Unjust Enrichment: Legal Theory in Equity

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David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Unjust Enrichment: Legal Theory in Equity

Post by David A. Szwak »

Meyers v. Denton, 848 So.2d 759 [La. App. 3 Cir. 2003] -

In 1995, the principle of unjust enrichment was codified in La.Civ.Code art. 2298 and provides in pertinent part: A person who has been enriched without cause at the expense of another person is bound to compensate that person. The term “without causeâ€
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Andrews v. Trans Union Corp., 917 So.2d 463 [La. App. 4 Cir.2005] -

Consumer brought class action against credit reporting agency for its failure to comply with the Fair Credit Reporting Act, alleging unjust enrichment, in that [1] Trans Union's violation of La. R.S. 9:3571.1 which provides at subsection G[3] that a violation of the FCRA shall be presumptive evidence that the defendant failed to exercise ordinary care and due diligence; and [2] unjust enrichment, seeking disgorgement of profits that Trans Union unlawfully earned, and has unjustly retained, from its sale of information in plaintiffs' private consumer credit files to target marketers. Another putative class action was filed in federal court in Louisiana. The District Court granted class certification. Agency appealed. The Court of Appeal held that: filing of another federal class action against agency by counsel in state action did not render class representative in state class action inadequate, common issues predominated in class action, class representative's claims were typical of other class members, trial plan was not necessary to certify class and class was objectively ascertainable. Affirmed.
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

City Financial Corp. v. Bonnie, 762 So.2d 167 [La. App. 1 Cir. 2000] -

Debtor's attorney was not unjustly enriched by receipt of attorney's fees from judgment obtained by debtor against creditor that was later overturned on devolutive appeal, and thus creditor was not entitled to recover fees from attorney. The action based on unjust enrichment has been codified in LSA-C.C. art. 2298, which provides as follows: A person who has been enriched without cause at the expense of another person is bound to compensate that person. The term “without causeâ€
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Gulfstream Services, Inc. v. Hot Energy Services, Inc., 907 So.2d 96 [La. App. 1 Cir. 2005] -

For purposes of claim for enrichment without a cause, person is enriched when his assets increase, without adequate compensation, or his liabilities diminish. Claim for enrichment without cause would be treated as if it had been raised in complaint that was filed by rental tool company in action against provider of oil field services, although complaint only raised claim on open account; company prayed for all general and equitable relief, necessary facts underlying questions of whether use of tanks was beneficial and whether benefit was gained without adequate compensation were pled or placed before court without objection, and issues of whether agreement was finalized and whether another remedy existed were raised by both parties. Rental tool company established claim for enrichment without cause concerning use of tanks by provider of oil field services; company provided direct benefit to provider, company had justified expectation of gain, and company delivered tanks on demand. Impoverishment is the loss of assets, increase in liabilities, or the prevention of justified expectation of gain. Tate, The Louisiana Action for Unjustified Enrichment: A Study in Judicial Process, 51 Tul.L.Rev. at 447; see Coastal Environmental Specialists, Inc., 2000-1936 at p. 9, 818 So.2d at 19; Scott, 589 So.2d at 27; La. C.C. art. 2298, Revision Comments-1995. Enrichment may be measured by a gain in assets, an economic benefit for which defendant has not fairly paid, or reduction of his liabilities. Coastal Environmental Specialists, Inc., 2000-1936 at p. 9, 818 So.2d at 19; Scott, 589 So.2d at 27; La. C.C. art. 2298, Revision Comments-1995; Tate, The Louisiana Action for Unjustified Enrichment: A Study in Judicial Process, 51 Tul.L.Rev. at 447. In a case of enrichment without cause, the “amount of compensation due is measured by the extent to which one has been enriched or the other has been impoverished, whichever is less.â€
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Quilio & Associates v. Plaquemines Parish Government, --- So.2d ----, 2006 WestLaw 1382175, 2005-0803 [La. App. 4 Cir. 5/10/06] -

Consultant brought action against parish seeking specific performance, declaratory judgment, and damages after entering into a contingency fee contract for work on litigation. The District Court, determined that consultant was not entitled to compensation based on contract. Consultant appealed. The Court of Appeal held that parish president lacked actual authority to enter into contract with consultant, the consultant was not innocent third party as required by doctrine of apparent authority, and thus, he could not recover for work he did under contract with parish president, and unjust enrichment did not apply to consultant who renewed his work contract with parish president without knowledge of parish council. Affirmed. To recover under doctrine of unjust enrichment, the claimant must prove: [1] enrichment of the defendant; [2] impoverishment of the plaintiff; [3] a connection between the enrichment and the impoverishment; [4] no justification for the alleged unjust enrichment; and [5] the lack of any other remedy at law. La. C.C. art. 2298; Minyard v. Curtis Prods., Inc., 251 La. 624, 205 So.2d 422, 432 [1967]; Gulfstream Services, Inc. v. Hot Energy Services, Inc., 907 So.2d 96 [La. App. 1 Cir.2005]. However, the plaintiff's impoverishment cannot be a result of his “own fault or negligence.â€
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Mangano Consultants, Inc. v. Bob Dean Enterprises, Inc., 921 So.2d 1081 [La. App. 5 Cir. 2006] -

