the fiduciary duty of loyalty 
defined by this court in Zastrow:13 
                                                 
12 Groshek v. Trewin, No. 2008AP787, unpublished slip op., 
¶28 (Wis. Ct. App. Mar. 26, 2009). 
 
13 Zastrow discussed the fiduciary duties of trustees in the 
context of a dispute as to the nature of the tort involved and 
"whether the breach of fiduciary duty claims the circuit court 
found the plaintiffs proved were properly dismissed because the 
two-year statute of limitations applie[d] to them."  Zastrow, 
291 Wis. 2d 426, ¶23. 
No. 
2008AP787   
 
14 
 
This constraint on acting in one's own self-interest 
has been described as a fiduciary's duty of loyalty. 
However, the duty of loyalty is broader than simply 
requiring the fiduciary to refrain from acting in his 
own self-interest.  For example, it also may require 
keeping a beneficiary's information confidential, and 
fully disclosing to the beneficiary all information 
relevant 
to 
the 
beneficiary's 
interest. 
Webster 
defines loyalty as "tenacious adherence" to principle 
and an obligation "based on individual choice."  
Zastrow, 291 Wis. 2d 426, ¶29 (citations omitted).  We agree 
that Trewin's conduct here fits the example given in Zastrow——
entering into a contract with a client "without full disclosure 
that the contract will benefit the lawyer and potentially 
disadvantage the client"——and therefore constitutes a breach of 
fiduciary duty, including specifically the fiduciary duty of 
loyalty. 
¶19 The final matter to address in regard to fiduciary 
duty is the question of whether the Grosheks proved that the 
breach caused damage. As noted above, Trewin argues that there 
was no damage here because it was clear that the Grosheks would 
not have been able to keep their property whether he was the 
buyer or someone else was.  The Grosheks argue that Trewin's 
actions resulted in their receiving less for the property than 
they might have in a foreclosure auction or from another buyer.   
¶20 We agree with the circuit court and the court of 
appeals that the Grosheks satisfied the damage element.  The 
circuit court made repeated references to the advantage Trewin 
had, as a result of knowing the particulars of the Grosheks' 
financial situation, in setting the purchase price.  The 
inference drawn by the circuit court, based on evidence of the 
No. 
2008AP787   
 
15 
 
value of the land and the purchase price, was that Trewin paid 
less for the land than another buyer would have paid.  Trewin's 
attempts to focus attention further down the timeline cannot 
avail given the effort he made to obtain the Grosheks' 
signatures on August 30.  As the court of appeals noted, Trewin 
had incentives for getting the signatures on those documents 
before his license was suspended:  it is reasonable to infer 
that the agreement to sell was understood by at least the 
Grosheks to be binding; there is neither testimony nor documents 
providing evidence to the contrary.  To infer otherwise would 
allow Trewin to benefit both from his acquiescence in the 
Grosheks' belief that the agreement was legally enforceable, and 
later, when the propriety of the transaction is questioned, from 
his claim that the agreement would never have been enforced.  
Therefore, given that Trewin took advantage of the trust and 
information he gained as the Grosheks' counsel in order to gain 
their signatures on the agreement to sell, the agreement itself 
gave rise to an injury, and the fact that its full force was 
felt only later is no reason to minimize its effect.   
¶21 Accordingly, the circuit court did not err when it 
determined that the Grosheks had proved the existence of a duty, 
because Trewin was, at least through August 30, 2004, acting as 
their attorney.  Nor did it err when it determined that the 
Grosheks proved a breach of that duty because Trewin failed to 
disclose fully what he was required to disclose to the Grosheks 
as his clients.  Finally, the circuit court did not err when it 
determined 
that 
the 
Grosheks 
proved 
damage 
because 
that 
No. 
2008AP787   
 
16 
 
conclusion is supported by evidence of the value of the property 
and the fact that the amount paid was far less than its value.  
Rescission is an appropriate remedy when property is acquired in 
connection with a breach of fiduciary duty.  Glojek v. Glojek, 
254 Wis. 109, 116, 35 N.W.2d 203 (1948) ("There can be no proper 
distinction between cases involving undue influence and breach 
of fiduciary relationship, on the one hand, and ordinary fraud 
in the inducement on the other, in so far as . . . the right to 
rescind or otherwise to get specific relief is concerned.").14  
We therefore affirm the court of appeals as to the determination 
of breach of fiduciary duty and the appropriateness of granting 
rescission of the conveyance.  
III. WHETHER THE GROSHEKS MAY RECOVER PUNITIVE DAMAGES 
¶22 The Grosheks argue that punitive damages are necessary 
in this case because the remedy of rescission is insufficient to 
deter Trewin or others like him from "predatory conduct with 
respect to vulnerable clients."  Trewin counters that punitive 
damages are by law unavailable in actions in equity; he argues 
besides that the record does not contain evidence of the kind of 
conduct for which punitive damages would be appropriate. 
¶23 We first review the kinds of cases in which courts 
have found punitive damage awards appropriate, then examine 
statutory and common law governing such awards, and then turn to 
                                                 
14 See also Whipp v. Iverson, 43 Wis. 2d 166, 168, 168 
N.W.2d 201 (1969) ("Rescission of a contract in equity may be 
grounded on misrepresentations not intentionally made for the 
purpose of defrauding or inducing a person to act to his 
detriment for the speaker's economic benefit.") 
No. 
2008AP787   
 
