Court Opinion

ID: 4286645
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Date Created: 2018-06-21 13:07:03.260752+00
Date Added: 2024-06-11T14:36:32.561800
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             DISTRICT OF COLUMBIA COURT OF APPEALS

                                No. 16-PR-1006

                       JOHN MAZOR, ET AL., APPELLANTS,

                                         v.

                         ELIZABETH FARRELL, APPELLEE.

                         Appeal from the Superior Court
                          of the District of Columbia
                                  (LIT-19-12)

                       (Hon. Gerald I. Fisher, Trial Judge)

(Argued December 7, 2017                                      Decided June 21, 2018)

      Daniel Morris, with whom David I. Ackerman was on the brief, for
appellants.

      William E. Davis for appellee.

      Before GLICKMAN, FISHER, and MCLEESE, Associate Judges.

      MCLEESE, Associate Judge:        Appellants John and William Mazor (“the

Mazor brothers”) sued their father Julian Mazor (“Mr. Mazor”) and their father’s

second wife, appellee Elizabeth Farrell, to recover funds misappropriated from the

estate of their grandmother Esther Mazor. The trial court found Ms. Farrell liable

to the Mazor brothers for unjust enrichment of over $300,000. In the present
                                         2

appeal, the Mazor brothers challenge the trial court’s decision that they were not

entitled to prejudgment interest on that award under D.C. Code § 15-108 (2012

Repl.) (in action to recover “liquidated debt on which interest is payable by

contract or by law or usage,” judgment shall include award of prejudgment

interest). We affirm.

                                        I.

      The following facts either are undisputed or were found by the trial court.

Ms. Mazor died in 1993. Mr. Mazor was a co-trustee of two trusts (Trust A and

Trust B) to be funded equally from Ms. Mazor’s residuary estate, valued at over $3

million. Trust B was established for the benefit of the Mazor brothers and Trust A

would benefit Mr. Mazor during his lifetime with any remainder going to Trust B.

      Neither trust was initially funded. Instead, funds from the estate were placed

into an account owned and controlled by Mr. Mazor. Mr. Mazor used the funds for

himself and Ms. Farrell, without regard to whether the funds belonged to Trust A

or Trust B.
                                          3

      The Mazor brothers eventually sued Mr. Mazor and Ms. Farrell to recover

funds misappropriated from the estate.        Mr. Mazor defaulted on the Mazor

brothers’ claims against him, but Ms. Farrell contested her liability.

      Mr. Mazor and Ms. Farrell were married in 1999. By marrying Mr. Mazor,

Ms. Farrell forfeited alimony payments she had been receiving from her previous

marriage. Until the Mazor brothers filed suit, Ms. Farrell did not suspect, and had

no reason to suspect, that Mr. Mazor had misappropriated estate funds to support

their marriage.

      Ms. Farrell benefited from Mr. Mazor’s misuse of estate funds in several

ways. She drew from accounts containing funds traceable to estate funds for daily

household and living expenses throughout the marriage. In 1999, the couple used

approximately $1 million traceable to estate funds to purchase and improve a

house in Washington, D.C. In 2005, Mr. Mazor provided $330,000 to Ms. Farrell

for the down payment on a house in Cape Cod, Massachusetts, $234,000 of which

was traced to estate funds.         Mr. Mazor also provided Ms. Farrell with

approximately $86,000 traced to estate funds to cover mortgage payments for the

Cape Cod house.
                                           4

       The Mazor brothers sued Ms. Farrell for unjust enrichment, seeking among

other things repayment of funds traceable to the estate, title to and rents from the

Cape Cod house, and prejudgment interest. The trial court granted summary

judgment on the issue of liability, concluding that it was undisputed that Ms.

Farrell benefited from funds misappropriated from the estate. The trial court

declined, however, to award damages on summary judgment, instead setting that

issue for trial.

