California's Unjust Treatment Of Unjust Enrichment

• Published date: 27 June 2023
• Subject Matter: Litigation, Mediation & Arbitration, Court Procedure, Trials & Appeals & Compensation
• Law Firm: Alto Litigation
• Author: Mr Bahram Seyedin-Noor, Bryan Ketroser and Joshua Korr

With ancient roots, the unjust enrichment claim has long allowed recovery for money paid by mistake or when contract formation fails. Indeed, the Roman jurist Pomponious once dictated the operating principle behind unjust enrichment: "This by nature is equitable, that no one be made richer through another's loss." John P. Dawson, Unjust Enrichment: A Comparative Analysis at 42-63 (1951). Withstanding the test of time, unjust enrichment became enshrined in the English common law in 1760, when Lord Mansfield said, "this kind ofequitable action, to recover back money, which ought not in justice to be kept, is very beneficial, and therefore much encouraged." (1760) 2 Bur 1005. And our legal system has largely followed suit. As summarized by the America Law Institute, "a person who is unjustly enriched at the expense of another is subject to liability in restitution." Restatement (Third) of Restitution and Unjust Enrichment ' 1 cmt. B (2011).

Despite this august history, the unjust enrichment claim has not found eternal acceptance in California courts. To the contrary, a recent published decision has flatly stated: "California does not recognize a cause of action for unjust enrichment." Hooked Media Grp., Inc. v. Apple Inc., 55 Cal. App. 5th 323, 336 (2020). According to this strain of caselaw, the phrase "'unjust enrichment' does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so." Melchior v. New Line Prods., Inc., 106 Cal. App. 4th 779, 793, 131 Cal. Rptr. 2d 347, 357 (2003). In other words, a party may recover for unjust enrichment only if it establishes an independent'and inevitably narrower'legal claim, such as quasi-contract. See id; Rutherford Holdings, LLC v. Plaza Del Rey, 223 Cal. App. 4th 221, 231, 166 Cal. Rptr. 3d 864, 872 (2014) (construing unjust enrichment claim as "a quasi-contract claim seeking restitution").Pleading unjust enrichment alone may not suffice. Id.

To be sure, California's disdain for the unjust enrichment claim is not universal; some caselaw does approve of it. For example, an unjust enrichment claim was upheld as enforceable in Elder v. Pac. Bell Tel. Co., 205 Cal. App. 4th 841, 857 (2012). The Elder plaintiff alleged that telephone public utilities overcharged him for unauthorized premium content charges. Id. With the elements described simply as "receipt of a benefit and [the] unjust retention of the benefit at the expense of...