17 
 
the application of the law to this case.  In a case last term 
that affirmed the availability of punitive damages in an injured 
seaman's claim against his employer for willful failure to pay 
for his food, lodging and medical care as required under 
maritime law, the United States Supreme Court observed that 
"[p]unitive damages have long been an available remedy at common 
law for wanton, willful, or outrageous conduct."  Atlantic 
Sounding Co., Inc. v. Townsend, 129 S. Ct. 2561, 2566 (2009).  
Writing for the Court, Justice Thomas briefly outlined the 
common law roots and noted American courts' approval of punitive 
damages "in appropriate cases since at least 1784"15: 
This Court has also found the award of punitive 
damages to be authorized as a matter of common-law 
doctrine.  In Day v. Woodworth, 13 How. 363, 14 L.Ed. 
                                                 
15 The United States Supreme Court listed the following 
examples of early cases that were deemed to warrant "damages for 
example's sake": 
American 
courts 
have 
likewise 
permitted 
punitive 
damages awards in appropriate cases since at least 
1784. See, e.g., Genay v. Norris, 1 S.C.L. 6, 7, 1784 
WL 26 (C.P. and Gen. Sess. 1784) (approving award of 
"very 
exemplary 
damages" 
because 
spiking 
wine 
represented a "very wanton outrage"); Coryell v. 
Colbaugh, 1 N.J.L. 77, 1791 WL 380 (1791) (concluding 
that a breach of promise of marriage was "of the most 
atrocious and dishonourable nature" and supported 
"damages for example's sake, to prevent such offences 
in 
future" 
(emphasis 
in 
original)). . . . By 
the 
middle of the 19th century, "punitive damages were 
undoubtedly an established part of the American common 
law of torts [and] no particular procedures were 
deemed necessary to circumscribe a jury's discretion 
regarding the award of such damages, or their amount. 
Id. at 2566-67. 
No. 
2008AP787   
 
18 
 
181 (1852), for example, the Court recognized the 
"well-established principle of the common law, that in 
actions of trespass and all actions on the case for 
torts, a jury may inflict what are called exemplary, 
punitive, 
or 
vindictive 
damages 
upon 
a 
defendant . . . ."  Id. at 371; see also Philadelphia, 
W., & B.R. Co. v. Quigley, 21 How. 202, 214, 16 L.Ed. 
73 (1859) ("Whenever the injury complained of has been 
inflicted 
maliciously 
or 
wantonly, 
and 
with 
circumstances of contumely or indignity, the jury are 
not 
limited 
to 
the 
ascertainment 
of 
a 
simple 
compensation for the wrong committed against the 
aggrieved person"); Barry v. Edmunds, 116 U.S. 550, 
562, 6 S.Ct. 501, 29 L.Ed. 729 (1886) ("[A]ccording to 
the settled law of this court, [a plaintiff] might 
show himself, by proof of the circumstances, to be 
entitled to exemplary damages calculated to vindicate 
his right and protect it against future similar 
invasions"). 
Id. at 2566-67. 
¶24 It may be true that it is "often recite[d] that 
punitive damages are not favored by the law"16; nevertheless, 
where cases involve conduct with a high "degree of grievousness 
                                                 
16 David G. Owen, A Punitive Damages Overview: Functions, 
Problems and Reform, 39 Vill. L. Rev. 363, 371 (1994) (citing 
Lyons v. Jordan, 524 A.2d 1199, 1204 (D.C. 1987), which so 
states but permits punitive damages on facts of that case).  
See, e.g., Jones v. Fisher, 42 Wis. 2d 209, 226-27, 166 
N.W.2d 175 (1969) (Hansen, J., dissenting) ("The concept of 
punitive damages, it has been said, is 'not a favorite of the 
law,' should be 'exercised with great caution,' and [should] 
properly be 'confined within the narrowest limits.'") (citation 
omitted). 
No. 
2008AP787   
 
19 
 
or reprehensibility"17 punitive damage awards are routinely held 
to be appropriate.  Invoking a case by the United States Supreme 
Court, this court noted in Trinity Evangelical Lutheran Church 
v. Tower Insurance Co.,18 "Punitive damages may properly be 
imposed to further a state's legitimate interests in punishing 
unlawful conduct and deterring its repetition."  As early as 
1914, this court made clear that it was not inclined to second-
guess a circuit court's $1,500 "punitory damages" award to "the 
father of Elsie Luther, . . . [who sought] such damages as are 
at common law recoverable in an action nominally for loss of 
                                                 
17 Trinity Evangelical Lutheran Church v. Tower Ins. Co., 
2003 WI 46, ¶57, 261 Wis. 2d 333, 661 N.W.2d 789 (affirming a 
grant of summary judgment in a bad faith insurance claim and 
allowing to stand a $3.5 million punitive damage award where 
insurer had refused coverage and refused to follow controlling 
case law, involving similar actions by the same insurer in an 
earlier case, where it also refused to reform a contract after 
the discovery of a mutual mistake). 
18 Id., ¶46 (citing BMW of North America v. Gore, 517 U.S. 
559, 568 (1996) (Gore)).  
No. 
2008AP787   
 
20 
 
services of a daughter caused by her seduction and consequent 
sickness, etc."19   
¶25 The availability of punitive damages is governed in 
Wisconsin, 
as 
in 
many 
states, 
in 
various 
respects 
by 
constitutional, statutory, and common law.  The statute on 
punitive damages defines the evidence required to support an 
award of punitive damages, setting a high standard:  "Standard 
of conduct. The plaintiff may receive punitive damages if 
evidence 
is 
submitted 
showing 
that 
the 
defendant 
acted 
maliciously toward the plaintiff or in an intentional disregard 
of the rights of the plaintiff."  Wis. Stat. § 895.043(3).  In 
Berner Cheese Corp. v. Krug,20 this court discussed the statute's 
revision by the legislature: 
                                                 
