Opinion ID: 4215122
Heading Depth: 2
Heading Rank: 2

Heading: Restitution and Unjust Enrichment Generally

Text: Before addressing the legal standards governing plaintiff’s claim of unjust enrichment, we observe that, for several reasons, restitution and unjust enrichment have been notoriously difficult to conceptualize and to summarize. That background helps to explain this court’s historical case-by-case approach to restitution cases. One difficulty is the current state of development of the law of restitution and unjust enrichment. The concept of restitution and unjust enrichment as a single area of the law was largely the creation of the American Law Institute with its publication of the first Restatement of Restitution in 1937. See Andrew Kull, Rationalizing Restitution, 83 Cal L Rev 1191, 1192 (1995) (attributing the “modern law of restitution” to the first Restatement, “in the sense that the law of contracts and the law of torts were invented by the nineteenthcentury treatise writers”); Peter Birks, Unjust Enrichment and Wrongful Enrichment, 79 Tex L Rev 1767, 1768 (2001) (agreeing about importance of first Restatement). Though the concepts of restitution and unjust enrichment long predated the first Restatement, they were not treated as a coherent whole. Instead, they were a collection of individualized forms of action and remedies. See Restatement (Third) of Restitution and Unjust Enrichment, Reporter’s Introductory Memorandum, xv (Discussion Draft 2000) (prior state of law was “a miscellaneous assortment (part legal, part equitable) of forms of action and remedial Cite as 362 Or 115 (2017) 125 devices, familiar in some of their particularized applications but never described or understood as parts of a coherent whole”); Birks, 79 Tex L Rev at 1768 (“the fragments [of pre-Restatement law] had acquired a life of their own, moving ever further apart”). The drafters of the first Restatement themselves noted in a contemporary law review article that the law at that time was “scattered through many sections of the digests and in treatises on apparently diverse subjects.” Warren A. Seavey & Austin W. Scott, Restitution, 54 LQ Rev 29, 29 (1938). The purpose of the first Restatement was to identify the underlying principles of an area of law that “has never been dealt with as a unit and because of this has never received adequate treatment.” Id. It is safe to say that the law of restitution remains a work in progress, with some principles recognized but with some theoretical underpinnings yet to be settled. Indeed, despite attempts by scholars to articulate basic legal principles governing restitution and unjust enrichment in the ensuing 80 years since the first Restatement, at least one foundational principle remains the subject of disagreement. Professor Kull has explained that, while the “modern consensus puts unjust enrichment at the heart of liability in restitution,” it is unclear whether restitution includes anything else. 83 Cal L Rev at 1193-94; see Restatement (Third) of Restitution and Unjust Enrichment § 1 comment a (2010) (“Restatement (3d) Restitution”) (noting disagreements among authorities). Professor Birks explains that, at “the beginning of the twenty-first century, a schism divides the scholars who write on the modem law of restitution,” with some who think that “restitution and unjust enrichment are different names for the same area of law,” while others maintain that a right to restitution “may be triggered by one of a number of distinct causative events,” including at least “wrongs and unjust enrichment.” 79 Tex L Rev at 1769-70. The current Restatement sums it up: “It is by no means obvious, as a theoretical matter, how ‘unjust enrichment’ should best be defined; whether it constitutes a rule of decision, a unifying theme, or something in between; or what role the principle would ideally play in our legal system.” Restatement (3d) Restitution § 1 comment a, at 4. The current status of the law of restitution may be analogous to 126 Larisa’s Home Care, LLC v. Nichols-Shields tort and contract law in the nineteenth century, when treatise writers were first defining those areas of the law. Kull, 83 Cal L Rev at 1194-95. Another difficulty with this area of law is the terminology itself, which can give rise to disordered thinking about the concepts. Professor Kull has noted “[t]he linguistic confusion that bedevils the law of restitution—necessitating laborious definitions before anyone can understand what you are talking about.” 