Demystifying Enrichment Without Cause

• Author: Nikolaos A. Davrados
• Position: Assistant Professor of Law, Loyola University New Orleans College of Law.
• Pages: 1223-1288

Demystifying Enrichment Without Cause Nikolaos A. Davrados * TABLE OF CONTENTS Introduction ................................................................................ 1224 I. Historical Foundations of Enrichment Without Cause ............... 1226 A. Roman Law Foundations ..................................................... 1226 1. Condictio and Actio de in Rem Verso ............................ 1227 2. Ulpian’s Causa .............................................................. 1232 B. European Civil Codes—The French-German Separation ........................................................................... 1234 1. The French Model—Causality and Actio de in Rem Verso ................................................... 1234 2. The German Model—Abstraction and Condictio ......... 1242 II. Scope of Application of Enrichment Without Cause ................. 1248 A. General Principles ................................................................ 1248 1. Enrichment Without Cause as Lex Generalis................ 1248 2. Enrichment Without Cause as a Juridical Fact .............. 1249 3. Enrichment Without Cause as Restitution, Not Restoration ............................................................. 1253 B. Requirements for an Action of Enrichment Without Cause ..................................................................... 1254 1. Material Requirements .................................................. 1255 a. Enrichment .............................................................. 1255 i. Performance or Benefit Conferred on Obligor at Obligee’s Expense ......................... 1256 Copyright 2018, by NIKOLAOS A. DAVRADOS. * Assistant Professor of Law, Loyola University New Orleans College of Law. The author wishes to thank Arthur Crais, David Cromwell, Trey Drury, David Gruning, John Lovett, Maria Pabon, Ronald J. Scalise, Jr., Robert Thibeaux, Dian Tooley-Knoblett, and James Etienne Viator for their thoughtful comments and valuable insight. The author also thanks Janet Kearney and Christopher Warren for their assistance in the research for this Article and the editors of the Louisiana Law Review for their helpful suggestions during the editing process. Any mistakes and omissions are attributable solely to the author. In memoriam A.N. Yiannopoulos: scholar, teacher, draftsman, biophile, mentor, and dear friend who so openhandedly imparted the gift of İ੣ ȗોȞ that he himself received. And may this contribution be an obol for the ferryman. ȀĮȜȩ IJĮȟȓįȚ ijȓȜİ ȝȠȣ țĮȜȑ! 1224 LOUISIANA LAW REVIEW [Vol. 78 ii. Obligor’s Interference with Obligee’s Patrimony ........................................................ 1262 iii. Obligee’s Expenses on Obligor’s Property .......................................................... 1264 b. Impoverishment ...................................................... 1266 c. Causal Link Between Enrichment and Impoverishment ...................................................... 1266 2. Juridical Requirements .................................................. 1270 a. Lack of Cause for Retaining Enrichment ............... 1270 i. Valid Juridical Act ............................................ 1271 ii. The Law ............................................................ 1275 ii-a. Failed Juridical Acts ................................ 1275 ii-b. Natural Obligations ................................. 1277 ii-c. Quasi-Contracts ....................................... 1279 ii-d. Judicial Decisions .................................... 1279 b. Absence of Other Remedy: Subsidiarity of the Action ........................................................... 1280 Conclusion .................................................................................. 1287 INTRODUCTION Enrichment without cause was introduced into the Louisiana Civil Code as revised Article 2298. 1 As indicated in the revision comments, 2 this provision codified preexisting jurisprudence that had imported the theory 1. LA. CIV. CODE ANN. art. 2298 (2018); Act No. 713, § 1, 1995 La. Acts No. 1041 (codified as LA. CIV. CODE art. 2298 (1996)). The Quasi-Contracts Committee of the Louisiana State Law Institute, chaired by Professor A.N. Yiannopoulos, prepared the initial draft of this revised Article. See Cheryl Martin, Louisiana State Law Institute Proposes Revision of Negotiorum Gestio and Codification of Unjust Enrichment, 69 TUL. L. REV. 181 (1994). 2. Art. 2298 cmt. a. 2018] DEMYSTIFYING ENRICHMENT WITHOUT CAUSE 1225 of actio de in rem verso, 3 together with the mysteries 4 of this theory’s jurisprudential past. Generally, liability for enrichment without cause requires a displacement of wealth in favor of the enriched obligor at the expense of the impoverished obligee. Morever, this displacement is not justified by the will of the parties or by operation of law. 5 The remedy provided is subsidiary. It is intended to restore this patrimonial imbalance while at the same time rectifying the inequity of the situation pursuant to the moral directives of equity and commutative justice. 