19 Luther v. Shaw, 157 Wis. 234, 235, 147 N.W. 18 (1914).  
The court also upheld an award of exemplary damages in Elsie 
Shaw's separate case for breach of promise to marry, one of the 
types of cases that was deemed in Wisconsin and elsewhere to 
warrant the availability of punitive damages.  Luther v. Shaw, 
157 Wis. 231, 234, 147 N.W. 17 (1914) ("The damages[] . . . do 
not seem too large, nor are we convinced that an award of $3,000 
damages in a breach of promise case aggravated by seduction of 
plaintiff indicates perversity, passion, or prejudice on the 
part of the jury.  True it is that the defendant is an artisan 
without property, and that it required no long siege or 
consummate strategy to induce the plaintiff to surrender the 
citadel of virtue.  But we must consider that he was an iron 
molder and she a factory girl, hence each probably more 
practical than refined or sentimental, and that she had his 
promise of marriage, and for this reason yielded, and that he 
was guilty of the perfidy of breaking such a promise, leaving 
her to bear the loss, suffering and shame alone, and that he 
attempted in the defense of this case in bad faith, as found by 
the jury, to further blacken her reputation.") 
20 Berner Cheese Corp., 312 Wis. 2d 251, ¶¶63-64. 
No. 
2008AP787   
 
21 
 
The legislature enacted Wis. Stat. § 895.043(3) in 
1995, thereby altering Wisconsin's common law standard 
for punitive damages. Strenke, 279 Wis. 2d 52, ¶19, 
694 N.W.2d 296. In doing so, it heightened the state 
of mind required of a defendant from a "wanton, 
willful and reckless" disregard for rights of another 
to an "intentional disregard" for rights of another. 
Id. 
A defendant acts with intentional disregard if he or 
she: (1) "acts with a purpose to cause the result or 
consequence," or (2) "is aware that the result or 
consequence is substantially certain to occur from the 
person's conduct."  Accordingly, in order to fall 
within Wis. Stat. § 895.043(3), a defendant's conduct 
must be (1) deliberate, (2) in actual disregard of the 
rights of another, and (3) "sufficiently aggravated to 
warrant punishment by punitive damages."  We explained 
in Strenke that under this heightened threshold for 
punitive damages, we "expect circuit courts to serve 
as gatekeepers before sending a question on punitive 
damages to the jury."   
Id. (citations omitted). 
¶26 There 
are 
other 
principles 
that 
govern 
the 
availability of punitive damages and are potentially relevant to 
this case.  For example, we have held that "where there exists a 
'cause of action,' but the action is not one for which the 
recovery of compensatory damages is justified, punitive damages 
cannot be awarded."  Tucker, 142 Wis. 2d at 440-41.  And in 
Karns,21 a case more than a hundred years old, this court held 
that "[t]he damages which may be recovered in an equitable 
action under our decisions are compensatory, and not exemplary, 
damages."22   
                                                 
21 Karns, 135 Wis.at 58. 
22 Karns, 135 Wis. at 58. 
No. 
2008AP787   
 
22 
 
¶27 Additionally, the United States Supreme Court has 
stated that there are constitutional limits to consider in some 
punitive damage awards:  "when a[] [punitive damage] award can 
fairly be categorized as 'grossly excessive' . . . it enter[s] 
the zone of arbitrariness that violates the Due Process Clause 
of the Fourteenth Amendment."  BMW of North America, Inc. v. 
Gore, 517 U.S. 559, 569 (1996).  In that instance, the Court 
based its analysis on the ratio between the compensatory damage 
and punitive damage awards, and concluded that the constitution 
did not permit a "ratio of a breathtaking 500 to 1" (where 
compensatory damages were $4,000 and punitive damages were $2 
million).  Id. at 583.  In another case reviewing a punitive 
damage award in the context of maritime law, the court summed up 
its recent decisions on constitutional requirements of punitive 
damages: 
The Court's response to outlier punitive damages 
awards has thus far been confined by claims at the 
constitutional level, and our cases have announced due 
process 
standards 
that 
every 
award 
must 
pass.  
Although "we have consistently rejected the notion 
that the constitutional line is marked by a simple 
mathematical formula," we have determined that "few 
awards exceeding a single-digit ratio between punitive 
and compensatory damages, to a significant degree, 
will satisfy due process[]"; "[w]hen compensatory 
damages are substantial, then a lesser ratio, perhaps 
only equal to compensatory damages, can reach the 
outermost limit of the due process guarantee[.]" 
No. 
2008AP787   
 
23 
 
Exxon Shipping Co. v. Baker, 128 S. Ct. 2605, 2626 (2008) 
(citations omitted).23 
¶28 Of 
the 
constitutional, 
statutory, 
and 
common-law 
boundaries related to punitive damages, it was the common-law 
rule prohibiting punitive damages in equitable actions, from 
Karns, that the court of appeals considered to be dispositive of 
this case.  However, it is the rule from Tucker, concerning the 
requirement of compensatory damages, that we consider to be the 
threshold question.  Tucker is of fairly recent vintage, and 
even though its focus is on a somewhat ancillary question,24 it 
recognized the "general and perhaps almost universally accepted 
rule . . . that punitive damages cannot be awarded in the 
absence of actual damage" and further notes that "[t]his holding 
is firmly rooted in long-standing principles of Wisconsin law."25  
The court went on to say 
                                                 
