Chapter 43 UNJUST ENRICHMENT, QUANTUM MERUIT, QUASI CONTRACT, IMPLIED CONTRACT

• Jurisdiction: New York

Chapter Forty-Three

Unjust Enrichment, Quantum Meruit, Quasi Contract, Implied Contract

I. Unjust Enrichment, Quantum Meruit, Quasi Contract, Implied Contract

Quantum meruit and unjust enrichment are equitable remedies with their own prerequisites, they are not mere devices to give effect to unenforceable contracts.⁶⁶⁸⁸ A quasi contract applies only in the absence of an express agreement, and is not really a contract at all, but rather a legal obligation imposed in order to prevent a party's unjust enrichment.⁶⁶⁸⁹ Where parties have executed a valid and enforceable written contract governing a particular subject matter, recovery on a theory of unjust enrichment for events arising out of that subject matter is ordinarily precluded.⁶⁶⁹⁰ The obligation implied under quasi contract is such as justice would dictate, and must conform to what the court may assume would have been the agreement of the parties if the situation had been anticipated and provided for.⁶⁶⁹¹

Quasi contracts are not contracts at all, but they give rise to obligations more akin to those stemming from contract than from tort. The contract is mere fiction, a form imposed in order to adapt the case to a given remedy. A quasi-contractual obligation is one imposed by law where there has been no agreement or expression of assent, by word or act, on the part of either party involved. The law creates it, regardless of the intention of the parties, to assure a just and equitable result.⁶⁶⁹²

An action to recover for unjust enrichment sounds in restitution or quasi-contract;⁶⁶⁹³ unjust enrichment is the essence of the remedy of restitution. The cause of action alleging unjust enrichment is governed by the six-year statute of limitations of CPLR 213(1), which begins to run upon the occurrence of the wrongful act giving rise to the duty of restitution.⁶⁶⁹⁴

Unjust enrichment is not a catchall cause of action to be used when others fail. It is available only in unusual situations when, though the defendant has not breached a contract nor committed a recognized tort, circumstances create an equitable obligation running from the defendant to the plaintiff. Typical cases are those in which the defendant, though guilty of no wrongdoing, has received money to which he or she is not entitled.⁶⁶⁹⁵

Where there is a bona fide dispute as to the existence of a contract or where the contract does not cover the dispute in issue, the plaintiff may proceed upon a theory of unjust enrichment (quantum meruit) as an alternative to a cause of action alleging breach of contract and will not be required to elect his or her remedies.⁶⁶⁹⁶ A claim for unjust enrichment "is not available where it simply duplicates, or replaces, a conventional contract claim.⁶⁶⁹⁷

Damages for unjust enrichment may not be sought where the suing party has fully performed on a valid written agreement, the existence of which is undisputed, and the scope of which clearly covers the dispute between the parties.⁶⁶⁹⁸

The theory of unjust enrichment lies as a quasi-contract claim; it is an obligation imposed by equity to prevent injustice in the absence of an actual agreement between the parties⁶⁶⁹⁹ because of the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another when and because the acts of the parties or others have placed in the possession of one person money, or its equivalent, under such circumstances that in equity and good conscience he ought not to retain it.⁶⁷⁰⁰

Where an express contract has been rescinded, is unenforceable or abrogated, a recovery may be had on an implied promise to pay for benefits conferred thereunder. It is clear, however, that quantum meruit will only be invoked where required to avoid unjust enrichment,⁶⁷⁰¹ which is implied in law.

Pleadings for unjust enrichment must set forth: (1) the party against whom the claim is made has been enriched; (2) at the claimant's expense; and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered.⁶⁷⁰² The elements of a restitution claim in quasi-contract are essentially the same elements as for unjust enrichment: (1) that the defendant has received a benefit or was enriched; (2) at the plaintiff's expense; and (3) under circumstances that would make it unjust and against equity and good conscience for the defendant to retain what is sought to be recovered.⁶⁷⁰³

The essential inquiry in any action for unjust enrichment or restitution is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered.⁶⁷⁰⁴ Unjust enrichment, however, does not require the performance of any wrongful act by the one enriched;⁶⁷⁰⁵ innocent parties may frequently be unjustly enriched.⁶⁷⁰⁶ It is not the promise only, nor the breach only, but unjust enrichment under cover of the relation of confidence, puts the court in motion.⁶⁷⁰⁷