83 Cal L Rev at 1191-92. As a legal term, “restitution,” for example, is broader than the ordinary meaning might suggest. It is not limited to those circumstances in which a defendant must give back something that had previously belonged to the plaintiff; it may also sometimes require a defendant to give to the plaintiff something the plaintiff never had. Restatement (3d) Restitution § 1 comment a; see George E. Palmer, 1 Law of Restitution § 1.1, 4 (1978) (“The term [‘restitution’] is not wholly apt since it suggests restoration to the successful party of some benefit obtained from him.”). As a term, “unjust enrichment” also can be mis- leading, suggesting that liability turns on vague notions of injustice. The traditional definition is that coined by Lord Mansfield: whether a party, “upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.” Moses v. Macferlan, 2 Burr 1005, 1012, 97 Eng Rep 676, 681 (KB 1760), quoted in Restatement (3d) Restitution § 1 comment b, at 4. Yet “natural justice and equity” is a standard that provides little guidance for individual decisions and has been criticized as “an open-ended and potentially unprincipled charter of liability.” Restatement (3d) Restitution § 1 comment b, at 5. In actuality, the question of when enrichment is unjust does not turn on whether one has been unjustly enriched in some abstract sense of moral judgment; the law of restitution has developed with greater specificity based on articulated legal standards: “In reality, the law of restitution is very far from imposing liability for every instance of what might plausibly be called unjust enrichment. The law’s potential for intervention in transactions that might be challenged as inequitable is narrower, more predictable, and more objectively Cite as 362 Or 115 (2017) 127 determined than the unconstrained implications of the words ‘unjust enrichment.’ ” Restatement (3d) Restitution § 1 comment b, at 5. See also Dan B. Dobbs, 1 Dobbs Law of Remedies § 4.1(1), 552 (2d ed 1993) (noting that the “substantive question” for unjust enrichment is “whether the defendant is unjustly enriched by legal standards” (emphasis added)); Michael Traynor, The Restatement (Third) of Restitution & Unjust Enrichment: Some Introductory Suggestions, 68 Wash & Lee L Rev 899, 900-01 (2011) (“The enrichment must be ‘unjustified’ under the law, not simply ‘unjust’ because you as a judge, scholar, or lawyer might think so.” (Footnote omitted.)). C. Approach by Oregon Courts to Unjust Enrichment Cases In keeping with the state of restitution and unjust enrichment as a developing area of the law, this court recognized several years ago that our case law has addressed unjust enrichment in a practical way, by matching the circumstances presented in the case to those patterns already recognized in the case law, without explaining an overarching doctrine. In Tupper v. Roan, 349 Or 211, 220, 243 P3d 50 (2010), the court stated: “Although our cases refer to a substantive ‘doctrine’ of unjust enrichment, none provide any really comprehensive exposition of that doctrine. Instead, the cases simply describe the kinds of actions and circumstances that would constitute unjust enrichment warranting imposition of a constructive trust, and then observe that the concept extends to other similar acts and circumstances.” In Tupper, the plaintiff was seeking to impose a constructive trust on a named beneficiary’s life insurance proceeds when the deceased was required by court order, but failed, to name the plaintiff as a beneficiary of his life insurance. Id. at 213. The court undertook the task of identifying the elements needed to prove an unjust enrichment claim in those and similar circumstances and did not attempt to state elements that would more widely apply. See id. at 223. As Tupper indicates, the approach taken in this court’s unjust enrichment cases can be described as incremental rule development on a case-by-case basis, based on 128 Larisa’s Home Care, LLC v. Nichols-Shields recognized grounds for imposing liability. See Suitter v. Thompson et ux, 225 Or 614, 625, 358 P2d 267 (1961) (quoting equity treatise for proposition that constructive trust would be imposed in various identified situations “or under any other similar circumstances” (internal quotation marks and citation omitted)). In that respect, the open-ended nature of unjust enrichment reflects the nature of equity itself. See Teachers’ Ret. Fund Ass’n v. Pirie, 150 Or 435, 445, 46 P2d 105 (1935) (“[H]uman ingenuity and human affairs can not create a condition which the long arm of the court of equity can not reach if injustice or wrong would otherwise result.”). That incremental approach accords with the approach advocated by various commentators who assert that courts should determine whether any particular enrichment is unjust by examining whether the case type matches already recognized forms of unjust enrichment. E.g., Palmer, 1 Law of Restitution § 1.7 at 41 (“the usual approach is to search for some particularized reason or ground for finding that the retention of the enrichment would be unjust”). The Restatement (3d) Restitution is organized for that approach. It contains a statement of four general principles, see id. §§ 1-4, and then 44 sections addressing the types of circumstances in which liability in restitution is recognized. Those include, for example, benefits conferred by mistake, §§ 5-12; cases involving defective consent or authority on the part of the transferor, §§ 13-19; and benefits acquired by tort or other breach of duty, §§ 40-48. The reporters for the first Restatement of Restitution offered an observation in their law review article that may serve to explain rule development