23 In its line of cases that address due process limits to 
punitive damage awards, including Gore and Exxon Shipping Co., 
the United States Supreme Court has not addressed the corollary 
question, namely, whether or how the single-digit ratio between 
punitive damages and compensatory damages is to be applied in a 
case with an award of nominal damages.  The present case does 
not give us occasion to address that question.  Rather, we 
invoke Gore and Exxon Shipping Co. for the limited purpose of 
noting that the United States Constitution is one of several 
sources of law that impose limits on the availability of 
punitive damage awards. 
24 The specific question before the court in Tucker was 
whether the plaintiff was entitled to "punitive damages for the 
survival action where compensatory damages are not available 
under section 895.045 due to the apportionment of negligence." 
Tucker, 142 Wis. 2d at 431.   
25 Id. at 438-39. 
No. 
2008AP787   
 
24 
 
[W]hile not exact, the relationship between punitive 
and exemplary damages has been previously recognized 
as sufficiently similar to justify consistency in 
decisions 
regarding 
both 
types 
of 
damages.  
Consequently, to the extent that both treble damages 
and punitive damages operate as an enhancement of 
compensatory damages, recovery of compensatory damages 
should 
be 
similarly 
required 
for 
punitive 
damages. . . . Similar results have been reached in 
other jurisdictions.  It is widely recognized that 
despite the unambiguous presence of actual harm, 
punitive damages are not available absent an award of 
compensatory damages.26 
¶29 In this case, no compensatory damages were sought or 
awarded.  The Grosheks argue that Tucker and Karns should not 
bar recovery of punitive damages because in an equitable action 
a court can use its equitable powers to fashion an appropriate 
remedy 
and 
because 
Trewin 
"acted 
maliciously 
toward 
the 
plaintiff or in an intentional disregard of the rights of the 
plaintiff," and thus falls within the ambit of Wis. Stat. 
§ 895.043(3) for purposes of a punitive damage award.  However, 
as noted above, the court has construed Wis. Stat. § 895.043(3) 
as setting the bar higher for the kind of evidence required to 
support a punitive damage award, rather than as expanding the 
category of cases where punitive damages may be awarded.  In 
other words, within the category of cases where punitive damages 
may be appropriately awarded——those where compensatory damage 
awards have been made, for example——the legislature created a 
heightened standard as to the defendant's state of mind, 
requiring 
a 
showing 
of 
"intentional 
disregard" 
of 
the 
                                                 
26 Id. at 443. 
No. 
2008AP787   
 
25 
 
plaintiff's rights or a showing that "the defendant acted 
maliciously toward the plaintiff."  In cases where punitive 
damages are barred in the first instance, the standard for 
conduct simply does not come into play.  Therefore, our holding 
in Tucker forecloses recovery of punitive damages in a case 
where there is no award of compensatory damages.   
¶30 Because there was no compensatory damage award here, 
we do not reach the question raised concerning the principle 
articulated in Karns, above:  whether, in an equitable action 
where a court awards compensatory damages,27 the fact that the 
action is an equitable action would then bar recovery of 
punitive damages.  It is true, as the Grosheks point out, that 
the historical distinction between courts of law and courts of 
equity, and the differing treatment of equitable and legal 
actions have faded over time.28  The Grosheks rightly note that 
                                                 
27 See Karns, 135 Wis. at 58 (discussing the "general 
doctrines" of equitable actions, including equitable actions 
that involve the awarding of compensatory damages).  
28 T. Leigh Anenson, Treating Equity Like Law: A Post-Merger 
Justification of Unclean Hands, 45 Am. Bus. L.J. 455, 456-58 
(2008)(discussing the Federal Rules of Civil Procedure as having 
"reunited law and equity after five centuries of separation" and 
observing that the "historic boundary between law and equity was 
accidental and not functional").  
No. 
2008AP787   
 
26 
 
many jurisdictions29 have rejected the rule that was generally 
accepted at the time of Karns, and have declined to bar punitive 
damages in an action merely on the grounds that it seeks 
equitable relief.  Whether Wisconsin should likewise abandon 
that principle and overrule Karns, however, is a question for 
another day.  The case before us is one in which no punitive 
damages can be awarded because there are no compensatory 
damages, and we decline to reach out to resolve the question 
presented by Karns. 
IV. CONCLUSION 
¶31 The two questions presented by this case are whether 
the circuit court's findings of fact concerning the transaction, 
if not clearly erroneous, and its conclusions of law satisfy the 
elements of a claim for breach of fiduciary duty, and whether 
the circuit court's award of punitive damages was proper. 
¶32 We conclude that the findings of fact are supported by 
the evidence, and that they satisfy the elements of a claim for 
breach of fiduciary duty, and we therefore affirm the court of 
appeals' decision that the attorney breached his fiduciary duty 
and that rescission is therefore warranted. 
                                                 