Manager of nursing homes brought action against vendor and purchasers of the nursing homes for unlawful conversion by vendor of Medicaid checks issued to manager. Bank that negotiated the checks and against which manager obtained judgment for wrongful conversion in underlying action, intervened seeking indemnification from vendor and claiming manager was unjustly enriched. Manager and vendor filed exceptions. The District Court granted manager's exception of res judicata and no cause of action and dismissed bank's petition to intervene. Bank appealed. The Court of Appeal held that the bank was entitled to intervene, the bank was entitled to bring unjust enrichment action against manager; and the bank was not barred by res judicata doctrine from bringing unjust enrichment claim against manager.
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Jackson v. Capitol City Family Health Center, 928 So.2d 129 [La. App. 1 Cir. 2005] -

An action for unjust enrichment is allowed only when the plaintiff has no other remedy at law. Coastal Environmental Specialists, Inc. v. Chem-Lig International, Inc., 00-1936 [La. App. 1 Cir. 11/9/01], 818 So.2d 12, 19; Pinnacle Operating Co., Inc. v. Ettco Enterprises, Inc., 914 So.2d 1144 [La. App. 2 Cir. 2005]. The Louisiana Supreme Court has held that the existence of a claim on an express or implied contract precludes application of the unjust enrichment theory because the potential claim constitutes a remedy at law available to the plaintiff. Morphy, Makofsky & Masson, Inc. v. Canal Place 2000, 538 So.2d 569, 572, 575 [La.1989]. Dr. Jackson has no entitlement to relief under LSA-C.C. art. 2298 because there exists an independent remedy at law, the contract.â€
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Pinnacle Operating Co., Inc. v. Ettco Enterprises, Inc., 914 So.2d 1144 [La. App. 2 Cir. 2005] -

Oil well operator that claimed entitlement to an assignment of the underlying mineral interests pursuant to a farm-out agreement between its predecessor and original owners of the interests had a remedy at law for the original owners' failure to assign such interests, and, thus operator could not bring unjust enrichment action against subsequent assignee of such interests who then sold them to third party, even though third party was a protected purchaser under the public records doctrine; operator could seek relief against its predecessor, which assigned its interest to operator despite never having received assignments, or against the original owners, or both. LSA-C.C. art. 2298.
David A. Szwak
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Post by David A. Szwak »

84 Lumber Co. v. Babineaux, 886 So.2d 693 [La. App. 3 Cir. 2004] -

An employer, under the quasi contractual obligation of unjust enrichment, is entitled to recover benefits wrongly paid as the result of fraud. Where one is unjustly enriched at the impoverishment of another, without cause, the value of that enrichment must be restituted. Our Lady of the Lake Regional Medical Center v. Helms, 98-1931 [La. App. 1 Cir. 9/24/99], 754 So.2d 1049, 1052-1053, writ denied, 99-3057 [La.1/7/00], 752 So.2d 863, citing Minyard v. Curtis Products, Inc., 251 La. 624, 205 So.2d 422 [1967].
David A. Szwak
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Post by David A. Szwak »

Commercial Union Ins. Co. v. CBC Temporary Staffing Services, Inc., 897 So.2d 647 [La. App. 1 Cir. 2004] -

“However, indemnity is also an equitable principle, holding that such is due when fairness requires that one person bear the total responsibility for an injury. The basis for indemnity in the civil law is restitution, the indemnitor having been unjustly enriched when the person seeking indemnity has discharged liability that was his responsibility. Vaughn v. Franklin, 00-0291, p. 10 [La. App. 1 Cir. 3/28/01], 785 So.2d 79, 87, writ denied, 01-1551 [La.10/5/01], 798 So.2d 969. In Nassif v. Sunrise Homes, Inc., 98-3193, pp. 2-3 [La.6/29/99], 739 So.2d 183, 185, the supreme court stated the following regarding the action for indemnity: Indemnity in its most basic sense means reimbursement, and may lie when one party discharges a liability which another rightfully should have assumed. It is based on the principle that everyone is responsible for his own wrongdoing, and if another person has been compelled to pay a judgment which ought to have been paid by the wrongdoer, then the loss should be shifted to the party whose negligence or tortuous act caused the loss [Citations omitted]. An indemnity claim based on unjust enrichment principles has been recognized to “fill a gap in the law where no express remedy is provided.â€
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Arias v. Albe, 876 So.2d 179 [La. App. 5 Cir. 2004] -

