There are some situations where one party benefits financially at the expense of the other and no existing contract or law provides a remedy. This is where certain legal principles of equity come into play. One such equitable remedy is known as “unjust enrichment.”
What Is “Unjust Enrichment”?
In a typical breach of contract lawsuit, one party to the agreement accuses the other of failing to fulfill its end of the bargain. For example, let’s say Company A agrees to buy 10,000 widgets from Company B for $50,000. Company B delivers the widgets, but Company A never pays. Ergo, Company B sues Company A for breach of contract.
But what about a case where someone at Company A made a mistake and accidentally paid the $50,000 that was supposed to go to Company B to a third party–Company C–instead? Company A quickly makes up for the error by cutting a new check to Company B. But Company C now has $50,000 it did not earn.
Under this scenario–assuming Company C isn’t a good citizen and simply returns the money–Company A could sue Company C for unjust enrichment. In other words, the plaintiff (Company A) alleges the defendant (Company C) was enriched at its expense, this enrichment was unjust, and there is no other remedy available at law. After all, Company A never entered into a contract with Company C, so there can be no breach of contract, nor did Company C obtain the money through fraud.
Express Contract vs. Quasi-Contract
In practice, unjust enrichment claims are not that common in Texas. According to a 2012 paper on the subject, there was only an average of 78 judicial opinions in Texas citing “unjust enrichment” between 2007 and 2011. This is a drop in the bucket compared to the rest of the country, where “unjust enrichment” popped up in an average of 5,000 cases across all federal and state courts.
As noted above, one reason you do not hear much about unjust enrichment is that Texas courts consider it a remedy of last resort. If two parties have any type of express contract, unjust enrichment is not available as a remedy for any breach. As the Texas Supreme Court explained in a 2000 opinion, “When a valid agreement already addresses the matter, recovery under an equitable theory [such as unjust enrichment] is generally inconsistent with the express agreement.”
Indeed, the Court noted that unjust enrichment is based on another theory of law known as “quasi-contract.” A quasi-contract “is not a contract at all,” the Court explained. Rather, it is an “obligation imposed by law to do justice even though it is clear that no promise was ever made and/or intended.” In that sense, another way to look at unjust enrichment is that it provides a right of restitution to a plaintiff unfairly deprived of his or her property. As several Texas courts have put it, unjust enrichment “characterizes the result of a party’s failure to make restitution for benefits received under circumstances that give rise to a quasi-contractual obligation to return those benefits.”
It is also important to note that unjust enrichment is separate and distinct from fraud. As the hypothetical example above illustrated, unjust enrichment may occur simply due to mistake or unintended action. There is no requirement of malice or intent, only that the defendant is holding money or property that rightfully belongs to the plaintiff.
Quantum Meruit & Money Had and Received Claims
There are other equitable remedies in Texas law that are related to unjust enrichment. One is “quantum meruit.” This is a Latin phrase meaning “what one has earned,” and it applies to situations where a plaintiff seeks payment for services rendered to the defendant in the absence of an express contract. The basic elements of a quantum meruit claim are:
- The plaintiff performs “valuable services” for the defendant;
- The defendant accepts, uses, and enjoys those services; and
- Under the circumstances, the defendant was “reasonably notified” that the plaintiff expected payment for those services, which he or she did not receive.
Another type of unjust enrichment claim is a “cause of action for money had and received.” This refers to cases where the defendant is accused of holding money that belongs to the plaintiff “in equity and good conscience.” Again, it does not matter whether the defendant obtained the money through any wrongdoing on his or her part.
Has Someone Been Unjustly Enriched at Your Expense?
If you believe someone else is wrongfully holding property that belongs to you, it is important to consult with a qualified Dallas business litigation attorney who can help you determine the best course of action. Call the offices of Lindquist Wood Edwards LLP at 214-382-9789 to talk to a lawyer now.