Unanimous Supreme Court: Law bars recovery for unjust enrichment, breach of contract simultaneously

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A unanimous Wisconsin Supreme Court decided a general contractor should not have received damages for both breach of contract and unjust enrichment arising from the same conduct.

The court released its opinion on Wednesday in Mohns Inc. v. BMO Harris Bank. Mohns was the general contractor on a condominium complex project for the New Berlin developer Bouraxis Properties. As the condos were going up, BMO Harris sold the multimillion-dollar loan for the project to a different lender. That lender then rejected Mohns’ draw requests.

Mohns sued BMO for breach of contract, unjust enrichment and intentional misrepresentation. BMO filed a motion seeking summary judgment, which was denied when the court found there were factual issues that required resolution.

In January 2017, Mohns asked the Waukesha County Circuit Court to compel BMO to comply with discovery requests and impose sanctions for not providing the information and documents sought. The court granted summary judgment against BMO Harris on liability to all three of Mohns’ claims, and a jury awarded Mohns damages after that. The court reduced the jury’s punitive damage award from $1 million to $478,498 plus attorney’s fees.

BMO appealed, and the appellate court found the Waukesha County court had properly exercised its discretion in granting summary judgment to Mohns. The Court of Appeals also ruled that both the jury verdict and imposed damages were supported by credible evidence.

Upon review, the state Supreme Court affirmed the Court of Appeals’ decision in part and reversed in part. The justices agreed that circuit court did not erroneously exercise its discretion when it imposed judgment liability as a sanction for BMO’s discovery violations.

The unanimous opinion, from Justice Rebecca Bradley, described BMO’s failure to comply with the circuit court’s discovery order. In one instance, the circuit court judge said she “had root canals less painful” than reading a BMO corporate representative’s transcript.

“The circuit court found BMO’s actions to be egregious, disingenuous, designed to bury documents and hide a ‘smoking gun’ email, and in violation of its discovery order,” Bradley wrote. “Those findings are not clearly erroneous as the record contains evidence supporting them.”

The state Supreme Court did agree with BMO on the matter of awarding damages for both breach of contract and unjust enrichment arising from the same conduct. The opinion said the law bars recovery under the equitable doctrine of unjust enrichment when the parties entered into a contract.

“Because the circuit court explicitly found that BMO breached an agreement to pay Mohns for its labor and materials, the damages awarded for unjust enrichment must be set aside,” Bradley wrote.

The high court also overturned the punitive damages award because it was based upon an award of damages for the contract claims, and punitive damages are recoverable only in tort.

The case now goes back to the circuit court to amend the order for judgment and judgment consistent with the state Supreme Court’s opinion.

Justices Brian Hagedorn and Annette Ziegler did not participate. Follow @natebeck9