A party who knowingly and willingly enters into a contract cannot later successfully assert a claim in unjust enrichment or quantum meruit for services rendered under that contract by attacking the validity and legality of the contract.
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Laborde v. Dastugue, 868 So.2d 228 [La. App. 4 Cir. 2004] -

Vendors were not unjustly enriched by consideration prospective purchasers paid for option to purchase real property that was not exercised, where vendors did not sell property to any other party during the option period, vendors did not interfere with prospective purchasers' exercise of the option, and each party received something of value for the consideration the party gave. “The facts show that the Dastugues did not sell the property to any rty during the option period, and the Dastugues did not interfere with the Labordes' exercise of their option. Neither the Dastugues nor the Labordes were enriched or impoverished. There was a bargained for exchange, and each side received something of value for the consideration they gave. The Labordes had the right to buy the property at any time during the option period at the price stipulated in the option agreement, and they also had the right to assign their interest in the option agreement. They paid $21,000 for those rights. Similarly, the Dastugues gave up their right to sell the property to any other party, even if the terms offered were more beneficial to the Dastugues than the terms under the option agreement, and they received $21,000 in compensation for relinquishing their right to sell the property to a third party for ninety days. There was no enrichment, and there was no impoverishment, because each party received something of value for the consideration the party gave. Without an enrichment and an impoverishment, there is no unjust enrichment. Id.
David A. Szwak
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Post by David A. Szwak »

Treen Const. Co., Inc. v. Schott, 866 So.2d 950 [La. App. 5 Cir. 2004] -

Customers' failure to pay builder for plans that builder had purchased from architect did not amount to unjust enrichment; customers did not use or derive any benefit from plans, there was no contract between architect and customers, and builder could not show an absence of any other legal remedy. A party making a claim for unjust enrichment must show: [1] enrichment; [2] impoverishment; [3] a rational connection between the enrichment and the impoverishment; [4] lack of justification or cause for enrichment; and [5] absence of any other legal remedy.
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Cavaness v. State Dept. of Transp. and Development, 846 So.2d 866 [La. App. 3 Cir. 2003] -

Doctrine of unjust enrichment was inapplicable to broadcaster's action against communications company and state for reimbursement of expenses incurred in detuning their radio towers so that they would not interfere with broadcaster's radio station, because broadcaster was not impoverished; broadcaster could have enforced his rights under federal law, requiring communications company and state to detune their own towers, yet he did not seek this remedy.
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Soileau v. ABC Ins. Co., 844 So.2d 108 [La. App. 3 Cir. 2003] -

Client from whom accountant stole to repay another client brought action against that client to recover the stolen funds. The District Court granted summary judgment for the defendant client. Plaintiff client appealed. The Court of Appeal held that: [1] transferring stolen funds did not constitute “payment,â€
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

Industrial Companies, Inc. v. Durbin, 837 So.2d 1207 [La. 2003] -

Promissory note holder stated cause of action for unjust enrichment against its former attorneys arising from attorneys' retention of funds obtained from third-party purchaser of property in foreclosure proceeding, where note holder asserted that attorneys had been enriched by retention of almost $40,000 from funds, that note holder was impoverished by attorneys' retention of monies, that there was a connection between attorneys' enrichment and note holder's impoverishment, that there was absence of justification or cause for enrichment and impoverishment, and that there was no other remedy at law available to redress attorneys' improper retention of monies.
David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Post by David A. Szwak »

State, Through Dept. of Transp. & Development v. Todd, 834 So.2d 1114 [La. App. 3 Cir. 2002] -

Department of Transportation and Development [DOTD], which expropriated immovable property for development of highway and sought to recover expenses incurred in removing contaminated soil and ground water on property, failed to state claim against prior owners of property for indemnification under unjust enrichment theory; just as owners could not claim compensation for increase in property's value due to DOTD's use, DOTD could not claim reimbursement because its use caused property to lose value. An indemnity claim is a quasi-contractual obligation based on the equitable principle that “where there is an unjust enrichment of one at the expense or impoverishment of another, then the value of that enrichment or else, in some cases, the amount of the impoverishment must be restituted.â€
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