in this area of the law: “It requires an extensive set of individual rules to spell out what is meant by ‘unjust,’ especially since we are met with the fact that in certain situations, due in part to historical accident, a person who has obviously benefited another is not entitled to recover.” Seavey & Scott, 54 LQ Rev at 36. As earlier noted, the Court of Appeals used, and defendant supports, a formulation of unjust enrichment first articulated in Jaqua to apply to any claim of unjust enrichment based on quasi-contract, i.e., an “obligation implied in law” that accomplishes “substantial justice by preventing unjust enrichment,” Derenco v. Benj. Franklin Fed. Sav. and Cite as 362 Or 115 (2017) 129 Loan, 281 Or 533, 557, 577 P2d 477, cert den, 439 US 1051 (1978). See also Arthur Linton Corbin, 1 Corbin on Contracts § 19, 46 (1963) (quasi-contract “is created by the law for reasons of justice, without any expression of assent and some- times even against a clear expression of dissent”). This case presents a quasi-contract theory of recovery.5 Although plaintiff’s claim of unjust enrichment is based on quasi-contract, we conclude that the Court of Appeals should not have applied the formulation of unjust enrichment used in Jaqua, including its set of factors for determining when enrichment is unjust. As we will explain, the formula in Jaqua is unhelpful as an all-purpose statement of the elements of a claim of unjust enrichment, and it is also ill-suited to the circumstances of this case. Under Jaqua, an unjust enrichment claim based on quasi-contract requires a showing of three elements: “a benefit conferred, awareness by the recipient that a benefit has been received and, under the circumstances, it would be unjust to allow retention of the benefit without requiring the recipient to pay for it.” 125 Or App at 298. Those elements derived from the 1992 supplement to 3 Corbin on Contracts § 561 (1963). See Jaqua, 125 Or App at 298 (so noting). We note that the description of the elements of an unjust enrichment claim were not in section 561 of the original bound volume of Corbin on Contracts, nor were they incorporated into the 2002 interim edition or the 2010 revised edition. However, another contract law treatise recites a similar trio of elements based on holdings from a variety of courts: “Three elements must be established in order that a plaintiff may succeed in a claim based on unjust enrichment. These elements are: “(1) a benefit conferred on the defendant by the plaintiff; 5 A quasi-contract or obligation implied in law is distinct from an implied-infact contract. In an implied-in-fact contract, the parties’ agreement is inferred, in whole or in part, from their conduct. Restatement (Second) of Contracts § 4 comment a (1979). This court has explained that a contract implied in fact can arise “where the natural and just interpretation of the acts of the parties warrants such conclusion.” Owen v. Bradley, 231 Or 94, 103, 371 P2d 966 (1962). Plaintiff does not contend that, by virtue of conduct, Prichard through her agent agreed to pay for services at the private-pay rate and so must be held to her bargain. 130 Larisa’s Home Care, LLC v. Nichols-Shields “(2) an appreciation or knowledge by the defendant of the benefit; and “(3) the acceptance or retention by the defendant of the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without payment of its value.” Richard A. Lord, 26 Williston on Contracts § 68:5, 62 (4th ed 2003) (footnote omitted). The formula noted in Jaqua and in Williston on Contracts was roundly criticized in the Restatement (3d) Restitution. “Formulas of this kind are not helpful, and they can lead to serious errors. They lend a specious precision to an analysis that may be simple or complicated but which at any rate is not susceptible of this form of statement.” Id. § 1 comment d, at 8. As a former president of the American Law Institute noted, “The Reporter wisely advises you to avoid the temptation of formulaic checklists, which if you are not careful, could turn into formulaic jury instructions that advance neither comprehension nor clarity.” Traynor, 68 Wash & Lee L Rev at 901-02 (footnote omitted).6 The Restatement (3d) Restitution specifically takes issue with both the second and third elements in the formula. It provides the following critique of the second element—the recipient’s awareness of the benefit: “If the requirement is taken to mean that a defendant cannot be liable in restitution for benefits of which the defendant was unaware—or for benefits that the defendant attempted to refuse—it is plainly incorrect. If it refers to defensive limitations on a liability based on unjust enrichment, it is both redundant (in light of the third element) and an awkward summary of several features of the law of restitution that protect the defendant’s economic liberty.” Restatement (3d) Restitution § 1 comment d, at 8. We agree that an element that requires awareness by the recipient 6 For essentially that reason, the Court of Appeals itself recently questioned the three Jaqua elements of an unjust enrichment