       After trial, the trial court awarded only part of the requested relief. First, the

trial court determined that the Mazor brothers were not entitled to repayment of the

funds used for the purchase and improvement of the D.C. home, because those

funds did not exceed the more than $1 million that should have been deposited for

Mr. Mazor in Trust A.         The trial court also did not require Ms. Farrell to

compensate the Mazor brothers for most of the funds Ms. Farrell used to cover

household and daily living expenses.        Relying on the Restatement (Third) of

Restitution and Unjust Enrichment (Am. Law Inst. 2011), the trial court found that

Ms. Farrell was an innocent recipient of those funds because there was no evidence

that she knew that Mr. Mazor had misappropriated those funds from the estate.
                                          5

The trial court concluded that it would be inequitable to require Ms. Farrell to

compensate the Mazor brothers for funds she innocently received in exchange for

her role in supporting the marriage, particularly given that Ms. Farrell forfeited

alimony payments from her previous marriage. (The trial court did find Ms.

Farrell liable as to $21,500 she used after the Mazor brothers filed suit, because she

was not an innocent recipient of those funds, but that amount is not at issue on this

appeal.)

      As to the Cape Cod house, the trial court concluded that Ms. Farrell was

liable for the misappropriated estate funds that went to her down payment and

mortgage payments, because the circumstances did not justify her retention of

those funds. The trial court ordered Ms. Farrell to compensate the Mazor brothers

for the funds that could be traced to the estate, amounting to approximately

$320,000. On the other hand, the trial court concluded that Ms. Farrell’s status as

an innocent recipient shielded her from being required to relinquish any

“consequential gains” such as the rents she received or appreciation on the house.

      The Mazor brothers appealed, arguing among other things that the trial court

did not address whether they were entitled to prejudgment interest under both D.C.
                                         6

Code § 15-108 and the common law. Mazor v. Mazor, Nos. 15-PR-105 & 15-PR-

121, Mem. Op. & J. at 3 (Feb. 18, 2016). We agreed and remanded for the trial

court to address the Mazor brothers’ claim for prejudgment interest. Id.

      On remand, the trial court denied prejudgment interest under § 15-108,

concluding that the Mazor brothers’ unjust-enrichment claim against Ms. Farrell

was not an action to recover a liquidated debt. The trial court did not address

whether the Mazor brothers were entitled to prejudgment interest under the

common law, but the Mazor brothers do not press that issue on appeal and we

therefore do not address the issue.

                                        II.

      For the Mazor brothers to be entitled to prejudgment interest under § 15-108,

their unjust-enrichment claim against Ms. Farrell must have been an action “to

recover a liquidated debt.” The parties agree that we review de novo the trial

court’s conclusion that the Mazor brothers’ unjust-enrichment claim was not an

action to recover a liquidated debt. Assuming without deciding that our review is

de novo, we affirm.
                                         7

      Prejudgment interest operates in part to compensate prevailing plaintiffs for

the loss of the use of money that was wrongfully withheld by the defendant. Dist.

Cablevision Ltd. P’ship v. Bassin, 828 A.2d 714, 732 (D.C. 2003). “Statutes

providing for prejudgment interest are thus remedial and should be generously

construed so that the wronged party can be made whole.” Id. (internal quotation

marks omitted). Section 15-108 does not provide for an award of prejudgment

interest in every case, however. Rather, an award of prejudgment interest is

authorized under § 15-108 only if certain statutory requirements are present. At

issue in this appeal is the requirement that the action must be to recover a

liquidated debt. “A liquidated debt is one which at the time it arose was an easily

ascertainable sum certain.” Steuart Inv. Co. v. The Meyer Grp., 61 A.3d 1227,

1240 (D.C. 2013) (internal quotation marks and ellipsis omitted).

      The traditional rationale for requiring a liquidated debt was that “while a

person who failed to pay a debt which was fixed and certain was considered a

wrongdoer subject to penalty, it was deemed unfair to penalize one who failed to

tender payment when he could not know the amount of the debt.” District of

Columbia v. Pierce Assocs., 527 A.2d 306, 310-11 (D.C. 1987). Prejudgment

interest is not simply a penalty, though; it also serves to compensate the plaintiff

“for loss of the use of its money.” District of Columbia v. Potomac Elec. Power
                                           8

Co., 402 A.2d 430, 441 (D.C. 1979). More recently, the rationale for providing

prejudgment interest has focused less on the wrongdoing of the defendant and

more on making the plaintiff whole. Pierce, 527 A.2d at 306; Potomac Elec.