29 E.g., Charles v. Epperson & Co., 137 N.W.2d 605, 618 
(Iowa 1965) (holding that an equity court may in its discretion 
award exemplary damages for an intentional act of fraud); 
Tideway Oil Programs, Inc. v. Serio, 431 So. 2d 454, 460 (Miss. 
1983) (allowing punitive damages in chancery courts); I.H.P. 
Corp. v. 210 Central Park South Corp., 228 N.Y.S.2d 883 (N.Y. 
App. Div., 1962); Z.D. Howard Co. v. Cartwright, 537 P.2d 345 
(Okla. 
1975) 
(permitting 
punitive 
damages 
in 
action 
for 
rescission where fraud is present). 
No. 
2008AP787   
 
27 
 
¶33 We also affirm the court of appeals' decision that 
punitive damages are not available in this case.  The court of 
appeals' rationale focused on the equitable nature of the case; 
however, our decision is based on the rule articulated in Tucker 
v. Marcus that where there is no award of compensatory damages, 
punitive damages are not available.  Because no compensatory 
damages were sought or awarded in this case, we do not reach the 
question of whether, in an action in which compensatory damages 
are awarded, recovery of punitive damages would be barred solely 
on the grounds that the action is equitable in nature. 
By the Court.—Affirmed. 
 
No.  2008AP787.ssa 
 
1 
 
 
¶34 SHIRLEY S. ABRAHAMSON, C.J.   (concurring in part and 
dissenting in part).  I agree with those parts of the majority 
opinion that conclude that the attorney breached his fiduciary 
duty and that rescission is therefore warranted.   
¶35 I dissent from those parts of the majority opinion 
(including Part III) that conclude that punitive damages are not 
available in the instant case.  I conclude, as did the circuit 
court, that punitive damages are available in the instant case.  
I would therefore remand this case to the circuit court to 
restore the judgment originally entered for punitive damages in 
the amount of $38,200. 
¶36 The 
present case raises two interrelated issues 
regarding punitive damages.   
¶37 First, are punitive damages precluded because the 
plaintiff otherwise proceeded in an action in equity and sought 
equitable relief, specifically rescission?   
¶38 Second, may punitive damages be awarded when the 
claimant has suffered actual damages but has not sought or 
received a compensatory award and has not been granted even 
nominal nonpunitive money damages? 
¶39 The answer to the second question is important in the 
context of the first question because in many equitable actions, 
No.  2008AP787.ssa 
 
2 
 
relief is granted as was done here, without an award of 
compensatory damages.1   
¶40 The majority opinion does not address the first 
question and answers the second question in the negative.  I 
conclude that punitive damages are not precluded in an action in 
equity and that an award of nonpunitive money damages is not a 
prerequisite for an award of punitive damages when the claimant 
has suffered actual damages.   
I. History and Purpose of Punitive Damages 
¶41 My answers to the two questions are informed by the 
history and underlying purpose of punitive damages.  As the 
majority opinion correctly notes, punitive damages have long 
been awarded and can be traced back to at least 1784.  Majority 
op., ¶23.  Similarly, punitive damages were recognized in 
Wisconsin as early as 1854.2  
¶42 As their very name implies, the distinct policy 
rationale of punitive damages is one of punishment rather than 
payment.  Punitive damages are intended to "'vindicate [a 
claimant's] 
right 
and 
protect 
it 
against 
future 
similar 
invasions,'" majority op., ¶23 (quoting Barry v. Edmunds, 116 
U.S. 550, 562 (1886)), and "'to further a state's legitimate 
interests in punishing unlawful conduct and deterring its 
                                                 
1 2 John J. Kircher & Christine M. Wiseman, Punitive Damages 
Law and Practice, § 20.04 at 20-13 (2d ed. 2000) ("Equitable 
relief does not often include the award of money damages since 
the results achieved through remedies such as rescission, 
injunction and reformation usually supply complete relief."). 
2 McWilliams v. Bragg, 3 Wis. 377 (*424), 382-83 (*430-31), 
1854 WL 3450 (1854). 
No.  2008AP787.ssa 
 
3 
 
repetition,'" majority op., ¶24.  In this sense, the claimant's 
receipt of punitive damages is a means to an end, the means of 
communicating a societal message that the wrongdoer's conduct 
was of a kind that society will particularly punish.  The 
punitive award is not made to compensate the specific loss but 
rather to deter similar unlawful future conduct, both by the 
wrongdoer and by others.3    
II. Punitive Damages in Equitable Actions 
¶43 A key, early Wisconsin case discussing punitive awards 
in an equitable action is Karns v. Allen, 135 Wis. 48, 115 
N.W. 357 (1908).  Writing more than 100 years ago, the Karns 
court noted "a great dearth of authority" on the subject of 
punitive damages in equitable actions.4  The Karns court 
concluded, however, that when the applicable statute allowed 
claimants to elect between a suit at law and a suit in equity 
and the claimants elected an equitable action, they thereby 
"brought themselves within the rules of equitable actions, and 
waived the right to recover exemplary [punitive] damages."5   
                                                 
3 Trinity Evangelical Lutheran Church v. Tower Ins. Co., 
2003 WI 46, ¶50, 261 Wis. 2d 333, 661 N.W.2d 789; Mgmt. Comp. 
Servs., Inc. v. Hawkins, Ash, Baptie, & Co., 206 Wis. 2d 158, 
193, 557 N.W.2d 67 (1996); Tucker v. Marcus, 142 Wis. 2d 425, 
463, 418 N.W.2d 818 (1988) (Heffernan, C.J., dissenting) ("There 
is no doubt that the plaintiff is enriched, but this is a 
byproduct of the plaintiff's role as society's representative.  
The main goal of punitive damages is to deter outrageous 
behavior by showing the wrongdoer and other potential wrongdoers 
that a penalty will have to be paid for such actions."); I The 
Law of Damages in Wisconsin § 2.6, at 3-4 (Russell M. Ware ed., 
5th ed. 2010). 
4 Karns v. Allen, 135 Wis. 48, 57, 115 N.W. 357 (1908). 
5 Id. at 59. 
No.  2008AP787.ssa 
 
