Civil Theft in Small Business Litigation

Civil theft claims between individuals and small businesses sometimes arise because parties withhold important information about the goods or services being exchanged. A business may falsely misrepresent the goods or services being exchanged in an overly-aggressive push to get a good deal or win a negotiation. A false misrepresentation or omission can turn so blatant and harmful that a court evaluates it like criminal theft. Wisconsin consumer protection and unfair business practices cases against small businesses often include a claim for Civil Theft. You may think the exposure is limited to rather basic breach of contract-like damages, but this is false. The accompanying demand for treble damages can have a huge impact on settlement negotiations or trial.

A recent Marathon county and Wisconsin Supreme Court case, Estate of Miller v. Storey (1), discusses the shocking impact of civil theft statutes in a litigation context and how a party may be surprised to find a small exposure shatter into a large exposure. The defendant rejected a demand of $10,000 and a settlement offer of $7,500. The defendant was ultimately hit with a jury verdict of $52,629.90!  If you would like to learn more about civil theft by misappropriation claims and how they may affect your legal strategy, please consider reaching out to me to discuss.

Civil Theft: Estate of Miller v. Storey

The Plaintiff, Estate of Miller, involved an alleged theft of money from Storey’s elderly uncle, Stanley Miller, when she cared for him in the last year of his life. Storey served as Miller’s caretaker from May 2010 to May 2011. Storey helped Miller, eighty-six years old at the time, by doing his shopping, cooking meals, doing laundry, taking him to appointments, getting his mail, and other necessary tasks. Storey also helped Miller with his checkbook and paying bills. Trial testimony suggested that Storey also used Miller’s account for unauthorized payments, including a number of checks made out to “Cash”, a $450 check issued for “Cat Food”, a check payable to a “Collection Agency” which did not appear related to Miller. Several of the questioned checks were deposited directly into Storey’s bank account. The jury found Storey had taken $10,000 from Miller before his death.

Civil Theft Under Wisconsin Law

Wis. Stat. 943.20 “Theft” is a criminal statute, and Wis. Stat. 895.446 provides civil liability for violations of 943.20.  Section 895.446(1) provides that a person who suffers damage or loss by reason of intentional conduct prohibited by 943.20 may bring a civil action for damages. The civil theft action does not depend on any parallel criminal action – the plaintiff is essentially claiming the right to money damages instead of a criminal conviction and jail time. To recover for civil theft, a plaintiff must prove by a reasonable certainty the following four elements:

1. The defendant intentionally used, transferred, or retained possession of movable property (including money) of another;
2. The owner of the property did not consent;
3. The defendant knew the owner did not consent; and,
4. The defendant intended to permanently deprive the owner of the possession of the property.

It is often efficient to plead civil theft in addition to other claims, such as breach of contract, consumer protection laws, common law misappropriation, fraud, Wisconsin Deceptive Trade Practices Act (2), and any other claims that may arise from a particular set of facts. It is important to note that the civil theft elements are very similar to the common law tort claim of conversion and can often be asserted in the same lawsuit under the same facts. The elements of the common law tort claim of conversion differ in it does not require the plaintiff to provide the third element. It also only requires an “interference with” the defendant’s ownership of the property, instead of “permanently deprive.”

Civil Theft and Treble Damages

The devastating impact of Civil Theft by Misappropriation is in damages. If a plaintiff proves a claim under Wis. Stat. 895.466 and 943.20, the plaintiff can collect the following:

1. Actual damages: most often the amount of money lost.
2. All costs of investigation and litigation reasonably incurred: this was determined to include reasonable attorney’s fees.
3. Exemplary damages of not more than 3 times actual damages: 

Here, the jury found Storey was liable to the Estate of Miller for $10,000 in actual damages. The Court also found attorney’s fees of $20,000 were reasonable. It also found the Estate of Miller was entitled to an additional two times actual damages, increasing damages by $20,000.00. All in, the defendant became liable for over $50,000. 

Settlement Offers and Negotiation

While Estate of Miller is a family matter, same can be applied to any relationship where there is a duty of good faith or a fiduciary duty. Many reported cases concern a wide variety of business relationships, such as a bank taking possession of a bar as part of a foreclosure action (3), or a lender transferring funds from a line of credit without consent (4), or by a contractor violating construction trust fund provisions (5).  Sellers of real estate should keep a particularly close eye on misrepresentations in real estate condition reports, as several reported cases discuss potential exposure for misrepresenting something important in the condition report (6).

The Estate submitted a settlement offer of $7,500 several months before trial. Under Wis. Stat 807, if a defendant turns down the formal settlement offer and does worse than that amount at trial, then it could be taxed with paying double the amount of the taxable costs at trial. This tool is often used by litigants to encourage settlement, for fear that turning down a reasonable offer could increase a party’s exposure. I recommend considering this procedure in almost every case. 

Stiff Penalties for Civil Theft in Wisconsin

Individuals and businesses should be aware of the devastating effect of lying in business transactions. Civil theft statutes discourage intentional false statements and improper business dealings. They make even small exposures more expensive because of attorney’s fee provisions and multiples of damages. If you feel you have been the victim of this type of action or are defending this claim, I highly recommend contacting me or another attorney to discuss your options. 

(1)  Estate of Miller v. Storey, 378 Wis.2d 358 (Wis. 2017).

(2) Business Advertising Disputes and the Wisconsin Deceptive Trade Practices Act | Michael Johnson Legal LLC

(3) Schuepbach v. Leistikow Props., LLC, 390 Wis.2d 834 (Wis. App. 2020).

(4) Town & Country Bank v. Buss, 356 Wis.2d 325 (Wis. App. 2014).

(5) Theft by Contractor in Wisconsin | Michael Johnson Legal LLC

(6) Ferris v. Location 3 Corp., 337 Wis.2d 155 (Wis. App. 2011).