Power Co., 402 A.2d at 441. D.C. Code § 15-109 (2012 Repl.), which provides

discretionary authority to award prejudgment interest as part of damages, reflects

the more recent rationale. Pierce, 527 A.2d at 311. Section 15-108, rather than

§ 15-109, is at issue in this appeal, and the former provision requires that the

amount a plaintiff seeks to recover be liquidated, i.e., an easily ascertainable sum

certain at the time it arose. For several reasons, we conclude that the debt in this

case was not easily ascertainable at the time that it arose.

      First, Ms. Farrell’s debt rests on a determination that Ms. Farrell had been

unjustly enriched.

             The doctrine of unjust enrichment applies when a person
             retains a benefit (usually money) which in justice and
             equity belongs to another. The recipient of such a 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. The elements of an unjust enrichment claim are
             (1) the plaintiff conferred a benefit on the defendant; (2)
             the defendant retains the benefit; and (3) under the
             circumstances, the defendant’s retention of the benefit is
             unjust.
                                         9

Falconi-Sachs v. LPF Senate Square, LLC, 142 A.3d 550, 556 (D.C. 2016)

(brackets, citations, and internal quotation marks omitted). Thus, whether Ms.

Farrell owed a debt at all, and if so the amount of that debt, turned on an

assessment of what was just under all of the circumstances. Where the existence

and amount of a debt turns on such an assessment, the amount of the debt seems

far more likely to be “the subject of controversy and proof at trial,” Schwartz v.

Swartz, 723 A.2d 841, 844 (D.C. 1998) (internal quotation marks omitted), than to

be an “easily ascertainable sum certain,” Steuart, 61 A.3d at 1239 (internal

quotation marks omitted). See Aon Risk Servs., Inc. of Wash., D.C. v. Estate of

Coyne, 915 A.2d 370, 380 (D.C. 2007) (“[D]amages are not liquidated if the

ascertainment of their exact sum requires the taking of testimony to ascertain facts

upon which to base a value judgment.”) (internal quotation marks omitted).

      We have addressed a similar issue when considering whether debts resting

on a claim of quantum meruit are liquidated. In that context, we have concluded in

categorical terms that debts resting on quantum meruit “are by their very nature

unliquidated.” Schwartz, 723 A.2d at 844 (internal quotation marks omitted). That

conclusion is quite instructive, because we have noted the close relationship

between quantum meruit and unjust enrichment. See, e.g., News World Commc’ns,

Inc. v. Thompsen, 878 A.2d 1218, 1223 (D.C. 2005) (“[T]he essence of a quantum
                                         10

meruit claim is not the plaintiff’s expectancy of payment, but the unjust enrichment

of the defendant . . . .”) (ellipses and internal quotation marks omitted); Vereen v.

Clayborne, 623 A.2d 1190, 1194 (D.C. 1993) (“This particular quantum meruit

analysis is more commonly known as a theory of unjust enrichment.”). We are

aware of no case, from this court or any other, that has found a claim sounding in

unjust enrichment to be a liquidated debt for purposes of determining whether to

award prejudgment interest. Nevertheless, we need not decide in this case whether

claims based on unjust enrichment can ever involve liquidated debts. Rather, we

conclude more narrowly that unjust-enrichment claims, by their nature, will often

involve unliquidated debts rather than liquidated debts.

