Don’t Let the Other Guy be Unjustly Enriched
Print Article- Posted on: Sep 15 2023
Sometimes someone receives a valuable benefit from your efforts and refuses to compensate you. If the “benefit” was the result of a contractual relationship, a lawsuit for the breach of that contract would be viable. What happens, however, where there is no contract on which to bring a claim? There are several theories of liability sounding in “quasi-contract” that may offer you relief for your efforts. While today’s post will focus on the quasi-contract claim of unjust enrichment, there are others.
By way of background, a quasi-contract “is not really a contract at all, but rather a legal obligation imposed in order to prevent a party’s unjust enrichment.” Clark-Fitzpatrick, Inc. v. Long Island Rail Road Co., 70 N.Y.2d 382, 388 (1987) (citations omitted). The New York Court of Appeals has explained that:
[q]uasi contracts are not contracts at all, although they give rise to obligations more akin to those stemming from contract than from tort. The contract is a mere fiction, a form imposed in order to adapt the case to a given remedy. Briefly stated, 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.
Clark-Fitzpatrick, 70 N.Y.2d at 388-89 (citation, internal quotation marks and ellipses omitted; emphasis in original). For these reasons, a quasi-contract claim, such as unjust enrichment, will ordinarily be dismissed when “the relationship between the parties [is] defined by a valid written contract, which detailed the applicable terms and conditions” of the parties’ relationship. Fortune Limousine Service, Inc. v. Nextel Communications, 35 A.D.3d 350, 353 (1st Dep’t 2006); see also, The Fifth and Fifty-Fifth Residence Club Assoc., Inc. v. Vistana Signature Experiences, Inc., 217 A.D.3d 564, 566 (1st Dep’t 2023). Conversely, the “theory of unjust enrichment lies as a quasi-contract claim and contemplates an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties.” Nasca v. Greene, 216 A.D.3d 648, 650 (2nd Dep’t 2023) (citation and internal quotation marks omitted).
However, in Sebastian Holdings, Inc. v. Deutsche Bank AG, 78 A.D.3d 446 (1st Dep’t 2010), the Court sustained an unjust enrichment claim on a motion to dismiss because the “claim for unjust enrichment does not depend on the existence of valid and enforceable written contracts between the parties, but rather arises from facts wholly independent of any contract upon which the plaintiff sues [and t]herefore, it cannot be said at this early stage of the proceedings that these claims are duplicative of the breach-of-contract claims, and the rule of Clark-Fitzpatrick … does not apply.”
The elements of a claim for unjust enrichment are “(1) the defendant was enriched, (2) at the plaintiff’s expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered.” GFRE, Inc. v. U.S. Bank, N.A., 130 A.D.3d 569, 570 (2nd Dep’t 2015) (citation and internal quotation marks omitted); see also, Paramount Film Distr. v. State of New York, 30 N.Y.2d 415, 421 (1972) (“The essential inquiry in any action for unjust enrichment … is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered.”)
A claim for unjust enrichment was sustained on September 13, 2023, by the Appellate Division, Second Department, in Bedford-Carp Construction, Inc. v. Brooklyn Union Gas. [Eds. Note: some of the facts recited herein were obtained from the appellate record available on the NYSCEF system.] The plaintiff in Bedford-Carp was a construction contractor that entered into a contract with a New York City agency to “install a box storm sewer” in Brooklyn. During performance of the contract, plaintiff discovered 45,000 tons of contaminated soil. The site of the work was near Brooklyn Union Gas’ facility. The parties contract provides that plaintiff “shall not seek additional compensation from gas companies except as specifically set forth its contract” and anticipated that there may be interference from existing and abandoned gas lines. Plaintiff’s bid was to reflect same. In addition, the contract indicates that Brooklyn Union Gas may be responsible to the City for contamination it caused.
When contamination was found and verified, the City was notified and, in turn, contacted Brooklyn Union Gas and requested that it undertake remediation efforts. Defendant declined. In order to maintain the progress of the project, plaintiff undertook the remediation effort. Subsequently, plaintiff sued Brooklyn Union Gas – alleging causes of action sounding in breach of contract, declaratory judgment (that defendant, Brooklyn Union Gas must compensate plaintiff for remediation costs) and unjust enrichment. Plaintiff appealed the motion court’s dismissal of each cause of action in response to defendant’s motion to dismiss.
The Second Department sustained the dismissal as to the breach of contract and declaratory judgment cause of action because “there was no contractual relationship or privity between the plaintiff and the defendant.” The Court, however, held that the unjust enrichment claim should not have been dismissed and, in so doing, stated:
However, the Supreme Court erred in granting that branch of the defendant’s motion which was to dismiss the third cause of action, alleging unjust enrichment. Unjust enrichment lies as a quasi-contract claim and contemplates an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties. To recover under a theory of unjust enrichment, a litigant must show that (1) the other party was enriched, (2) at that party’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. The essential inquiry in any action for unjust enrichment is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered. Although privity is not required for an unjust enrichment claim, a claim will not be supported if the connection between the parties is too attenuated.
Here, affording the complaint a liberal construction, we find that it sufficiently alleged that the defendant was unjustly enriched, at the plaintiff’s expense, by the plaintiff’s remediation of the contaminated soil, and that it would be against equity and good conscience to permit the defendant to retain what was sought to be recovered. Moreover, we find that the Supreme Court erred in determining, in effect, that the connection between the parties was too attenuated to support a claim for unjust enrichment. [Citations, internal quotation marks, brackets and ellipses omitted.]
Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.
This article is for informational purposes and is not intended to be and should not be taken as legal advice.