A party has no right to induce another to contract with him on the supposition that his words mean one thing while he hopes that a court will adopt a construction by which the same words will mean another, more to his advantage.⁶⁷⁰⁸ Generally, courts will look to see if a benefit has been conferred on the defendant under mistake of fact or law, if the benefit still remains with the defendant, if there has been otherwise a change of position by the defendant, and whether the defendant's conduct was tortious or fraudulent.⁶⁷⁰⁹ It is almost impossible to state in detail the circumstances constituting a fraud where those circumstances are peculiarly within the knowledge of the party against whom the defense is being asserted.⁶⁷¹⁰

That an express contract is unenforceable because of its failure to comply with the Statute of Frauds does not mean that quasi-contractual recovery for the reasonable value of services rendered is, therefore, necessarily unavailable.⁶⁷¹¹

An existant, valid and enforceable written contract, governing a particular subject matter, ordinarily will preclude recovery in quasi contract for events arising out of the same subject matter.⁶⁷¹²

A claim of unjust enrichment does not require privity between the parties but rather that there must exist a relationship or connection between the parties that is not too attenuated.⁶⁷¹³ In Boardman v. Kennedy,⁶⁷¹⁴ plaintiff-ex-wife of decedent commenced an action against decedent's widow, individually and as executrix of decedent's estate. Pursuant to the matrimonial stipulation between plaintiff and decedent, plaintiff received, a onehalf interest in decedent's IRA. Plaintiff did not receive her share.

Not only was the cause of action for unjust enrichment time-barred by the six-year statute of limitations (CPLR 213(1)), but that branch of the unjust enrichment cause of action asserted against defendant individually, while not necessarily requiring privity between plaintiff and defendant, was, nevertheless, too attenuated to support that cause of action inasmuch as plaintiff and defendant "simply had no dealings with each other."

In Board of Education of Cold Spring Harbor Central School District v. Rettaliata,⁶⁷¹⁵ the Court of Appeals elaborated:

[A quasi contract] allows the plaintiff to recover money which has come into the hands of the defendant "impressed with a species of trust" because under the circumstances it is "against good conscience for the defendant to keep the money." . . . The action depends upon equitable principles in the sense that broad considerations of right, justice and morality apply to it, but it has long been considered an action at law.

In In re Carracino,⁶⁷¹⁶ the Appellate Division affirmed the dismissal of a complaint in a probate proceeding to recover, inter alia, damages for breach of a prenuptial agreement and for unjust enrichment. The agreement specified that "upon their marriage," the parties would become joint owners of either the decedent's then-current residence or a replacement home that they were contemplating purchasing at the time of the agreement. The decedent agreed to purchase a mortgage life insurance policy with respect to his then-residence or the replacement property, if it was purchased. No replacement property was ever bought. There was no language in the agreement that stated or could be construed to mean that the decedent had voluntarily obligated himself to purchase a mortgage life insurance policy for each and every home purchased by the parties throughout the duration of their marriage. Furthermore, no cause of action in unjust enrichment is available where claims are governed by a valid and enforceable prenuptial agreement.

A claim for unjust enrichment does not lie to relieve a party of the consequences of the party's own failure to exercise caution with respect to a business transaction.⁶⁷¹⁷

The theory of unjust enrichment is not precluded by the statute of frauds where it is not an attempt to enforce the oral contract but instead seeks to recover the amount by which the defendant was enriched at the plaintiff's expense.⁶⁷¹⁸

II. Implied Contracts

An implied contract exists when the parties have not entered into an express contract, but their course of conduct indicates that they have reached a meeting of the minds that is sufficient to constitute an enforceable contract. A contract may be implied "as an inference from the facts and circumstances of a case, although not formally stated in words, and is derived from the presumed intention of the parties as indicated by their conduct.⁶⁷¹⁹

A contract implied in fact may result as an inference from the facts and circumstances of the case, although not formally stated in words, and is derived from the "presumed" intention of the parties as indicated by their conduct. It is just as binding as an express contract arising from declared intention, since in the law there is no distinction between agreements made by words and those made by conduct.⁶⁷²⁰ This type of contract requires such elements as consideration...