Basic Principles of Restitution Flashcards
Restitution/Unjust Enrichment Elements
3 elements
1) D has been enriched by receipt of a benefit
2) D’s enrichment is at the P’s expense
3) It would be unjust to allow D to retain benefit
Whether D knows or appreciates benefit is not an element! But knowledge can inform the third element
How do we measure the recovery in restitution?
Measure by the defendant’s gain, not by the P’s loss (unlike in torts)
Implied in fact contract
Created by parties’ conduct
Contract at law
law imposes K
Quasi contract
Legal remedy
- Constructive Trust
- Equitable lien
Kossian
P entered K with motel owner to clean up debris after a fire. Owner declares bankruptcy and assigns interests to D, who submitted loss claim to the insurance company, and also claimed for the value of P’s work (which P had already completed), so D double-recovered
Not a tort or K claim, but unjust enrichment because D got the benefit of both the money and P’s work
Crawford’s
P recovered, impounded, and stored stolen cars for the PE State police. Police never paid P for services rendered
Court determined implied-in-fact contract existed – D asked P to do something, and P did it. Not paying P means D was unjustly enriched
Restitution claims can be either
legal or equitable
Tracing
Required.
Constructive Trusts are against specifically identifiable property
Quantum Meruit
applies to both quasi and implied in fact contracts
a) look at reasonable value of the services
b) Follows quasi or implied-in-fact K
c) Application – look at previous dealings and if none, then the Rx value of services
Constructive Trust Definition
Acquisition of legal title – D uses P’s assets or services to acquire legal title
Thieves do not have legal title!
- D must convey property to P
- When requested, it is P’s only remedy
Must be a conscious wrongdoer
When are Constructive Trusts more favorable?
Where wrongdoer has acquired an asset that has appreciated in value
Equitable Lien
- Uses the P’s assets or services to improve something D already has title to
- If D does not pay, P can force foreclosure sale
- Amount of money must be traceable from P to D’s property
- Equitable lien is for a specific amount
Requesting Constructive Trust vs. Equitable Lien
Claimant entitled to a constructive trust can request an equitable lien instead. Claimant entitled to equitable lien cannot request constructive trust!
Replevin
- Get property back plus reasonable rental value during the time D had the property
- Legal remedy, even though you get property back
- Sheriff oversees, not court, so court’s might prefer this over permanent injunction
Limiting recovery against innocent/good faith defendants
Can only recover to the amount of claimant’s loss
Hunter v. Shell
- Hunter worked for Shell and divulged confidential geological survey info to other companies
- D’s required to convey all such interests to Shell (constructive trust)
- D’s that sold to bonafide purchasers – Shel could get quasi-contract or market value of the interests
G&M Motor
- Thompson was an accountant who embezzled close to $80k from G&M. Used some of the money to pay life insurance premiums
- On appeal, court found that only the parts of the funds used to pay the premiums are subject to the trust
Lowest Intermediate Balance
- After trustee comingles funds, trustee can only recover lowest balance recorded after the comingling
- Not appropriate in multiple victim fraud
- Assume that moneys that are withdrawn from the comingled account come first from D’s money, and
- assume that any later deposits do not belong to the trust, UNLESS the later deposits are more money D stole from P
Verity. Verity
Wife wants constructive trust impressed on property which she improved. Husband told her they were JT but they were not
Was not entitled to remedy at law, but was able to get an equitable lien
Olwell v. NYE & Nissen
D used P’s egg-washing machine for three years without his knowledge or consent
Rule: If D was consciously tortious in acquiring the benefit, he is also deprived of any profit from his subsequent dealing with it. Benefit is not found only in use but also in preventing costs or losses
Also – can’t get more than you pray for. Court found P was owed $10per week for 156 weeks of use, but P only asked for $900 so that’s all he got
Defenses to Claims of Unjust Enrichment
a) wouldn’t be unjust to keep benefit
- -Scrushy
b) services rendered without expectation of compensation
- -Vortt v. Chevron
c) Changes of position
- -Messersmith
d) Innocent Third Parties
e) Restitution as the only cause of action
- -non-breaching party is discharged from K duties but may have had a quasi-contractual duty to pay value of the benefit conferred in excess of the damage caused by the contractor’s breach. Since there is enforceable K, recovery under quantum meruit might be appropriate
