Opinion ID: 2761876
Heading Depth: 2
Heading Rank: 2

Heading: The Quasi-Contract Claims

Text: Toll also attempts to recover compensation on the legal principles of restitution, quantum meruit, and unjust enrichment, all of which sound in quasi contract.5 Claims for Pennsylvania’s and the District Court wrongly changed its thinking post-discovery on summary judgment. And again, we note that the District Court was obligated to limit its thinking to the allegations set out in the complaint, giving every favorable inference to Toll. One such allegation was that “in discussions occurring in Montgomery County, Pennsylvania, there was a meeting of the minds between Toll and Tannenbaum as to the terms of their agreement.” Toll, 982 F.Suppp.2d at 555. The District Court, based on this allegation, cannot be faulted for believing that Tannenbaum “reached into Pennsylvania to negotiate and complete the alleged contract.” Id. This is not the picture that emerged after discovery, however, wherein Toll testified that the negotiations with his son-in-law took place in a variety of locales, and that maybe only one business discussion took place in Montgomery County. Also, Toll changed his story, indicating that the final meeting of the minds took place over the telephone – not in person in Montgomery County. Given these circumstances, the District Court could no longer hold that Tannenbaum “reached into” Pennsylvania and that, as a result, New York’s interests were diminished. This was not an error, but an evaluation made at a different stage of the litigation and with a vastly expanded record and a vastly expanded point-of-view for the District Court. 5 The District Court also found that Toll’s claim based on promissory estoppel was unfounded and Toll has not appealed this determination. 12 quantum meruit and unjust enrichment have been analyzed as a single claim under New York law. 6 See, e.g., Mid–Hudson Catskill Rural Migrant Ministry, Inc. v. Fine Host Corp., 418 F.3d 168, 175 (2d Cir. 2005) (analyzing the two causes of action “as a single quasi contract claim”). Unjust enrichment in New York is established where a plaintiff demonstrates (1) “that the defendant benefitted; (2) at the plaintiff's expense; and (3) that equity and good conscience require restitution.” Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., Inc., 448 F.3d 573, 586 (2d Cir. 2006). Similarly, to recover in quantum meruit under New York law, Toll must establish: “(1) the performance of services in good faith, (2) the acceptance of the services by the person to whom they are rendered, (3) an expectation of compensation therefore, and (4) the reasonable value of the services.” Mid–Hudson Catskill, 418 F.3d at 175 (internal quotation marks omitted). We do not need to delve deeply into the elements of each claim or determine their overlap to affirm the District Court’s conclusion that Toll was not entitled to relief. As to 6 We follow the Restatement (Second) of Conflicts of Laws, which counsels that when reviewing claims based on quasi-contract theory, we look to: “(a) the place where the parties’ relationship was centered; (b) the state where defendants received the alleged benefit or enrichment; (c) the location where the act bestowing the enrichment or benefit was done; (d) the parties' domicile, residence, place of business, and place of incorporation; and (e) the jurisdiction “where a physical thing ..., which was substantially related to the enrichment, was situated at the time of the enrichment.” Id. § 221(2) (1971). Like the District Court, we find these contacts reminiscent of those we used to determine which state’s law applies to Toll’s breach of contract claim. Inasmuch as we applied New York law to that claim, we will do so again to these claims. We note further that the District Court did the same. Toll points out in his brief that if we were to decide that Pennsylvania law controls the breach of contract claim, and apply that law to these equitable claims, the quantum meruit analysis would be a bit different, excluding any analysis of his reasonable expectation of compensation. That, however, is not an argument that New York law should not apply to these claims. We do not see either party as raising a specific objection to the application of New York law to the quasicontract claims on appeal and will apply that state’s law accordingly. 13 Toll’s claim for unjust enrichment, the District Court focused on the question of whether equity and good conscience required that Toll receive restitution. We agree with the District Court that Toll suffered no inequity and therefore has no claim for unjust enrichment or quantum meruit. Toll provided loan guarantees because, he alleges, Tannenbaum agreed to share half the profits with Toll’s daughter--not with Toll himself. Toll also admits to advising his daughter on her divorce settlement, which disclaimed any actions against Tannenbaum and/or his company. In other words, he seeks restitution for himself even though his daughter has relinquished her claims. Therefore, we see no inequity. Also, Toll did receive a benefit from guaranteeing the loans: his guarantee helped attract other investors to Tannenbaum’s fund--a fund in which Toll was a major investor. Because Toll has rendered a service from which he received a benefit, there is no inequity to compensate. Furthermore, Toll suffered no injury by guaranteeing the loans to Tannenbaum. Tannenbaum never defaulted on the loans and Toll himself testified that in making the loan guarantees, he had neither out-of-pocket expense nor lost investment opportunity as a result of making these loan guarantees. And, the record reveals that Toll had provided loan guarantees for Tannenbaum before without asking for any compensation. We see no inequity and the District Court correctly granted summary judgment to Tannenbaum on these claims. Toll fares no better under quantum meruit. First, Toll did not seek recovery for the value of services he rendered to Tannenbaum. Toll admits on the record that he never expected to be compensated directly for providing the loan guarantees, but that his daughter, Elizabeth, would receive investment fund profits instead. Toll calls our 14 attention to other loan guarantees he made on behalf of Tannenbaum’s business, but in those situations Toll himself received direct compensation for himself and not a third party. We agree with the District Court’s analysis which concluded that Toll offered no evidence that he expected compensation prior to the performance of his services. The District Court also faulted Toll for not alleging damages that could have been recoverable under quasi-contract theory. Toll asked for damages for the reasonable value of the interest he would have had in Tannenbaum’s company had his son-in-law not promised Elizabeth half the profits. The District Court found this request incompatible with unjust enrichment as it was based on the existence of a contract. We agree. Toll does not take issue with the District Court’s analysis, but instead argues that he should have been permitted to amend his complaint post-summary judgment so as to allege appropriate damages, this even though Toll never asked the District Court for such leave. Toll’s arguments here are unavailing and we see no error. First, Toll bears the responsibility of moving to amend his complaint under FED.R.CIV.P. 15; it is not the District Court’s task to encourage any such amendment. That Toll may have changed his theory of recovery more than a year before Tannenbaum’s summary judgment motion was filed does not change the fact that Toll’s complaint needed amending in order to reflect that change in legal theory. Additionally, Toll’s argument that the District Court would have freely granted him leave to file an amended complaint is not convincing. This decision is within the discretion of the District Court, Lake v. Arnold, 232 F..3d 360, 373 (3d Cir. 2014), and we find no abuse of that discretion here. Toll’s quasi-contract claims had been found lacking for various reasons that stand independent from the 15 question of appropriate damages. Any amendment was likely futile and would have caused undue delay here. In sum, none of Toll’s claims for quasi-contract relief are meritorious and the District Court did not err by granting summary judgment to Toll.