Basic Principles of Restitution

Question 1

Restitution/Unjust Enrichment Elements

Answer 1

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

Question 2

How do we measure the recovery in restitution?

Answer 2

Measure by the defendant’s gain, not by the P’s loss (unlike in torts)

Question 3

Implied in fact contract

Answer 3

Created by parties’ conduct

Question 4

Contract at law

Answer 4

law imposes K

Question 5

Quasi contract

Answer 5

Legal remedy

• Constructive Trust
• Equitable lien

Question 6

Kossian

Answer 6

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

Question 7

Crawford’s

Answer 7

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

Question 8

Restitution claims can be either

Answer 8

legal or equitable

Question 9

Tracing

Answer 9

Required.

Constructive Trusts are against specifically identifiable property

Question 10

Quantum Meruit

Answer 10

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

Question 11

Constructive Trust Definition

Answer 11

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

Question 12

When are Constructive Trusts more favorable?

Answer 12

Where wrongdoer has acquired an asset that has appreciated in value

Question 13

Equitable Lien

Answer 13

• 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

Question 14

Requesting Constructive Trust vs. Equitable Lien

Answer 14

Claimant entitled to a constructive trust can request an equitable lien instead. Claimant entitled to equitable lien cannot request constructive trust!

Question 15

Replevin

Answer 15

• 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

Question 16

Limiting recovery against innocent/good faith defendants

Answer 16

Can only recover to the amount of claimant’s loss

Question 17

Hunter v. Shell

Answer 17

• 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

Question 18

G&M Motor

Answer 18

• 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

Question 19

Lowest Intermediate Balance

Answer 19

• 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

Question 20

Verity. Verity

Answer 20

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

Question 21

Olwell v. NYE & Nissen

Answer 21

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

Question 22

Defenses to Claims of Unjust Enrichment

Answer 22

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