Court: Menard founder doesn't owe ex-fiancee ownership share

Markets Associated Press

The founder of the Menards building supply chain doesn't have to give his ex-fiancee ownership interest in the company, an appeals court ruled Tuesday.

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Debra Sands filed a lawsuit in 2008 alleging she moved in with John Menard in 1998 and became engaged to him later that year. She lived with him until their relationship ended in 2006.

She claimed that during her relationship with Menard she performed a range of tasks for both him and the company, serving as Menard's social companion, advising him on acquiring airplanes and their design and decor and suggesting new ideas for his stores, according to court documents. Sands also asserted that she performed legal work for the company beginning in 2003. Menard repeatedly promised her ownership interest in exchange for her work, according to court documents.

Menard has conceded he was engaged to Sands but has denied they ever lived together.

In 2006, after their relationship had ended, Sands submitted invoices demanding $1 million in legal fees. The company offered to pay her $961,518 in exchange for her signature on a waiver that would release Menard from any additional claims. The waiver would have barred her from pursuing claims under a state law that stipulates unmarried people who live and start a business together must fairly divide assets they jointly accumulated.

Sands refused and filed the lawsuit seeking a share of Menard's property, wealth and net worth he acquired through her efforts or damages equal to the ownership interest Menard had allegedly promised her.

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Eau Claire County Circuit Judge Paul Lenz found in Menard's favor, ruling that Sands violated rules that generally prohibit an attorney from entering into a business transaction of knowingly acquiring ownership adverse to the client unless the attorney fully discloses the terms, the client understands them and agrees in writing.

The 3rd District Court of Appeals upheld Lenz's ruling, finding the rules apply in Sands' case.

Giving her ownership interest would be adverse to Menard since her gain would be his loss, triggering the rule, the court said. Whenever Menard allegedly made his ownership interest promise to Sands they had an attorney-client relationship and she failed to disclose the terms and obtain Menard's written consent, the court concluded.

Sands' attorney, Daniel Shulman, said he disagrees with the appeals court and is considering asking the state Supreme Court to take the case.

Menards is the nation's third-largest home improvement chain behind Home Depot and Lowes, with more than 280 stores in 14 Midwestern states, according to Forbes. The Eau Claire-based company generated $8.7 billion in calendar year 2015, according to the business magazine.

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