      Second, the trial court determined that Ms. Farrell was an innocent recipient

of the funds currently at issue.     The Mazor brothers do not challenge that

determination in this appeal.    It can be particularly complicated to determine

whether, and if so to what extent, an innocent recipient of funds belonging to

someone else is liable in unjust enrichment. For example, requiring an innocent

party to return funds may be inequitable if the innocent recipient has reasonably

relied upon receipt of the funds. See, e.g., Marsden v. District of Columbia, 142
A.3d 525, 528 (D.C. 2016) (“[R]equiring repayment may be inequitable where [an]

innocent recipient relied on [a] benefit to make expenditures that [the] recipient
                                          11

would not otherwise have made.”) (citing 2 Restatement (Third) of Restitution and

Unjust Enrichment § 65 & cmt. c).          Moreover, it may be unjust to require

repayment that would leave an innocent recipient “worse off . . . than if the

transaction giving rise to liability had not occurred.” 2 Restatement (Third) of

Restitution and Unjust Enrichment § 50(3); see id. § 53, cmt. c, ill. 5 (innocent

recipient of $10,000 in fluctuating stocks who eventually sells at loss for $5,000 is

not liable to claimant for full amount). In other words, the amount, if any, of an

innocent recipient’s liability in unjust enrichment can fluctuate over time

depending on circumstances that arise after the recipient obtained the funds at

issue.   Such complexities cut strongly against a conclusion that an innocent

recipient’s liability in unjust enrichment can reasonably be viewed as “an easily

ascertainable sum certain” “at the time it arose.”       Steuart, 61 A.3d at 1240.

(Although we have no occasion to delve into the issue in the present case, we note

that it also can be difficult to ascertain when a claim for unjust enrichment arises in

cases involving an innocent recipient.         Cf. Boyd v. Kilpatrick Townsend &

Stockton, 164 A.3d 72, 79-80 (D.C. 2017) (accrual of unjust-enrichment claim

requires that payment “has been wrongfully withheld,” which can turn on whether

and when payment was demanded) (internal quotation marks omitted).)
                                        12

      Third, the amount the Mazor brothers sought from Ms. Farrell relating to the

Cape Cod house varied significantly over the course of the litigation. In the

complaint, the Mazor brothers alleged that “much” of “at least $330,000” for the

down payment of the Cape Cod house, in addition to unquantified monthly

mortgage payments, came from estate funds. The Mazor brothers’ claim as to the

Cape Cod house rose to $500,000 at the damages trial, although they provided

specific support only for $415,935.43: $330,000 for money that went to the down

payment, of which only $234,000 was traceable to estate funds, and $85,935.43 in

mortgage payments. We have said that the fluctuating value claimed by a plaintiff

throughout the course of litigation is “evidence that the sum was not easily

ascertainable.”   Steuart, 61 A.3d at 1240 n.15; see District of Columbia v.

Campbell, 580 A.2d 1295, 1300-01 (D.C. 1990) (“Such fluctuation in itself likely

would be sufficient grounds for us to conclude that the damages [the plaintiff]

claimed were unliquidated.”).

      Taken together, these considerations convince us that the trial court correctly

concluded that the Mazor brothers’ action was not an action to recover a liquidated

debt. Cf., e.g., Aon, 915 A.2d at 379-80 (breach-of-contract and professional-

negligence claims unliquidated, where dispute about proper assessment of damages

created “at least a reasonable controversy” as to amount of defendant’s liability);
                                         13

Schwartz, 723 A.2d at 842-44 (claims of quantum meruit, unjust enrichment, and

breach of contract unliquidated, where retainer agreement did not specify definite

sum for legal services). Because the considerations we have already discussed

suffice to convince us, we need not and do not address the parties’ dispute as to

whether the debt was unliquidated because it was difficult to determine to what

extent the funds Mr. Mazor provided to Ms. Farrell in connection with the Cape

Cod house were properly traceable to misappropriated funds.

      We are not persuaded by the Mazor brothers’ arguments in support of the

contention that Ms. Farrell’s debt was liquidated.       First, although the Mazor

brothers correctly point out that there was no dispute that Mr. Mazor was the

source of money that Ms. Farrell used to buy the Cape Cod house, that fact was by

itself not sufficient to establish Ms. Farrell’s liability, much less to permit ready

ascertainment of the amount of that liability. Rather, the amount of Ms. Farrell’s

liability could not be ascertained without determining whether and to what extent,

under all of the circumstances, it would be just to require Ms. Farrell to repay the

Mazor brothers.

