Bruce Vielmetti

Milwaukee Journal Sentinel

Menards founder John Menard's onetime fiancée never got the ring, and now she's not getting the money either.

The state Court of Appeals on Tuesday affirmed an Eau Claire County circuit judge's decision to throw out Debra K. Sands' claims that Menard, his various companies and trusts owe her a stake for the work she did while she was Menard's live-in partner from 1998 to 2006.

Nor is Sands entitled to the millions in attorney fees she claims she is owed, the court ruled in a 38-page opinion.

Sands, a Minnesota lawyer, began dating Menard in 1997, four years after she graduated from William Mitchell College of Law. She moved in with him in 1998, a fact he disputes, though he admits they were engaged.

According to Sands, during their relationship, she did everything from manage his health care and residential remodelings, to advising him on airplane purchases and Menard Inc. marketing plans, as well as helping to manage Menard's horse racing enterprise and a $400 million private equity fund.

Her role in the equity fund has led to other problems for Sands, who was not licensed to practice in Indiana when she was advising the creation of the fund there, according to another lawsuit.

In return for all the work, she says, Menard promised to compensate her with partial ownership in the businesses, a promise he denies.

The legal work Menard says Sands did perform — during an environmental action in 1997 — she says was really just a fake invoice meant to disguise his payment of her unpaid law school loans.

Sands contends she did not do any legal work for Menard until 2003, years after they began their personal relationship.

That's important because ethical rules prohibit lawyers from doing business deals with clients without certain extra precautions.

Menard Inc. did pay Sands $152,105 for legal services she provided between April 2003 and June 2004. And when the couple broke up in 2006, Sands was offered more than $1 million to settle her other legal fee claims, provided she sign a release waiving any "quasi-marital claims" as well, according to court documents.

Sands declined and sued in 2008 for unjust enrichment, breach of contract and other claims. She sought a share of the increase in Menard's net worth during the period she was his girlfriend and "acquired through her efforts." Menard Inc. filed a counterclaim for breach of fiduciary duty, which was later dismissed, a ruling also affirmed by the Court of Appeals.

The trial judge granted summary judgment to Menard on Sands' claims. The judge found that even if her story that the original legal invoices, predating the romantic relationship, were a scam to hide Menard's payment of her student loans, Sands was part of the fraud and therefore comes to court with "unclean hands."

Menard sought an admission that Sands' only remaining claim would be for payment for legal services at $145 per hour. But Sands asserted she was entitled to between $355 and $640 per hour for 6,780 hours, for a total of $2.4 million to $4.3 million.

However, the court agreed with Menard that because Sands had an actual contract to provide service at $145 an hour, her quantum meruit claim for more could not stand.

Sands did prevail in one aspect. Both the trial and appeals courts agreed that Menard Inc.'s counterclaim against her should be dismissed for not being filed within the statute of limitations.

Sands broke up with Menard in 2006, around the time he fired her sister, Dawn Sands, who had served as general counsel to Menard Inc. Dawn Sands also sued and won more than $1 million until the judgment was reversed.