Callano v. Oakwood Park Homes Corp.

Superior Court of New Jersey, Appellate Division · 1966 · Contracts

Contractsquasi-contractunjust enrichmentthird partybenefit conferredquasi-contractunjust enrichmentbenefit conferred

Facts

Oakwood contracted to sell a lot and house under construction to Bruce Pendergast. Before completion, the Callanos, who ran a plant nursery, delivered and planted shrubbery on the property under an express contract with Pendergast, and Oakwood knew the shrubbery had been planted. Pendergast died without paying the invoice, and Oakwood later canceled its sale contract with Pendergast's estate. Oakwood then sold the property, including the shrubbery, to new purchasers, and the parties stipulated that the shrubbery enhanced the property's value by $475.

Issue

Whether Oakwood, after retaking and reselling property enhanced by shrubbery supplied under plaintiffs' contract with Pendergast, was liable to plaintiffs for the reasonable value of the shrubbery on a theory of quasi-contract or unjust enrichment.

Rule

To recover on a quasi-contract theory, a plaintiff must prove that the defendant was enriched by receiving a benefit and that retention of that benefit without payment would be unjust. A common thread in successful quasi-contract cases is that the plaintiff expected remuneration from the defendant, or would have expected it if the true facts were known, when the benefit was conferred; such cases also generally involve either some direct relationship between the parties or a mistake by the person conferring the benefit. Quasi-contract cannot be used to substitute one promisor or debtor for another where the plaintiff already contracted with and expected payment from a different party.

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In Phoenix, Desert Bloom Irrigation installed a custom sprinkler system on a house lot at the request of Nina Velez, who was under contract to buy the lot from Saguaro Crest Builders. Nina died before closing and never paid Desert Bloom. Saguaro Crest canceled the sale, kept the sprinkler system in place, and sold the improved lot to another family.

If Desert Bloom sues Saguaro Crest in quasi-contract for the value of the sprinkler system, which is the strongest argument against recovery?

Explanation. Quasi-contract requires both a benefit to the defendant and circumstances making retention unjust. The majority stressed that where the plaintiff furnished the benefit under an express contract with someone else and expected payment from that person, quasi-contract cannot be used to shift liability to a third party who later benefits. Here Desert Bloom dealt with Nina, not Saguaro Crest, so the best argument against recovery is that this would improperly substitute one debtor for another. (Derived from Callano v. Oakwood Park Homes Corp. (1966).)