6 This Article explores two mysteries surrounding the theory of enrichment without cause that still bedevil scholars and the courts—the theory’s foundation and its scope of application. Part I examines the history, characteristic features, and underlying principles of enrichment without cause as a source of obligations and a special expression of the more general principle of unjustified enrichment. 7 Part II applies this 3. In France, the actio de in rem verso was introduced in the seminal decision of the Cour de cassation in the Boudier case. Cour de cassation [Cass.] [supreme court for judicial matters] req., June 15, 1892, D. 1892, 1, 596, S. 1893, 1, 281, note J.-E. Labbé (Fr.); HENRI CAPITANT ET AL., 2 LES GRANDS ARRETS DE LA JURISPRUDENCE CIVILE, OBLIGATIONS, CONTRATS SPECIAUX, SURETES No. 241 (13th ed. 2015) (Fr.). The Louisiana Supreme Court recognized the actio de in rem verso in the landmark cases Minyard v. Curtis Prod., Inc., 205 So. 2d 422 (La. 1967) and Edmonston v. A-Second Mortgage Co., 289 So. 2d 116 (La. 1974). ALAIN A. LEVASSEUR, LOUISIANA LAW OF UNJUST ENRICHMENT IN QUASI-CONTRACTS 344, 355–60 (1991). 4. A.N. Yiannopoulos, Presentation to the Civil Law Property Students at the Loyola University New Orleans College of Law: Mysteries of the Louisiana Civil Code (Oct. 19, 2015), https://vimeo.com/143021101 [https://perma.cc/V3DW-8L8K] (discussing “truths, half-truths, and falsehoods” of Louisiana civil law). 5. Scott v. Wesley, 589 So. 2d 26, 27 (La. Ct. App. 1991) (“The root principle of an unjustified enrichment . . . is that the plaintiff suffers an economic detriment for which he should not be responsible, while the defendant receives an economic benefit for which he has not paid.”). 6. See 9 CHARLES AUBRY & CHARLES RAU, COURS DE DROIT CIVIL FRANÇAIS No. 578 (Etienne Bartin ed., 5th ed. 1897–1923). 7. LA. CIV. CODE ANN. arts. 1757, 2298. Courts often use the terms “unjust(ified) enrichment” and “enrichment without cause” interchangeably. These two terms, however, should be distinguished. “Unjustified enrichment” is a general principle of law, whereas “enrichment without cause” is a specific source of obligations. This Article does not discuss the general principle of unjustified enrichment, the expression of which is found in several areas of the law, including enrichment without cause. See DIG. 12.6.14 (Pomponius, Ad Sabinum 21) (“For it is by nature fair that nobody should enrich himself at the expense of another.”) and DIG. 50.17.206 (Pomponius, Ex Variis Lectionibus 9) (“By the law of nature it is fair that no one become richer by the loss and injury 1226 LOUISIANA LAW REVIEW [Vol. 78 historical and comparative information in an attempt to decipher the precise scope of application of enrichment without cause in Louisiana law, in hopes that this contribution will prompt a more general discussion on the formulation of a coherent Louisiana model of enrichment without cause. 8 I. HISTORICAL FOUNDATIONS OF ENRICHMENT WITHOUT CAUSE The foundation of enrichment without cause is the first mystery to explore. This mystery is an ancient one, dating back to a historical misunderstanding among early French and German jurists as to the meaning of certain Roman legal concepts. Exploring these Roman concepts and this French-German misunderstanding will perhaps help solve this first mystery. A. Roman Law Foundations The historical foundation of enrichment without cause, as a modern source of obligations, is traced back to Justinian and his Corpus Iuris Civilis. 9 The compilers of the Roman texts enunciated the principle of unjustified enrichment based on two actions of the classical Roman period—the condictio and the actio de in rem verso. of another.”); cf. LA. CIV. CODE ANN. art. 2055; Vernon V. Palmer, The Many Guises of Equity in a Mixed Jurisdiction: A Functional View of Equity in Louisiana, 69 TUL. L. REV. 7, 42–47 (1994) (referring to unjustified enrichment as an example of the application of the principle of equity by Louisiana courts); David W. Gruning, Codifying Civil Law: Principle and Practice, 51 LOY. L. REV. 57, 64 (2005) (using the principle of unjustified enrichment as an example of a principle of law interacting with practice). Also, this Article does not cover issues concerning the consequences of enrichment without cause. 8. In essence, this Article attempts to uncover hidden truths, clarify half-truths, and dispel falsehoods concerning the mysterious actio de in rem verso. See Yiannopoulos, supra note 4. 9. Translated texts from the Digest are taken from THE DIGEST OF JUSTINIAN (Theodor Mommsen et al. eds., 1985). Translated texts from the Institutes of Justinian are taken from THOMAS COLLETT SANDARS, THE INSTITUTES OF JUSTINIAN WITH ENGLISH INTRODUCTION, TRANSLATION, AND NOTES (12th rev. ed. 1917) (1898). Translated texts from the Institutes of Gaius and from Justinian’s Code are taken from SAMUEL P...