Opinion ID: 2630317
Heading Depth: 1
Heading Rank: 4

Heading: The Measure of Recovery in Unjust Enrichment Actions

Text: ¶ 37 Jim and Shannon [1] brought a quasi-contract or unjust enrichment claim. At issue here is the proper application of the reasonable value of services measure of recovery for unjust enrichment, set forth in the Restatement (Second) of Contracts. The Restatement, section 371, adopted by this court in Noel v. Cole, 98 Wash.2d 375, 655 P.2d 245 (1982), superseded by statute on other grounds as stated in Dioxin/Organochlorine Center v. Pollution Control Hearings Board, 131 Wash.2d 345, 362, 932 P.2d 158 (1997), states that unjust enrichment recovery [2] may be measured as the reasonable value to the other party of what [she] received in terms of what it would have cost [her] to obtain it from a person in the claimant's position. RESTATEMENT (SECOND) OF CONTRACTS § 371(a) (1981). ¶ 38 I agree with the majority that a person in the claimant's position means a similar provider[ ] of like services. Majority at 1265. Jim and Shannon urge us to calculate the reasonable value of the benefit as the sum Judith would have paid a professional general contractor to perform the work. But Jim and Shannon are dissimilar to professional general contractors. [3] They undertook to perform the work on an informal basis, on their own time line, while living on the property. They were not licensed, bonded, or insured as general contractors. They paid no state taxes; they incurred no overhead costs. The court was correct to measure the value of their services as informal contractors, not professional general contractors. ¶ 39 Contrary to the majority's assertion, this reading of in the claimant's position does not ignore the fact that the remedy of restitution should cause the recipient of the benefit to disgorge that benefit in full. See majority at 1265. Instead, this approach recognizes that receiving the benefit from informal workers reduces the actual value of the benefit, largely because the recipient bears increased risk. For example, no performance bond guarantees that the project will be completed. If a construction accident occurs for which the recipient could be liable or if construction defects surface, the recipient lacks insurance protection. The recipient cannot seek recourse with the state Department of Licensing if she is unsatisfied with the work. There is no doubt that the provider's circumstances affect the work's value to the recipient, thus trial judges may adjust recovery accordingly. ¶ 40 Our case law and the Restatement show that the trial judge had ample discretion when fashioning the remedy in this case. Initially, the majority correctly notes that unjust enrichment is an equitable doctrine. [4] Precisely for that reason, there can be no strict rule for calculating reasonable value of services recovery in an unjust enrichment action. See 26 SAMUEL WILLISTON & RICHARD A. LORD, A TREATISE ON THE LAW OF CONTRACTS § 68:36, at 445 & n. 89 (4th ed.2003). `[E]quitable doctrines grew naturally out of the humane desire to relieve [parties] under special circumstances from the harshness of strict legal rules.' Kingery v. Dep't of Labor & Indus., 132 Wash.2d 162, 173-74, 937 P.2d 565 (1997) (quoting Ames v. Dep't of Labor & Indus., 176 Wash. 509, 513, 30 P.2d 239 (1934)). When fashioning equitable remedies, trial courts' aim is to do substantial justice to the parties. See Esmieu v. Hsieh, 92 Wash.2d 530, 535, 598 P.2d 1369 (1979); Hough v. Stockbridge, 150 Wash.2d 234, 236, 76 P.3d 216 (2003). To that end, trial courts sitting in equity must look to the circumstances surrounding each case when determining remedies. Esmieu, 92 Wash.2d at 535, 598 P.2d 1369. ¶ 41 The Restatement rule for reasonable value recovery contemplates this flexible approach to calculating awards. As noted above, it states that reasonable value is what [the other party] received in terms of what it would have cost [her] to obtain it from a person in the claimant's position.  RESTATEMENT (SECOND) OF CONTRACTS § 371(a) (1981) (emphasis added). Further, the Restatement acknowledges that the measure of reasonable value is  usually based on the market price of ... a substitute. RESTATEMENT (SECOND) OF CONTRACTS § 371 cmt. a, at 203 (1981) (emphasis added). The Restatement invites courts sitting in equity to consider the claimant's position, using market value as a starting point. ¶ 42 In Noel, this court established that the court may take a plaintiff's circumstances into account when calculating the amount of recovery. 98 Wash.2d at 383, 655 P.2d 245. In Noel, an unjust enrichment case about improvements to state timber lands, this court remanded to the trial court for a computation of recovery. Id. at 383-84, 655 P.2d 245. This court ordered the trial court to allow the plaintiff to prove the reasonable value of its improvements. Id. at 383, 655 P.2d 245. Specifically, this court advised the trial court that the reasonable value of the services might be either more or less than cost, plainly intending to allow the trial court to consider the circumstances of the case when determining reasonable value. Id. ¶ 43 Other Washington cases have taken a flexible approach and used factors other than strict market value in calculating reasonable value awards. In Losli v. Foster, 37 Wash.2d 220, 232, 222 P.2d 824 (1950), this court used the actual cost to appellant of the labor and materials supplied as the basis for its calculations. [5] In Heaton v. Imus, 93 Wash.2d 249, 254, 608 P.2d 631 (1980), this court recognized that lost profits may also factor into the calculation at a trial court's discretion. This sort of flexibility is crucial in fashioning remedies that do equity to the parties. ¶ 44 Here, when Jim and Shannon brought an unjust enrichment claim, they asked the trial judge to sit in equity. Accordingly, the trial judge had broad discretion to fashion a remedy that did substantial justice to the parties. By deducting general contractors' costs from the expert's cost estimate, the trial judge awarded reasonable value of the benefit in terms of what it would have cost Judith to obtain it in an informal arrangement with other parties who were not professional general contractors. The remedy he ordered here was well within the bounds of his discretion under the doctrine of unjust enrichment. ¶ 45 Informal arrangements for home improvement and construction are common, especially in rural areas, and they present a dizzying variety of circumstances for trial judges to consider. By limiting trial judges to strict market value of professional contracting services as the measure of reasonable value, the majority ties the hands of trial judges when faced with nuanced conflicts arising from these informal construction arrangements. I dissent.