      Second, the Mazor brothers argue that partial prejudgment interest can be

appropriate if a portion of the debt was liquidated. Our case law on that point is
                                         14

not entirely clear. Compare Steuart, 61 A.3d at 1240 n.16 (not reaching issue

under § 15-108), with Burke v. Groover, Christie & Merritt, P.C., 26 A.3d 292,

306 & n.13 (D.C. 2011) (In context of court’s equitable power to award

prejudgment interest, court states, “That the total amount of the interest award is

disputed does not affect the liquidated nature of that part of the interest award the

debtor concedes is valid.”) (internal quotation marks omitted). Assuming that the

Mazor brothers are correct on this point, we do not see any discrete portion of the

debt at issue that should be viewed as liquidated.

      Third, this case is not comparable to the cases upon which the Mazor

brothers primarily rely, because (a) those cases did not involve claims comparable

to unjust enrichment and (b) in all of those cases the precise amount of damages

was far more clearly fixed. Wash. Inv. Partners of Del. v. Sec. House, K.S.C.C., 28
A.3d 566, 581-82 (D.C. 2011) (holding that breach-of-contract damages were

liquidated debt; “Both parties knew exactly how much WIP had been paid under

the AMA, and thus appellee’s award was a sum certain.”) (internal quotation

marks omitted); In re Estate of Green, 912 A.2d 1198, 1212 (D.C. 2006) (holding

that breach-of-fiduciary-duty damages were liquidated debt; defendant stipulated

that he took specific amount of money from estate without court approval); Dist.

Cablevision, 828 A.2d at 732 (holding that damages for violation of District of
                                              15

Columbia Consumer Protection Procedures Act were liquidated debt; cable

provider was liable for “full . . . amount of the void $5.00 late fees” charged to

customers); Pierce, 527 A.2d at 311 (holding that breach-of-contract damages

were liquidated debt; “[T]he District disputed neither the amount of the debt nor

the fact that it was required to pay it.”).

       Fourth, the Mazor brothers rely on the statement in some of our cases that

“[e]ven where a bona fide dispute exists as to a debt, courts generally find the

liquidated nature of the debt unaffected.” Giant Food, Inc. v. Jack I. Bender &

Sons, 399 A.2d 1293, 1302 (D.C. 1979). That language, however, simply reflects

the established principle that a debt can be liquidated even if there is a dispute as to

liability, as long as the amount of any liability is easily ascertainable. Compare

Pierce, 527 A.2d at 311 (debt liquidated where amount owed was not in dispute

and only dispute was when debt was due), with Aon, 915 A.2d at 380 (debt

unliquidated even though plaintiff recovered full amount of claim because

defendant’s “asserted defense and testimony created at least a reasonable

controversy as to the amount for which [defendant] would be liable if [plaintiff]

prevailed”). For the reasons we have explained, we conclude that the amount of

the debt in this case was not easily ascertainable at the time it arose.
                                        16

      Finally, the Mazor brothers argue that denying prejudgment interest in this

case will encourage defendants to dispute obvious claims and to commingle funds

in order to avoid prejudgment interest. We do not believe that our holding that

prejudgment interest is not available in this case under § 15-108 will have the

sweeping consequences the Mazor brothers suggest. Importantly, trial courts have

discretion to award prejudgment interest under the common law, “even in the

absence of a statutory authorization to that effect.” Burke, 26 A.3d at 306; see 2

Restatement (Third) of Restitution and Unjust Enrichment, § 53(4) & cmt. e (in

some circumstances, it may be appropriate to award prejudgment interest as

element of unjust enrichment). Moreover, § 15-109 provides statutory authority to

include “interest as an element in the damages awarded, if necessary to fully

compensate the plaintiff.” The Mazor brothers have relied exclusively in this

appeal on § 15-108, and we thus have no occasion to address whether prejudgment

interest might have been warranted in this case on any other basis.

      For the foregoing reasons, we affirm the judgment of the trial court.

                                          So ordered.