Pleading Unjust Enrichment in Construction Litigation
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The theory of recovery known unjust enrichment is often used by attorneys in construction litigation actions as an alternative count to claims for breach of contract or for foreclosure of a construction lien. It is not uncommon, however, for unjust enrichment claims to be improperly pled in the complaint, which will often lead to a misguided legal analysis. This, of course, can negatively affect your client’s case at the earliest stage of the dispute.
Unjust enrichment is often referred to as a contract implied in law; however, it is not a contract at all. The theory of unjust enrichment is a legal fiction defined as “an obligation imposed by law to do justice even though it is clear that no promise was ever made or intended.” Tipper v. Great Lakes Chemical Company, 281 So.2d 10, 13 (Fla. 1973). Unlike quantum meruit, unjust enrichment does not require an assent between the parties. Quantum meruit is premised on the expectation of the parties, while unjust enrichment is supported by the interest of society in the prevention of injustice.
One must prove the following elements to recover under the theory of unjust enrichment: 1) lack of an adequate remedy at law; 2) a benefit conferred upon the defendant by the plaintiff coupled with the defendant’s appreciation of the benefit; and 3) acceptance and retention of the benefit under circumstances that make it inequitable for him or her to do so without paying the value of it. Challenge Air Transport, Inc. v. Tranportes Aeros Nacionales, 520 So.2d 323 (Fla. 3d DCA 1988). As this post will reveal, each of these elements present peculiar issues and analytical challenges for the legal practitioner.
Inadequate Remedy at Law
Proving the inadequacy of remedy at law is not a simple task. Neither the courts nor the legislature have provided a clear rule as to when equity should be invoked. In most cases, subcontractors not in privity with the owner will seek to enforce a lien when they do not receive payment from the general contractor. When a subcontractor fails to comply with the rigorous requirements of Florida’s construction lien law, he will often seek to invoke equity so that the owner is not unjustly enriched at his expense. An example of this tactic is shown in Rite-way Painting & Plastering, Inc. v. Tetor, where a subcontractor failed to serve the notice to owner within the 45-day time period required by statute. 582 So.2d 15 (Fla.2d DCA 1991). Here, the court permitted the subcontractor to recover from the owner under the theory of unjust enrichment. In contrast, the court in Pinewood Plumbing Supply, Inc. v. Centennial Construction, Inc., examined an identical situation presented to the court in Rite-way, but reached the opposite conclusion. 489 So.2d 216 (Fla.3d DCA 1986). Here again, the subcontractor failed to serve proper notice on the owner and invoked equity to recover against the general contractor; however, the Pinewood court reasoned that unjust enrichment should not lie as a basis for recovery from the owner. The court reasoned that the subcontractor did indeed have an adequate remedy at law under F.S. §255.05, but failed to properly use it. Here, the court barred equitable relief, due to the fact the subcontractor’s lack of an adequate remedy was self-inflicted; whereas, the Rite-Way court permitted the invocation of equity under identical circumstances.
The existence of co-parties also creates complications when attempting to prove the inadequacy of a legal remedy. If a legal remedy exists against a co-party, a claimant must first exhaust the legal remedy before attempting to recover in equity against another party. An example of this is shown in Deanna Construction Co. Inc. v. Sarasota Entertainment Corp., where a subcontractor sought to recover against an owner under a theory of unjust enrichment when his lien rights were extinguished by foreclosure of a superior mortgage. 636 So.2d. 767 (Fla.4th DCA 1994). Because the subcontractor was still engaged in arbitration with the general contractor, the court reversed the judgment against the owner. The court reasoned that there was a chance that the subcontractor could be fully compensated through the arbitration with the general contractor, and that the existence of the ongoing arbitration rendered an indirect equity claim premature.
On the other hand, courts are reluctant to bar recovery in equity against one party, where a legal remedy exists against a co-party, and the co-party is financially weak, thus creating the likelihood that a judgment would be rendered uncollectible. Deanna Construction Company, Inc. v. Sarasota Entertainment Corp., 563 So.2d 150 (Fla.2d DCA 1990). Courts are likely to reason that a legal remedy against a dissolved corporation or a party in bankruptcy is indeed inadequate.
Was the Defendant Actually Enriched?
For an enrichment to exist, one must ascertain whether a benefit was conferred upon the recipient. In making this determination, the reasonable value of services is not determined by its market value, rather the services provided by the claimant must be considered beneficial and valuable through the eyes of the recipient.
For example, in Henry M. Butler v. Trizec Properties, Inc., a contractor filed suit against a landlord for work that was contracted for by a defaulting tenant. 524 So.2d 710 (Fla.2d DCA 1988). Here, the contractor converted unimproved space into fully finished offices, which the landlord could presumably lease to another tenant. Because the landlord could re-lease the premises, the court acknowledged that a benefit had been conferred and remanded for trial on the theory of unjust enrichment. Alternatively, in Coffee Pot Plaza Partnership v. Arrow Air Conditioning and Refrigeration, Inc., the court denied recovery in unjust enrichment where an air conditioning contractor repaired and installed refrigeration equipment left behind by a tenant in a space that the landlord could not rent. 412 So.2d 883 (Fla.2d DCA 1982). The court reasoned that it would be speculative to hold that the landlord had received a benefit, even though the value of the equipment had been enhanced.
Based on the foregoing, the lesson is that even when substantial work is performed by the claimant, such work may not be considered beneficial to the defendant, and if the defendant is not benefitted, he is not enriched. As a result, the claimant must carefully scrutinize the basis upon which they intend to quantify their recovery.
Was the Enrichment Unjust?
Once you have determined that the defendant has been enriched, you must then ascertain whether or not the enrichment was unjust. An enrichment is considered unjust when a party receives a benefit without paying for it. For example, if an owner knows that a contractor is unable to pay a subcontractor, yet despite this knowledge, allows the subcontractor to improve his or her property, a court will likely hold that the owner was unjustly enriched. See Zaleznik v. Gulf Coast Roofing Co., 576 So.2d 776 (Fla.2d DCA 1991). In contrast, where an owner pays a contractor for work performed by a subcontractor, and the contractor does not pay the subcontractor for the performance of his services, courts have held that the “injustice was not visited” upon the subcontractor by the owner. Blum v. Dawkins, Inc. 683 So.2d 163 (Fla. 5th DCA 1996).
In order to invoke equity under a claim of unjust enrichment, one must first thoroughly analyze the facts of a particular case. As shown, there must not be an adequate remedy at law, a benefit must be conferred on the defendant in order to be enriched and the enrichment must be unjust. Though it may seem elementary to satisfy the elements of a claim for unjust enrichment, in reality the analysis is fairly complex in the world of construction litigation.