claim. See Cumming v. Nipping, 285 Or App 233, 238-39, 395 P3d 298 (2017) (noting criticism by Restatement (3d) Restitution). Cite as 362 Or 115 (2017) 131 that a benefit has been received does not accurately apply to all unjust enrichment claims. An unjust enrichment claim based on mistake, for example, can allow imposition of liability by operation of law, regardless of such awareness. See McKay v. Horseshoe Lake Hop Harv., 260 Or 612, 613-14, 491 P2d 1180 (1971) (in plaintiffs’ action to recover possession of land, allowing defendant to recover in unjust enrichment for improvements it had made to plaintiffs’ real property, even though both plaintiffs and defendant had mistakenly believed that defendant occupied land under 99-year lease); Stirewalt v. Chilcott, 236 Or 128, 134, 387 P2d 351 (1963) (finding unjust enrichment and imposing constructive trust when deed mistakenly conveyed more land to defendant buyers than buyers and sellers had intended; court rejected assertion that question was whether defendant buyers had known of sellers’ mistake). According to the Restatement (3d) Restitution, the third element is overbroad because it “incorporates the whole of the question presented, making the rest of the formula superfluous.” Restatement (3d) Restitution § 1 comment d, at 8. That criticism of the third element, standing alone, is valid. However, the Court of Appeals has historically added three factors, any one of which permits the determination that enrichment is unjust: “ ‘(1) the plaintiff had a reasonable expectation of payment; “ ‘(2) the defendant should reasonably have expected to pay; or “ ‘(3) society’s reasonable expectations of security of person and property would be defeated by non-payment.’ ” Jaqua, 125 Or App at 298 (quoting 1 Corbin, Contracts § 19A (Supp 1992)). The discussion above explains why those factors are substantively incorrect. The factors added by the Jaqua court would substitute entirely for any reference to established categories of unjust enrichment, and they are underinclusive of all the circumstances in which a plaintiff may establish an unjust enrichment. Moreover, the unadorned factors are vague, as this action illustrates. 132 Larisa’s Home Care, LLC v. Nichols-Shields In part, the parties argued over the application of the first and third Jaqua factors. By its terms, the third factor based on societal expectations is subject to wide-ranging interpretations. Plaintiff’s arguments concerning that factor focus on the ill effects of requiring it to bear the cost of what amounts to Medicaid fraud: it would encourage further fraud, an issue of vital importance to healthcare and longterm care facilities as well as patients and Oregon taxpayers. But the Court of Appeals looked at provisions of Medicaid law to conclude that they reflected societal expectations that apply generally, regardless of fraud: a care facility cannot exploit residents by extracting payments beyond Medicaid rates when the residents are deemed Medicaid-eligible. The court concluded that allowing recovery in this action would defeat those expectations. 277 Or App at 818-19. Even the first factor—whether plaintiff had a reasonable expectation of payment—leads to very different interpretations in its application. The Court of Appeals concluded that, for plaintiff to have a reasonable expectation of receiving the private-pay rate of payment under the first factor, plaintiff had to prove that the state had determined that Prichard was not Medicaid-eligible. Id. at 817. Otherwise, the court concluded, plaintiff could only reasonably expect to be paid in accordance with the terms of its contract with the state. Id. Thus, the Court of Appeals viewed the first factor as applying regardless of the fraud and plaintiff’s lack of knowledge concerning that state of affairs when plaintiff accepted Prichard as a Medicaid resident pursuant to its contract with the state. Plaintiff, on other hand, argues that, under the proper view of that factor, plaintiff can reasonably expect its residents to pay at the rate that they are properly—not fraudulently—qualified to pay. Accordingly, we conclude that the formula for unjust enrichment in Jaqua is inadequate to the task, and we reject it. In lieu of applying the formula in Jaqua, Oregon courts should examine the established legal categories of unjust enrichment as reflected in Oregon case law and other authorities to determine whether any particular enrichment is unjust. Cite as 362 Or 115 (2017) 133 D. Legal Standards Applicable in this Case As we noted at the outset, at least one of plain- tiff’s allegations in this action falls squarely within the categories recognized by Oregon case law and treatises to involve unjust enrichment: plaintiff alleges that Prichard’s estate has been benefited by fraud. “A conclusion that one party has obtained benefits from another by fraud is    one of the most recognizable sources of unjust enrichment.” Restatement (3d) Restitution § 13 comment a, at 166. Specifically, plaintiff alleges that the particular fraud here involved false representations on Prichard’s Medicaid