4 
 
¶44 The Karns case can be read narrowly to apply only to 
cases in which the claimant is statutorily obligated to choose 
between suing in equity or at law.6  Since the Karns case, the 
relevant law has changed considerably.7  Wisconsin procedural 
statutes no longer differentiate between actions at law and 
proceedings in equity.8  Thus, the statutory basis for Karns has 
largely been repealed.  When Karns was decided, it remained a 
meaningful distinction for the court to say that claimants had 
brought their claim "within the rules of equitable actions" and 
thereby waived rights and remedies available at law, but today 
that distinction has ceased to have the same importance.9  I see 
no reason to read the Karns case more broadly than is justified 
by 
its 
facts 
and 
its 
historic 
and 
statutory 
context.  
Accordingly, Karns should not be read to state that punitive 
damages may never be awarded in an equitable action.   
                                                 
6 Kircher and Wiseman conclude that there is no suitable 
explanation or justification for the waiver theory.  2 Kircher & 
Wiseman, supra note 1, § 20.04, at 20-16. 
7 Karns v. Allen, 135 Wis. 48, 115 N.W. 357 (1908), was 
predicated on Wis. Stat. § 3180 (1898), which explicitly 
distinguished between equitable actions and actions at law.  The 
modern revision of the statute, codified as Wis. Stat. § 823.01 
(2007-08) (governing Jurisdiction Over Nuisances) has been 
substantially changed.  The language of Wis. Stat. § 823.01 no 
longer draws any distinction between law and equity. 
8 See, e.g., Wis. Stat. § 801.01(2) (2007-08). 
9 The majority acknowledges, at ¶30 & n.28, that the 
historical distinctions between law and equity "have faded over 
time." 
No.  2008AP787.ssa 
 
5 
 
¶45 Since 1908, the Wisconsin Supreme Court has not 
reviewed in other contexts or under modern statutes whether 
punitive damages are available in equitable actions. 
¶46 The Wisconsin court of appeals, however, addressed the 
issue in White v. Ruditys, 117 Wis. 2d 130, 139, 343 N.W.2d 421 
(Ct. App. 1983),10 an equitable action in which the circuit court 
awarded punitive but not compensatory damages.  The court of 
appeals examined authority in Wisconsin and in other states and 
concluded that a strong current of modern decisions allow 
punitive damages in equity as well as at law.  The court of 
appeals concluded that a circuit court acting in equity has 
discretion to award punitive damages.11   
¶47 The court of appeals in the present case refused to 
follow the precedent of White v. Ruditys, which is directly on 
point, even though the court of appeals has no authority to 
overrule one of its own decisions.12  Instead, the court of 
                                                 
10 White v. Ruditys, 117 Wis. 2d 130, 343 N.W.2d 421 (Ct. 
App. 1983), also briefly concluded that "a court of equity has a 
great deal of flexibility in fashioning its remedy. . . . [T]his 
includes the awarding of attorney fees."  Id. at 142.  This 
statement was overruled by an unpublished decision of the court 
of appeals.  See Nourse v. Marchetta, No. 89-0493, unpublished 
slip op. (Wis. Ct. App. Dec. 07, 1989). 
11 The court of appeals cited numerous cases from other 
jurisdictions, and closely reviewed I.H.P. Corp. v. 210 Central 
Park South Corp., 228 N.Y.S.2d 883 (App. Div. 1962), aff'd, 189 
N.E.2d 812 (N.Y. 1963), the "seminal case adopting the modern 
view," and cited Dan B. Dobbs, Handbook on the Law of Remedies, 
§ 3.9, at 2.11 (1973), among other authorities supporting its 
holding.   
12 Cook v. Cook, 208 Wis. 2d 166, 186-90, 560 N.W.2d 246 
(1997). 
No.  2008AP787.ssa 
 
6 
 
appeals reversed the circuit court's award of punitive damages 
in the present case, declaring that the court of appeals in 
White v. Ruditys had impermissibly declined to follow the 
controlling precedent of  Karns.  The court of appeals 
acknowledged that "[t]here may be good reasons to re-examine 
Karns," but concluded that "those reasons must be directed to 
the supreme court."13  White v. Ruditys was decided 75 years 
after Karns and was a precedential opinion in its own right for 
another 27 years.  It seems to me that overruling White v. 
Ruditys should have been left to this court.  
¶48 In my view, the "strong current" of modern law, and 
the reasons sustaining it, have, if anything, only gained 
greater strength since White v. Ruditys was decided in 1983.  
Many contemporary court decisions that have considered whether 
punitive damages may be awarded in an equitable action have 
answered this question in the affirmative.14  Their reasoning is 
                                                 
13 Groshek v. Trewin, 2009 WI App 56, ¶40, 317 Wis. 2d 730, 
768 N.W.2d 62.   
14 Commonwealth 
of 
Ky. 
Dep't 
of 
Ag. 
v. 
Vinson, 
30 
S.W.3d 162, 166 (Ky. 2000) ("The trend throughout this nation is 
to allow recovery for punitive damages in an equitable action").  
Professor Dobbs reports that contemporary decisions allow 
punitive damages in equitable actions:  
The traditional rule was that equity would not award 
punitive 
damages, 
either 
because 
equity's 
sole 
province 
was 
to 
provide 
"complete 
relief," 
and 
compensatory damages marked the limit of that relief, 
or because punishment or vengeance seemed vaguely 
inappropriate to a "benignant" equity.  Though this 
rule is rejected by contemporary decisions that have 
addressed it as a serious issue, there are cases that 
still repeat it. 
No.  2008AP787.ssa 
 
