Opinion ID: 2156596
Heading Depth: 2
Heading Rank: 3

Heading: Jordan Keys'unjust enrichment theory.

Text: Jordan Keys also asserts a claim in quasi contract for unjust enrichment. Jordan Keys argues that it provided legal services to the Hospital but has not been paid for these services; that St. Paul has now received the benefit of these very services, but has not paid for them; and that St. Paul has therefore been unjustly enriched at Jordan Keys' expense. Jordan Keys relies, inter alia, on our decision in 4934, Inc. v. District of Columbia Dep't of Employment Servs., 605 A.2d 50 (D.C.1992), in which this court summarized the applicable principles: The modern law of unjust enrichment and restitution has its roots in the common law concept of quasi-contract. At common law there were cases in which the courts, in the absence of an actual contract, nevertheless imposed a duty ... under certain conditions upon one party to requite another in order to avoid the former's unjust enrichment. Bloomgarden v. Coyer, 156 U.S.App. D.C. 109, 116, 479 F.2d 201, 208 (1973) (footnote omitted). To achieve this result, the courts devised a legal obligation closely akin to a duty to make restitution, id. at 118, 479 F.2d at 210, which they called a quasi-contract. From the beginning a quasi-contract has been openly acknowledged to be a [l]egal fiction invented by common law courts to permit recovery by contractual remedy in cases where, in fact, there is no contract, but where circumstances are such that justice warrants a recovery as though there had been a promise.... It is ... founded on considerations of justice and equity, and on [the] doctrine of unjust enrichment. BLACK'S LAW DICTIONARY 324 (6th ed.1990). When the essential facts are not in dispute, as in this case, the question of whether a quasi-contract should be recognized is one of law. Bloomgarden v. Coyer, supra, 156 U.S.App. D.C. at 119, 479 F.2d at 211. Unjust enrichment occurs when a person retains a benefit (usually money) which in justice and equity belongs to another. Hillyard v. Smither & Mayton, Inc., 76 A.2d 166, 167 (D.C.1950); Sparks v. Gustafson, 750 P.2d 338, 342 (Alaska 1988); Partipilo v. Hallman, 156 Ill.App.3d 806, 811, 109 Ill.Dec. 387, 510 N.E.2d 8, 11 (1987); see RESTATEMENT OF RESTITUTION § 1 comment a (1937). In such a case, the recipient of the benefit has a duty to make restitution to the other person if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for [the recipient] to retain it. Id. § 1 comment c. Thus the doctrine of unjust enrichment depends on whether it is fair and just for the recipient to retain the benefit, not on whether the person or persons who bestowed the benefit had any duty to do so.... A claim of unjust enrichment does not require fault on the part of the recipient of the benefit. His innocence in receiving the benefit does not mean that his retention of that benefit without payment is just. Partipilo v. Hallman, supra, 156 Ill.App.3d at 810, 109 Ill.Dec. 387, 510 N.E.2d at 11 (citations omitted). Id. at 55-56. In Bradkin v. Leverton, 26 N.Y.2d 192, 309 N.Y.S.2d 192, 257 N.E.2d 643 (1970), the New York Court of Appeals provided the following explanation of the theory underlying claims sounding in quasi contract: Quasi 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. ( See KEENER, THE LAW OF QUASI CONTRACTS [1893], p. 14.) 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. ( See, e.g., Dentists' Supply Co. v. Cornelius, 281 App. Div. 306, 308, 119 N.Y.S.2d 570, 571, aff'd, 306 N.Y. 624, 116 N.E.2d 238; Dermott v. State of New York, 99 N.Y. 101, 109 1 N.E. 242, 245; see, also, Miller v. Schloss, 218 N.Y. 400, 407, 113 N.E. 337, 339; Ward v. Taggart, 51 Cal.2d 736, 741, 336 P.2d 534; RESTATEMENT, RESTITUTION, § 1; 1 CORBIN, CONTRACTS [1963], § 19; 1 WILLISTON, CONTRACTS [3d ed., 1957], § 3A.) The obligation implied under such circumstances, the court wrote in the Dermott case (99 N.Y. at p. 109, 1 N.E., at p. 246), 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. The applicable principle finds [an] apt and more full statement in Miller v. Schloss, 218 N.Y. 400, 407, 113 N.E. 337, 339, supra: A quasi or constructive contract rests upon the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another. In truth it is not a contract or promise at all. It is an obligation which the law creates, in the absence of any agreement, 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, and which ex aequo et bono belongs to another. Duty, and not a promise or agreement or intention of the person sought to be charged, defines it. It is fictitiously deemed contractual, in order to fit the cause of action to the contractual remedy. Id. at 645 (footnote omitted). As these passages reveal, the claim of unjust enrichment asserted by Jordan Keys is based on equitable principles, and it is not contingent upon the niceties of the law of contracts. Indeed, it is not a claim of breach of contract at all. Rather, the question before us is whether it is fair and just, under all of the circumstances, for St. Paul to receive Jordan Keys' non-work product documents without compensating Jordan Keys for them. St. Paul asserts that the principles of quasi contract and unjust enrichment have no application where, as is alleged by the carrier to be true in the present case, the plaintiff's rights are governed by an express contract. St. Paul relies, inter alia, on the emphasized words in our statement in the 4934, Inc., case that [ absent ] an actual contract, [unjust enrichment] ... impose[s] ... `a duty ... under certain conditions upon one party to requite another in order to avoid the former's unjust enrichment.' 