Opinion ID: 1755609
Heading Depth: 2
Heading Rank: 2

Heading: Whether the trial court erred by entering a summary judgment for MEP on Donna Welch's unjust-enrichment claim.

Text: Donna Welch also seeks the equitable remedy of restitution. She relies on a quasi-contract theory, alleging that MEP abused a confidential relationship to gain ownership and control of Dr. Welch's optometry practice. Donna specifically argues that MEP and Dr. Welch had a confidential relationship, which she says MEP abused by refusing to negotiate for the purchase of Dr. Welch's practice knowing that Dr. Welch's health was failing, knowing that his death was imminent, and knowing that, upon his death, his optometry practice would, by default, go to MEP. As the circuit court correctly noted in its summary-judgment order, Donna's argument is defective in that Dr. Welch executed three separate written employment contracts with MEP and entered into an oral consulting agreement with MEP after his illness prevented him from continuing to practice on a regular basis. During the negotiations for each of those contracts, Dr. Welch had ample opportunity to propose an arrangement whereby MEP would purchase his practice if he were to become ill or unable to practice for other reasons. However, the only provision in the contracts providing for illness or disability appears in the third employment contract, which states: In the event of illness or injury disabling Employee and preventing Employee from carrying out his duties under this contract, Employer agrees to pay Employee's salary and bonus for a period not to exceed six (6) months, but in no event beyond the date of termination of this Contract, less the salary including matching withholding contributions and benefits required to be paid by Employer to hire a professionally competent and qualified optometrist as a replacement. If Dr. Welch had preferred a different arrangement, he was in a position to bargain for what he wanted. Furthermore, when MEP and Dr. Welch entered into the oral consulting agreement, after Dr. Welch had been diagnosed with cancer, he could have proposed, at that point, that they enter into an agreement specifically stating that MEP would purchase his optometry practice. However, he did not do this. Donna asserts that MEP was unjustly enriched because MEP retained Dr. Welch's practice after he died and did not pay Dr. Welch before he died or his estate after for the practice. The law regarding unjust enrichment is clear. One is unjustly enriched if his retention of a benefit would be unjust. Jordan v. Mitchell, 705 So.2d 453, 458 (Ala.Civ.App.1997)(citing Restatement of Restitution: Quasi Contracts and Constructive Trusts § 1, Comment c. (1937)). The Jordan court continued: Retention of a benefit is unjust if (1) the donor of the benefit [here, allegedly Dr. Welch] ... acted under a mistake of fact or in misreliance on a right or duty, or (2) the recipient of the benefit [here, allegedly MEP] ... engaged in some unconscionable conduct, such as fraud, coercion, or abuse of a confidential relationship. In the absence of mistake or misreliance by the donor or wrongful conduct by the recipient, the recipient may have been enriched, but he is not deemed to have been unjustly enriched. 705 So.2d at 458. Because the basis of Donna's unjust-enrichment argument is the allegation that MEP abused a confidential relationship, we will address only the second prong discussed in Jordan. This Court has stated that a confidential relationship exists when confidence is reposed by one party in another, and the trust or confidence is accepted under circumstances which show that it was founded on intimate personal and business relations existing between the parties, which gave the one advantage or superiority over the other. Cannon v. Gilmer, 135 Ala. 302, 305, 33 So. 659, 659 (1903). Dr. Welch and MEP had an employer-employee relationship. They had entered into several contracts, including written employment contracts and an oral consulting agreement. Extensive negotiations had occurred between the parties before any of those agreements were reached. Dr. Welch was an intelligent, professional businessperson with experience in contract negotiations. There is no evidence of a confidential relationship between Dr. Welch and MEP, nor can there be any evidence that MEP abused any such relationship. Also, in addressing the noncompetition agreement, the trial court classified the agreement as follows: The non-compete agreement was a vehicle designed to allow [Dr. Welch's] disability payments to continue. The agreement itself was a sham since it is acknowledged that Dr. Welch was incapable of competing with MEP at that point. The refusal of MEP to enter into a dubious contract, standing alone, cannot rise to the level of an abuse of a relationship, assuming a confidential relationship existed. Jordan v. Mitchell, 705 So.2d 453, 462 (Ala.Civ.App.1997). The trial court appropriately labeled the noncompetition agreement a sham. Because Dr. Welch was in failing health and was unable to compete with MEP, there was no legitimate reason for either party to enter into a noncompetition agreement. Therefore, the noncompetition agreement cannot serve as the basis for a claim that MEP was unjustly enriched because it abused a confidential relationship. Furthermore, it is important to note that over the years MEP compensated Dr. Welch significantly for his services. At the outset of the business relationship, MEP purchased nearly all of the furniture, fixtures, and equipment Dr. Welch had used in his solo optometry practice. MEP paid $71,848.63 for those items, which was the agreed upon fair market value of the furniture, fixtures, and equipment. In addition, the first employment contract set Dr. Welch's salary at $178,600 per year, through the duration of the contract, which ended on September 30, 1996. Similarly, the second employment contract provided Dr. Welch with a salary equal to 68 percent of the net profits of the contact lens clinic, plus other specified benefits. The third and final employment contract provided essentially the same terms as the second contract. Clearly, Dr. Welch was adequately and appropriately compensated while he was associated with MEP. As a result, MEP was not unjustly enriched by retaining Dr. Welch's practice after his death. Although the situation surrounding Dr. Welch's death was tragic, Donna Welch presents no evidence on which to base an unjust-enrichment claim.