7 
 
persuasive:  A court in an equitable action is charged with 
granting relief that equity and good conscience require.15  If a 
legally protected interest has been invaded, and the nature of 
the conduct warrants the award of punitive damages, why 
shouldn't the responsible party be penalized?  Given the 
statutory and procedural merger of law and equity, why should a 
court at law, but not in equity, have the power to impose 
punitive damages?  The award of punitive damages in Wisconsin is 
now governed by statute, Wis. Stat. § 895.043, which establishes 
a standard of conduct allowing for punitive damages and a 
procedure for their award, but draws no distinction between law 
and equity.  The incongruous nature of maintaining such a 
distinction is even more heightened when one considers that in 
actions both in law and at equity, conduct causing injury to a 
                                                                                                                                                             
Dan B. Dobbs, Dobbs Law of Remedies § 3.11(1), at 460 (2d ed. 
1993). 
For a discussion of reasons that equity courts do not award 
punitive damages, see 2 Kircher & Wiseman, supra note 1, 
§ 20.04. 
15 "The overall goal of equity [is] to achieve justice 
between the parties who are subject to its jurisdiction."  2 
Kircher & Wiseman, supra note 1, § 20.04, at 20-13.   
No.  2008AP787.ssa 
 
8 
 
legally protected interest has been shown.16  Does society's 
interest in punishing and deterring such harmful conduct turn on 
the arbitrary and generally anachronistic distinction of the 
nature of the action through which the injury is vindicated?  I 
do not think that such a distinction can be maintained given the 
                                                 
16 For cases adhering to this reasoning and allowing 
punitive damages in an equitable action, see, e.g., Charles v. 
Epperson &  Co., 137 N.W.2d 605, 618-19 (Iowa 1965); Kennedy v. 
Thomsen, 320 N.W.2d 657, 659, (Iowa Ct. App. 1982); Tideway Oil 
Programs, Inc. v. Serio, 431 So. 2d 454, 463-64 (Miss. 1983); 
Forster v. Boss, 97 F.3d 1127, 1130 (8th Cir. Mo. 1996) 
(applying Missouri law) ("[A] court of equity may award 
injunctive relief and actual and punitive damages as an adjunct 
to its equity jurisdiction."); Madrid v. Marquez, 33 P.3d 683 
(N.M. App. 2001); I.H.P. Corp. v. 210 Cent. Park S. Corp., 228 
N.Y.S.2d 883 (1962); Jones v. Morrison, 458 S.W.2d 434, 438 
(Tenn. App. 1970); see also McPeak v. McPeak, 593 N.W.2d 180, 
184 (Mich. App. 1999) ("[E]xemplary damages are permissible in 
both legal and equitable actions where the plaintiff pleads 
malicious and wilful conduct.").   
For 
cases 
awarding 
punitive 
damages 
in 
equitable 
rescission, see, e.g.,  Medasys Acquisition Corp. v. SDMS, P.C., 
55 P.3d 763, 767 (Ariz. 2002) (concluding punitive damages 
allowable in rescission action to punish the wrongdoer for his 
conduct); Ind. & Mich. Elec. Co. v. Harlan, 504 N.E.2d 301, 307 
(Ind. App. 1987) (stating that "the granting of affirmative 
equitable relief will support an award of punitive damages"); 
Capitol Fed. Sav. & Loan Ass'n v. Hohman, 682 P.2d 1309, 1310-11 
(Kan. 1984) (allowing punitive damages incidental to equitable 
relief of rescission); Z.D. Howard Co. v. Cartwright, 537 
P.2d 345, 348 (Okla. 1975) (holding that the Uniform Commercial 
Code’s permissive recovery of damages in rescission actions 
includes 
punitive 
damages 
where 
breach 
of 
contract 
"is 
accompanied by fraudulent acts which are wanton, malicious and 
intentional"). 
For a collection of cases on the power of an equity court 
to award punitive damages, see Jay M. Zitter, Punitive Damages: 
Power of Equity Court to Award, 58 A.L.R. 4th 844 (2010); 2 
Kircher & Wiseman, supra note 1, §§ 20.05, 20.06. 
No.  2008AP787.ssa 
 
9 
 
merger of law and equity and the contemporary law of punitive 
damages.  
¶49 The historic rule that courts cannot award punitive 
damages in equitable actions has eroded over the years.17  I 
conclude that Wisconsin should not adopt or maintain such a 
blanket rule.   
III. Actual Damages Requirement   
¶50 Whether an award of "actual damages" is required for 
an award of punitive damages has generated much litigation, in 
large part because the words "actual damages" are subject to 
numerous meanings in different contexts, and courts have divided 
                                                 