605 A.2d at 55 (emphasis added). St. Paul also quotes the court's observation in Bloomgarden, 156 U.S.App. D.C. at 118, 479 F.2d at 210, that [t]here is, of course, no need to resort to [quasi contract] when the evidence sustains the existence of a true contract, either express or implied in fact. St. Paul's argument makes sense where a contract exists between the party seeking recovery on the basis of unjust enrichment and the party alleged to have been unjustly enriched. One who has entered into a valid contract [3] cannot be heard to complain that the contract is unjust, or that it unjustly enriches the party with whom he or she has reached agreement. The equities may be quite different, however, where A, who claims that B has been unjustly enriched at A's expense, has a contract with C rather than with B. It is not at all clear to us that in such a situation, the existence of a contract with C should automatically bar A's claim of unjust enrichment against B. See, e.g., Paschall's, Inc. v. Dozier, 219 Tenn. 45, 407 S.W.2d 150, 155-56 (1966); Commerce P'ship 8098 Ltd. P'ship v. Equity Contracting Co., 695 So.2d 383, 387-88 (Fla.Dist.Ct.App.1997) (both holding that a plaintiff may recover in quasi contract for unjust enrichment against one not a party to the contract under which the plaintiff provided services). [4] In the present case, there is no contract, express or implied in fact, between Jordan Keys and St. Paul, and we are not prepared to sustain the judgment upon the ground that the existence of an agreement between Jordan Keys and the Hospital would necessarily bar any recovery by Jordan Keys against St. Paul based on quasi contract or unjust enrichment. In any event, we need not decide the merits of St. Paul's contention that the contract between Jordan Keys and the Hospital precludes recovery against St. Paul for unjust enrichment, for in our view, St. Paul has not been unjustly enriched. We reach this conclusion because, as counsel for Jordan Keys acknowledged at oral argument, it was contemplated from the outset of the malpractice suit instituted by the Thompsons against the Hospital that St. Paul would receive the benefits of Jordan Keys' representation of the Hospital. This understanding was implicit in Jordan Keys' theory, stated in its complaint, that St. Paul was a third party beneficiary of the contract between Jordan Keys and the Hospital. See note 1, supra. If the Thompsons won a verdict greater than $1,000,000, then St. Paul would be obliged to pay the plaintiffs any part of the judgment in excess of that amount. For this reason, according to Jordan Keys, St. Paul directed and controlled the litigation [5] pursuant to written litigation guidelines and required Jordan Keys to provide St. Paul with regular and detailed reports on the status of the case. Because Jordan Keys, as counsel for the Hospital, was also automatically representing the interests of St. Paul, St. Paul's requests for, and expectations of, full information from Jordan Keys were altogether reasonable. As Jordan Keys asserted in the trial court, [t]he defendant was informed of the progress of the litigation at virtually every step of the way. Thus, Jordan Keys concedes that when the Bankruptcy Court ordered Jordan Keys to make the information in its files available to St. Paul without having to compensate the Hospital or its attorneys for it, St. Paul received nothing that it would not have expected to be given had the Hospital not gone bankrupt. Accordingly, in our view, although St. Paul benefited from Jordan Keys' work on behalf of the Hospital, St. Paul was not unjustly enriched. There can be no doubt that the Hospital's bankruptcy significantly altered the legal terrain insofar as Jordan Keys was concerned. Jordan Keys had expected to be fully compensated by the Hospital, and its client's bankruptcy shattered these expectations. [6] Nevertheless, in the absence of some unanticipated and unjust enrichment of St. Paul, the loss resulting from the Hospital's inability to meet its obligations must be borne by the party that contracted with the Hospital, namely, Jordan Keys. Finally, Jordan Keys asserts that, in selecting new counsel to defend the Thompson case, St. Paul made no claim that Jordan Keys' performance was unsatisfactory. Therefore, according to Jordan Keys, [t]he logical inference then is that St. Paul used the bankruptcy of its insured to cut legal fees and save money by switching counsel after discovery had closed. This is not equitable. It is unclear to us that a change of counsel after the close of discovery could reduce the carrier's legal fees, for the new attorneys would have to familiarize themselves with a complex case and get up to speed, while the Jordan Keys lawyers presumably already had the requisite familiarity. Moreover, following the bankruptcy, St. Paul was arguably in a worse position than it had previously anticipated as an excess carrier, for it was compelled to step in, assume an active role, and incur the expenses of a legal defense before the self-insured Hospital had completed its anticipated task of defending against the first $1,000,000 of the Thompsons' claims for damages. In any event, St. Paul had the right to select its own attorneys when it took over the defense of the case. At the time St. Paul replaced counsel, Jordan Keys either was entitled to compensation for its documents from St. Paul (under principles of implied-in-fact contract or quasi contract) or it was not. The resolution of this issue could not turn on the carrier's motive for deciding to change attorneys, and we have concluded that Jordan Keys is not entitled to recovery under either of these theories. [7] Accordingly, the judgment is Affirmed.