form that led to Prichard being charged only Medicaid rates. The Restatement states the general rule regarding transfers induced by fraud as follows: “A transfer induced by fraud or material misrepresentation is subject to rescission and restitution. The transferee is liable in restitution as necessary to avoid unjust enrichment.” Id. § 13(1). The comments to section 13 include an illustration analogous to the facts at issue here—a person who obtained services by falsely claiming to be indigent: “County appoints public defender to represent Defendant charged with burglary, relying on Defendant’s affidavit of indigence. It transpires that Defendant owns substantial property. County is entitled to recover from Defendant the reasonable value of the services provided.” Restatement § 13 comment c, illustration 4, at 168. Case law accords with that conclusion. This court itself addressed a case very similar to this one, where a person had obtained benefits by falsely claiming impoverishment, and the provider of the benefits subsequently sought to recover from the person’s estate under a theory of unjust enrichment. In In re Anderson’s Estate, 157 Or 365, 71 P2d 1013 (1937), a former employee of a bank, Joseph Anderson, had asked his former employer for money. Anderson told the 134 Larisa’s Home Care, LLC v. Nichols-Shields bank that he was destitute, but his representations were false; he actually had substantial savings. Id. at 369-70. The bank, not knowing of Anderson’s deceit, gratuitously paid Anderson $25 per month until his death, for a total of $2,500. Id. at 368-69. Anderson’s fraud was discovered after he died, and the bank sought to recover the amounts it had paid from Anderson’s estate. This court agreed that the estate had been unjustly enriched: “It is plain and uncontroverted that Joseph Anderson obtained the payment of the sum of $2,500 upon different dates by means of false representations and deceit and that the bank paid the money in ignorance of the facts, of which they had no means of ascertaining the truth. Under such circumstances the bank is entitled to recover the money paid, with interest[.] Likewise where a donor has been induced through misrepresentation, fraud and deceit, exercised by the donee to make a gift, the donor may recover on the principle that no one shall be allowed to obtain any benefit arising from his own fraud or wrongful act[.]” Id. at 374-75 (citations omitted). Other jurisdictions have held similarly. In Old Men’s Home, Inc. v. Lee’s Estate, 191 Miss 669, 4 So 2d 235 (1941), a charitable home had taken care of Lee based on Lee’s false representations that he was destitute, when unknown to the home, Lee had some $5,000 in the bank. The Supreme Court of Mississippi upheld the home’s claim against Lee’s estate for the value of its services. 191 Miss at 681, 4 So 2d at 236. See also Jones v. Stearns, 97 Vt 37, 122 A 116 (1923) (allowing couple to recover value of support they had rendered to decedent, based on decedent’s false representation that she was destitute); Eggers v. Anderson, 63 NJ Eq 264, 272-73, 49 A 578, 582 (NJ 1901) (allegations would support equitable relief requiring executor “to pay out of the estate such sum as will recompense [a charitable group] for the money and property which they were induced to furnish to and for Mrs. Stager because of her fraudulent pretence of poverty”). In short, both the Restatement (3d) Restitution and our case law are in accord that a person—and his or her Cite as 362 Or 115 (2017) 135 estate—have been unjustly enriched if the person obtains benefits by making false representations about his or her financial state. Accordingly, we turn to whether the particular facts of this case fall within that category of unjust enrichment. E. Application Defendant contends that plaintiff’s case fails at two points. First, she essentially challenges causation: She asserts that the false representations on Prichard’s Medicaid application would not have disqualified her from Medicaid. If Prichard would have qualified for Medicaid benefits without regard to whether the form disclosed the numerous transfers of her assets, then there could be no enrichment at all. Plaintiff would have been required to charge Prichard only the Medicaid rate. Second, defendant argues that the false representations were by Gardner, not Prichard, and Prichard should not be held responsible for those misrepresentations. Before we turn to the specifics of defendant’s causation argument, we provide a brief overview of the relevant disqualification law. As noted, the Medicaid application filled out by Gardner required the disclosure of all transfers made within the previous 60 months. Generally, transfers are disqualifying if they are “made in whole or in part for the purpose of establishing or maintaining eligibility for benefits.” OAR 461-140-0210(2). Many transfers are not disqualifying, however; a second rule, OAR 461-140-0220, identifies those nondisqualifying transfers. For example, a transfer is not disqualifying if the asset is “sold or traded” “for compensation equal to or greater than fair market value.” OAR 461-140-0220(2)(a). Defendant does not dispute that the undisclosed transfers here were generally disqualifying as transfers made in whole or in part to establish eligibility for benefits.7 Both sides also either agree or assume that—if the undisclosed transfers were disqualifying—then the 7 In particular, the evidence shows that substantial sums were transferred to defendant and the other children at defendant’s suggestion and explicitly for the purpose of establishing Prichard’s eligibility for Medicaid benefits. 