17 2 Kircher & Wiseman, supra note 1, § 20.06, at 20-25; see 
also Linda L. Schlueter, Punitive Damages § 4.1(A)(3)(a), at 
135-36 (5th ed. 2005):  
Although the traditions of equity remain, the practice 
of denying punitive damages is changing.  Thus, the 
recent 
trend 
of 
court 
decisions 
indicates 
that 
punitive damages will be allowed in equity as well as 
at law.  The rationale for this modern view is that to 
do otherwise would subvert the very purpose of the 
merger of law and equity . . . . Practically speaking, 
there is no reason to forbid punitive damages in 
equity actions.   
For cases allowing punitive damages in equity actions, see, 
e.g., Charles v. Epperson & Co., 137 N.W.2d 605, 618-19 (Iowa 
1965); Tideway Oil Programs, Inc. v. Serio, 431 So. 2d 454, 463-
64 (Miss. 1983); Kennedy v. Thomsen, 320 N.W.2d 657, 659 (Iowa 
Ct. App. 1982). 
For a discussion of punitive damages in equitable actions 
in Australia, New Zealand, Canada, England, and some American 
states, see Anthony Duggan, Exemplary Damages in Equity: A Law 
and Economics Perspective, 26 Oxford J. Legal Stud. 303 (2006).  
No.  2008AP787.ssa 
 
10 
 
on what their proper interpretation should be.18  Actual damages 
may mean that the claimant was awarded a judgment to recover for 
actual damages, or it may mean that the claimant sustained a 
legally compensable injury.19  Competing meanings of "actual 
damages" have led courts to take a number of different positions 
on whether compensatory damages are a prerequisite to a punitive 
damages award.20 
¶51 In Wisconsin, punitive damage awards are permitted 
when a claimant is awarded even nominal damages.21  If "actual 
damages" means that compensatory damages are actually recovered, 
it is difficult to explain why nominal damages will support a 
punitive damages award while their absence may defeat it.  A 
claimant is not actually compensated for his or her injuries by 
an award of nominal damages. 
¶52 From my perspective, the actual damages requirement 
means that the claimant must establish a cause of action, 
                                                 
18 For a discussion of actual damages as a prerequisite to a 
punitive damages award, see 1 Kircher & Wiseman, supra note 1, 
§ 5.21.  
19 Tucker v. Marcus, 142 Wis. 2d 425, 455-56, 418 N.W.2d 818 
(1988) (Heffernan, C.J., dissenting); Dobbs, supra note 14, 
§ 3.11(10), at 512-16.  
20 For a collection of cases, see Richard C. Tinney, 
Annotation, Sufficiency of Showing of Actual Damages to Support 
Award of Punitive Damages—Modern Cases, 40 A.L.R. 4th 11 (1985). 
21 Jacque v. Steenberg Homes, Inc., 209 Wis. 2d 605, 621, 
563 N.W.2d 154 (1997) (action for intentional trespass to land; 
$1 nominal damages).  See also Robison v. Lescrenier, 721 
F.2d 1101, 1102 (7th Cir. 1983) (applying Wisconsin law; 
awarding $10,000 punitive damages with six cents nominal 
damages).    
No.  2008AP787.ssa 
 
11 
 
whether at law or in equity, before punitive damages can be 
awarded.22  Once there is a valid cause of action and thus a 
legally cognizable harm, no reason exists to deny punitive 
damages merely because the claimant's relief is not pecuniary.  
The question of whether punitive damages are available depends 
on the nature of wrongdoer's conduct, not on the type of relief 
sought.23  Indeed, if the wrongdoer's conduct is so harmful or 
egregious as to warrant the imposition of punitive damages, the 
very lack of compensatory damages may increase the need for 
punishment and deterrence.24   
¶53 I conclude that the failure to recover compensatory 
damages——actual, presumed, nominal, or otherwise——has no logical 
bearing on the propriety of a punitive award.  The suitability 
of a punitive damage award should be determined by the usual 
rule, evaluating the nature of the wrongdoer's conduct.  The 
economic magnitude of the wrongdoing may or may not be properly 
represented by an award of compensatory damages and the absence 
                                                 
22 "The reason for [a requirement of actual damages] is that 
it first insures that some legally protected interest has been 
invaded.  It prevents the assessment of punitive damages against 
one who may have caused damage without legal injury."  Village 
of Peck v. Denison, 450 P.2d 310, 314-15 (Idaho 1969). 
23 Wis. Stat. § 895.043(3) ("The plaintiff may receive 
punitive damages if evidence is submitted showing that the 
defendant acted maliciously toward the plaintiff or in an 
intentional disregard of the rights of the plaintiff.").  
24 See Dobbs, supra note 14, § 3.11(10), at 512-16. 
No.  2008AP787.ssa 
 
12 
 
of such an award should not raise a categorical bar to punitive 
damages if the conduct otherwise warrants them.25   
¶54 For the reasons set forth, I write separately. 
 
                                                 
25 Numerous 
courts 
have 
concluded 
that 
an 
award 
of 
compensatory damages is not a prerequisite for an award of 
punitive damages.  See, e.g., Beard v. Flying J., Inc., 116 
F. Supp. 2d 1077, 1081 (S.D. Iowa 2000) (applying Iowa law), 
aff'd in relevant part, 266 F.3d 792, 804 (8th Cir. 2001); 
Platté v. Whitney Realty Co., Inc., 538 So. 2d 1358, 1360 (Fla. 
Ct. App. 1989); Nash v. Craigco, Inc., 585 P.2d 775, 778 (Utah 
1978); Haskins v. Shelden, 558 P.2d 487, 493 (Alaska 1976); 
Kennedy v. Thomsen, 320 N.W.2d 657, 659-60 (Iowa 1960).  
No.  2008AP787.ssa 
 
 
 
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