March 21, 2018 – Apparently, saying “I do” still has a real meaning.
In 1987, the Wisconsin Supreme Court decided two cases: Watts v. Watts1 and Lawlis v. Thompson2, which reversed prior law that cohabitation constituted a meretricious (which I think means really, really bad, and maybe evil) relationship that can be given no legal standing for such participants.
Under Watts and Lawlis, a cohabitant has a right to sue the other party at the end of the relationship for equitable remedies. While this created a crack in the door by creating certain legal rights for such couples, those rights are quite limited under Wisconsin law. A recent Wisconsin Supreme Court case reinforces the limitation of these rights and, in the process, makes it clear that being married affords far more legal rights under Wisconsin law.
Even prior to this recent case, subsequent cases after Watts and Lawlis have made clear that the rights of cohabitants are limited. For example, in Waag v, Borer3, the court of appeals held that simply performing household services during cohabitation does not give rise to a claim of unjust enrichment under Watts. Rather, the services must be linked to an accumulation of wealth or assets during the relationship. Further, in Wisconsin, we do not have “palimony.” In other words, spousal support is available only if the parties were actually married, not based upon periods of unmarried cohabitation, unlike some other states.
Rights of Unmarried Cohabitants are Limited
While the recent case, Sands v. Menard4, does not change Wisconsin law, it reinforces the concept that the rights of unmarried cohabitants are quite limited.
Gregg Herman is a family law attorney with Loeb & Herman S.C. His primary office is in Milwaukee. Gregg is the co-editor of the System Book for Family Law, published by the State Bar of Wisconsin PINNACLE® and is a former chair of the State Bar and American Bar Association family law sections. Follow Gregg’s opinions on his family law blog.
In Sands, the parties began dating nearly 40 years after Menard founded his chain of home improvement stores. The parties agree that they were engaged to get married, but disagreed as to whether they actually lived together. In any event, Sands claimed to have made substantial contributions, both business and professionally, to Menard and his company and that he had promised her ownership interests in various business ventures.
Menard denied such promises, although he admitted that Sands had provided certain legal services, at least to the companies. In fact, she was paid approximately $150,000 for some of those services. However, Sands submitted 190 invoices for legal work over a period of a little more than three years for total fees in excess of $1 million.
When the company refused to pay the full amount (it did make an offer, which in retrospect, she should have accepted), Sands started a Watts lawsuit alleging equitable remedies. The trial court awarded summary of judgment on behalf of Menard (and its companies and a trust that she also sued) on the basis that Sands had violated SCR 20:1.8 (a). This rule requires a lawyer who performs legal services to have a written contract. The court of appeals affirmed the circuit court, and that ruling was affirmed by the Wisconsin Supreme Court.
Unjust Enrichment Requires Three Elements
The supreme court relied less upon the ethical rules than on the Watts principles that unjust enrichment requires proof of three elements: a benefit, appreciation or knowledge of the benefit, and acceptance or the retention of the benefit under circumstances that would make it inequitable to do so. The supreme court differentiated Watts where the parties have lived together, the woman had assumed the husband’s last name, they raised two children using the husband’s name, filed joint income tax returns, had joint bank accounts, and owned joint real and personal property. Essentially, in Watts, the parties were married for all intents and circumstances other than the marriage license.
On the contrary, Sands’ allegations were essentially that she provided professional advice and services (without abiding by the applicable ethical rules), and she failed to show how her efforts caused a substantial increase in Menards’ net worth, especially since the company had been in business for almost 40 years by the time that they had met. Further, there was no comingling of finances, filing of joint tax returns, or purchasing of joint real or personal property. In addition, Sands was not obligated for any of Menards’ debts. Therefore, the supreme court held that there was no “joint enterprise” as required under Watts.
Watts Creates an Opening
Watts created a narrow opening in the previously closed door for unmarried parties. If parties were married, then principles of equitable distribution apply, which would include valuing and awarding property fairly between the parties. In addition, retirement plans can be divided via QDROs and maintenance can be awarded if circumstances so warrant.
However, failure to say “I do” means that there cannot be any maintenance, QDROs dividing retirement plans, or other remedies available to married couples. In other words, being married does make a difference and does have a meaning, even in today’s world. Or, to paraphrase the song, better “put a ring on it.”
Endnotes
1 Watts v. Watts, 132 Wis. 2d 506, 405 N.W. 2d 23 303 (1987).
2 Lawlis v. Thompson, 137 Wis. 2d 490, 405 N.W. 2d 317 (1987).
3 Waag v, Borer, 188 Wis. 2d 324, 525 N.W. 2d 96 (Ct. App. 1994).
4 Sands v. Menard, 2017 WI 110, 379 Wis. 2d 1, 904 N.W. 2d 789.