136 Larisa’s Home Care, LLC v. Nichols-Shields disqualification period would have extended through the remainder of Prichard’s life and covered the entirety of her stay at plaintiff’s facility. Defendant instead asserts that the undisclosed transfers here were not disqualifying, because they fell under an exception to the general rule. Under OAR 461140-0220(7), a transfer is not disqualifying if the “client was a victim of fraud   , and legal steps have been taken to recover the asset.” Prichard was the victim of Gardner’s fraud in making the transfers, and legal steps have now been taken—successfully—to recover those transfers. Thus, defendant maintains, Prichard would not have been disqualified from receiving Medicaid, so Prichard correctly paid only Medicaid rates while at plaintiff’s facility. Defendant’s argument fails to recognize, however, that the disqualification rules are written to address the situation at a specific point in time: they are forward looking. They presume that an applicant has just applied for Medicaid, and they set out the method that the department will use to determine how far into the future an applicant will be disqualified from benefits (if at all). Thus, OAR 461140-0296(2) explains how to calculate the length of the disqualification period, starting with the “initial month”—the month that the applicant is “first    eligible for a program benefit,” OAR 461-001-0000(31). The time-dependent nature of the rules is even more clearly illustrated in OAR 461-140-0300(2), which provides that “the disqualification ends if the transfer that caused the disqualification is rescinded.” The fact that rescission merely causes the disqualification to “end” at that time does not match defendant’s position, which would imply that rescission would retroactively qualify the applicant for benefits for months that have already passed. When we examine the facts as they existed on April 17, 2007—the date Prichard applied for Medicaid—we see that no steps had been taken to recover any of Gardner’s wrongful transfers. Thus, the requirements of OAR 461140-0220(7) had not been met. If the transfers had been disclosed on the form, then Prichard would have been disqualified from receiving Medicaid benefits while she stayed at Cite as 362 Or 115 (2017) 137 plaintiff’s facility. The false representations on the Medicaid form thus enabled Prichard to pay the discounted Medicaid rates, when she otherwise would have had to pay the higher private-pay rates. We turn, then, to defendant’s second argument: Was Prichard legally responsible for Gardner’s false representations? Defendant asserts that she was not. Under standard agency principles, however, we conclude that Gardner acted as Prichard’s agent when he filled out the Medicaid application for her. As to third parties, Prichard was legally responsible for Gardner’s false representations. Defendant’s argument turns on Prichard’s incapacity. Defendant admits that Prichard, through her power of attorney, had given Gardner authority to act as her agent. Defendant notes, however, that Prichard had become incompetent by the time Gardner filled out the Medicaid application form. Defendant maintains that Prichard’s incompetency had terminated Gardner’s agency. We disagree. Prichard’s power of attorney expressly stated that Gardner’s authority to act would apply “regardless of my subsequent disability or incompetence.” Such a provision is lawful and valid. When Gardner filled out Prichard’s Medicaid application, ORS 127.005(1)(c) (2005) provided that, unless the principal’s written designation stated otherwise, the “powers of the attorney-in-fact or agent shall be exercisable by the attorney in-fact or agent on behalf of the principal notwithstanding the later disability or incompetence of the principal at law.” See also Restatement (Third) of Agency § 3.08(2) (2005) (“Restatement (3d) Agency”) (“A written instrument may make an agent’s actual authority effective upon a principal’s loss of capacity, or confer it irrevocably regardless of such loss.”). Defendant cites no authority to the contrary. Thus, Prichard’s incompetence did not end Gardner’s agency. Gardner filled out the Medicaid form as Prichard’s agent. In doing so, Gardner made a misrepresentation on Prichard’s behalf and for the purpose of getting her Medicaid benefits. He represented on the form that Prichard had made no transfers, knowing that that representation was false. Because Gardner made a false representation while 138 Larisa’s Home Care, LLC v. Nichols-Shields acting as Prichard’s agent and on her