Opinion ID: 3002730
Heading Depth: 2
Heading Rank: 3

Heading: The District Court’s Treatment of the Quantum-

Text: Meruit Claim Much of the confusion in this case arose from the parties’ and the district court’s reliance on Theuerkauf v. Sutton. As Lindquist acknowledged in its brief in this court, Theuerkauf is an implied-in-fact contract case. It mentions quantum meruit only once and does so at the end of the opinion when it quotes Mead v. Ringling, 64 N.W.2d 222, for the proposition that quantum meruit will prevent the statute of frauds from barring enforcement of an otherwise enforceable implied-in-fact contract. Theuerkauf, 306 N.W.2d at 663. This proposition is true but not relevant in our case. Theuerkauf describes when a court can presume 24 Nos. 08-1067 & 08-1689 that services are valuable, but value to the defendant is immaterial in quantum-meruit cases. See, e.g., Barnes, 123 N.W.2d 543. The district court’s misplaced reliance on Theuerkauf permeated this case. In denying summary judgment, the court cited Theuerkauf to describe the elements of quantum meruit. Accordingly, the court thought the value of the services to defendant established a presumption bearing on “[t]he ultimate inquiry[:] whether the parties came to a mutual agreement by the words, conduct or course of dealing, as shown by [the] parties’ external expressions of intention.” This substitution of the Theuerkauf implied-infact contract elements in place of the proper Ramsey quantum-meruit elements was a mistake of law that affected the court’s summary-judgment ruling. The conceptual confusion continued throughout the trial. The district court excluded all evidence relating to the parties’ negotiations, reasoning that such evidence was irrelevant because this was not a breach-of-contract case. This was a mistake. It is true that this is not a breach-ofcontract case (there was insufficient proof of either an express or implied-in-fact contract), but the background evidence remains highly relevant. The parties’ course of conduct, their actions, and their failed negotiations all bear on whether Lindquist reasonably expected compensation at the time Middleton requested, and Miller rendered, his services. The district court also erred in its order amending its previous judgment. Recounting the earlier proceedings, the court noted that Lindquist had established a rebuttable Nos. 08-1067 & 08-1689 25 presumption of intended fair payment, which “left the possibility that at trial, defendant could avoid liability . . . by coming forward ‘with evidence sufficient to rebut and overcome the presumption of the existence of an implied contract in fact.’ ” (Citing Theuerkauf and emphasis added.) We have already explained why this importation of implied-in-fact contract principles was improper here. Accordingly, we conclude that the district court misconstrued the liability principles of quantum meruit under Wisconsin law and consequently mistried the claim. This was understandable given the inconsistencies in some of the caselaw. Nevertheless, the claim must be retried; the district court’s legal error led to the exclusion of relevant evidence on the central question of whether Lindquist reasonably expected compensation for Miller’s services. See Dandridge v. Williams, 397 U.S. 471, 476 n.6 (1970) (“When attention has been focused on other issues, or when the court from which a case comes has expressed no views on a controlling question, it may be appropriate to remand the case rather than deal with the merits of that question . . . .”). D. The District Court’s Treatment of the Unjust-Enrichment Claim In contrast to the quantum-meruit claim, the district court correctly identified the three elements for liability under unjust enrichment. The question for us is whether the court correctly applied these elements. It was not clear error to find that Miller conferred a benefit to Middleton. Both sides presented evidence of what transpired at the dealership during Miller’s tenure. The judge found 26 Nos. 08-1067 & 08-1689 Lindquist’s evidence and argument on this point to be more credible and persuasive. On the second element of the claim, there is no question that Middleton accepted whatever benefit Miller conferred. Our concern lies with the third element of unjust enrichment—whether “it would be inequitable [for Middleton] to retain the benefit without payment.” See Seegers, 236 N.W.2d at 230. We are not convinced that the district court properly weighed the equities in this case. The court oversimplified this aspect of the claim, essentially reducing it to this question: May an employer equitably withhold payment from an employee who worked for 11 months? The facts and context here make this claim more complicated. As we have noted, the district court excluded key areas of evidence relating to the parties’ negotiations and their understandings about the terms under which Miller would work for Middleton. The district court also excluded evidence that Miller continued to promise Middleton that Lindquist would soon come forward with a $500,000 cash infusion in return for an ownership share in Middleton, but Lindquist of course never made that promised payment. It also appears that the court excluded evidence that Middleton rolled back Miller’s operational changes as soon as he left, perhaps to undercut Miller’s claim that his efforts would eventually turn Middleton around. This evidence would tend to favor Lindquist’s position. These evidentiary decisions flowed from a legal error: the court’s too-narrow view of the equitable element of unjust enrichment. Accordingly, this claim too must be retried. If the court determines on remand that Lindquist expected to be paid only if Miller turned Middleton profitNos. 08-1067 & 08-1689 27 able and that Miller did not turn Middleton profitable after a fair attempt, then the court should enter judgment for Middleton under both quantum meruit and unjust enrichment. If the facts are as Middleton describes them, then Lindquist gambled and lost on its bet. Equity requires that it internalize the consequences. E. Damages We conclude with a brief word about damages, which we need not fully address in light of our decision on liability. The district court calculated damages in part by comparing Miller to a consultant who charges auto dealerships a couple thousand dollars a day for his services. We see nothing in the record to suggest that any general manager is compensated in this way. Also, while the court expressed concern about compensating Miller based on Middleton’s profits when none existed, the parties should be able to provide evidence of how general managers are paid in dealerships that lose money. Finally, Middleton argues that because Miller worked at several dealerships at one time, he should be paid as if he worked only part-time. Here again, additional facts could help the analysis. (Does a dealership pay its general manager less if he works for several companies at once? Are general managers instead given a certain amount per dealership, which is multiplied for each dealership a manager services?) There should be no need to resort to conjecture when the answers are obtainable. 28 Nos. 08-1067 & 08-1689