behalf, Prichard is liable for the fraud. “A principal is liable to third persons for frauds, deceits, concealments, torts and omissions of duty of his agent, when acting in the course of his employment, although the principal did not authorize or justify or participate in, or indeed know of such misconduct, or even if he forbade the acts or disapproved of them.” White v. Gordon et al., 130 Or 139, 143, 279 P 289 (1929) (internal quotation marks and citation omitted)). See Barnes v. Eastern & Western Lbr. Co., 205 Or 553, 588, 287 P2d 929 (1955) (“[A] principal, who commits to an agent a duty, in the performance of which the agent will be required to make representations, is liable for misrepresentations made by [the agent] in the discharge of the duty which he employed in his efforts to serve his principal.”); ORS 127.005(2) (2005) (“All acts done by the attorney-in-fact or agent under the power of attorney during any period of disability or incompetence of the principal at law shall have the same effect and shall inure to the benefit of and bind the principal as though the principal were not disabled or incompetent.”); Restatement (3d) Agency § 7.08 (“A principal is subject to vicarious liability for a tort committed by an agent in dealing or communicating with a third party on or purportedly on behalf of the principal when actions taken by the agent with apparent authority constitute the tort[.]”). The Court of Appeals noted that Prichard was Gardner’s victim. That statement is certainly true, insofar as Gardner misappropriated Prichard’s assets. Gardner was convicted of committing a crime against Prichard, and we do not question that Prichard’s estate could have obtained a verdict in an appropriate civil action against Gardner. But an agent’s actions may make a principal liable to a third party, even if the agent’s actions are themselves a breach of the agent’s duty to the principal. See Restatement (3d) Agency § 2.01 comment f, at 85 (noting that agent’s actions may make principal liable to third party, even though agent is liable to principal for having breached duty). The issue concerns third-party liability—whether Prichard is liable to Cite as 362 Or 115 (2017) 139 plaintiff as principal for the misrepresentation of her agent, not whether Gardner is liable to Prichard for breaching his duties to her as principal. From the perspective of third parties such as plaintiff, Prichard is liable for false representations by her agent, Gardner.8 The facts in this case thus support a determination of unjust enrichment. Prichard (through Gardner) made false representations specifically for the purpose of obtaining Medicaid benefits. Plaintiff provided valuable care to Prichard at a substantially discounted rate, precisely because of those false representations. Prichard’s estate is substantially larger because Prichard did not have to pay plaintiff the private-pay rates. It would be unjust and inequitable for Prichard’s beneficiaries to retain the benefits that Prichard had gained through the misrepresentation. We conclude that the Court of Appeals erred in holding that there was no unjust enrichment. Accordingly, we reverse that determination. 8 The Restatement (3d) Restitution suggests that Prichard’s estate might be subject to restitution even if Gardner was not her agent and Gardner’s fraud was not attributable to her: “A transfer induced by fraud or material misrepresentation is subject to restitution, whether the representation is made by the transferee or by a third party.” Id. § 13 comment g, at 171 (emphasis added). The Restatement then offers the following example: “13. Corporation pays $45 million in bonuses to its President, based on its reported net income during a five-year period. It is subsequently revealed that Corporation’s net income for the period was artificially inflated, in consequence of an accounting fraud perpetrated by certain officers and directors. (Corporation was actually operating at a loss.) Corporation has a claim in restitution against President to recover $45 million plus interest. Restitution from President does not depend on proof that President participated in the fraud, or that President had notice that earnings were overstated.” Id. § 13 comment g, illustration 13, at 172 (emphasis added). See also Tupper, 349 Or at 224 (noting in constructive trust context that prior decisions by this court suggest that unjust enrichment may be found even when recipient is innocent). The Restatement does indicate that the innocence of the recipient can affect the results of the case. An innocent recipient may be entirely protected against restitution by affirmative defenses. See id. § 13 comment g, at 171. The recipient’s innocence may also limit the amount of restitution. See id. § 50 (setting out principles for determining amount of restitution where recipient was innocent). In this case, however, we need not decide whether an innocent recipient would be subject to restitution, because Prichard was liable as principal for the misrepresentations of her agent, Gardner. 140 Larisa’s Home Care, LLC v. Nichols-Shields