RestitutionRestitution Basic Premise:

◦ In cases where D has been unjustly enriched at P’s expense, D must return the amount of his/her unjust enrichment

Restitution Is a Hybrid:◦ It is one of 3 forms of substantive liability

◦ It is also a possible remedy when the source of liability is contract, tort or statute

Blue Cross v. Sauer Blue Cross v. Sauer – substantive – substantive restitutionrestitution

Why are the Sauer’s liable for the return of the mistaken payments from Blue Cross?

◦ Did they do anything wrong? How easy would it be to prove?

◦ Assume they had been on an extended vacation & payments were directly deposited – would the court have required them to return the payments?

So what is (would be) the easiest source of their liability forcing them to return the payments from Blue Cross in either situation?

Restitutionary Remedial DevicesRestitutionary Remedial Devices

Why was Sauer so concerned w/ the manner in which restitution occurred? Restitution encompasses many different devices, which effect return in different ways – some examples:◦ Constructive Trust – P can trace into specific, identifiable

property in D’s hands and keep it even if it has increased in value (as long as traceable to wrongfully taken property from P)

◦ Quasi-Contract (aka “Money Had & Received” in Sauer) – results in simple money judgment for value of unjust enrichment to D

For wrongdoers who have received mistaken payments of money, P’s must rely on restitution as substantive cause of action & remedy:◦ P’s limited to restitutionary devices giving them a simple

money judgment

Somerville v. Jacob Somerville v. Jacob – restitution and – restitution and innocent improversinnocent improvers

Could Somervilles get restitution if they deliberately improved the Jacob’s land because the Somervilles thought the land really needed it and it would improve the Jacob’s property values?

What remedy if the Somerville’s negligently built a building over the shared property line onto the Jacob’s land?

What are the options when the Somervilles innocently improve the Jacob’s land thinking it is their land and mistake is discovered after improvement is finished?◦ Somervilles get nothing because they should have known of

problem◦ Jacobs should pay Somervilles for actual cost of improvements◦ Jacobs should convey land to Somervilles in exchange for value of

unimproved land

What does the majority say? Why does the dissent balk?

RestitutionRestitution & Mistake & Mistake

A truly innocent mistake by P/improver/payor is most likely to result in restitution.◦ As P’s culpability increases, courts are less

likely to grant restitution

Also with a truly innocent victim (D/improvee/payee), courts may “balance the hardships” and refuse to grant restitution if returning the benefit will be hard on D

(But see Somerville)

◦ Bottom line – whether restitution is granted depends on culpability of both parties and hardship on D. (See Restatement 3rd)

Measuring the unjust benefit to be Measuring the unjust benefit to be returned – innocent wrongdoersreturned – innocent wrongdoers

Often there are different ways to measure D’s unjust gain – this isn’t clearly self-defining or there are simply two available measures.

◦ What measure do courts use when the D is innocent(ish)?

Theme throughout restitution with innocent wrongdoers:◦ When given a choice of measurement of unjust

enrichment, courts will usually choose the lower amount (which it believes represents unjust enrichment to innocent D)

Grounds for restitution with Grounds for restitution with innocent(ish) wrongdoersinnocent(ish) wrongdoers Mistake – see previous slides Emergency – one who reasonably provides essential

goods/services during emergencies is excused from getting promise to pay beforehand◦ Measurement of U.E. for lives saved – FMV of treatment (NOT

value of life saved)◦ Measurement of U.E. for property saved – lesser of value of

services or property damage avoided Performance of Duties to 3rd Parties – e.g., paying brother’s

bills◦ Measurement of U.E. – reasonable value of services/bills paid for

Joint Ownership of Property – payment of necessary expenses◦ Measurement of U.E. – reasonable value of other’s proportionate

expenses Quantum Meruit or Unenforceable Contracts

◦ Four Different Measures - Cost to Plaintiff, Market Value, Agreed Price, or Value in advancing D’s purposes

Olwell v. Nye & Nissen CoOlwell v. Nye & Nissen Co.. D temporarily converted P’s egg washer (1 day/week

for 156 weeks). P offered to sell but D refused to buy. P sued for benefit D gained while using converted egg washer.◦ http://i01.i.aliimg.com/photo/v0/122600771/NABEL_Egg_Washer.jpg

What are P’s damages if P sues for temporary conversion?

What is the amount of compensation P is awarded as unjust enrichment for D’s conversion?◦ Is there another way to measure unjust enrichment

to D other than the measure used by the court?

Why did Why did Olwell Olwell choose the choose the measure for unjust enrichment measure for unjust enrichment that it did?that it did? In mistake cases, courts chose the lower

measure of compensation as the appropriate measure of restitution. In Olwell, the Court chose the higher measure (aka it required D to disgorge its profits from use of P’s property). Why did the courts choose different measures?

Do these reasons distinguish the outcomes in Edwards (p. 515) (award of profits) and Beck (p. 518) (award of rental value)?

Who are Who are consciousconscious wrongdoers? wrongdoers?

Under Rstmt (3d), misconduct = “tortious or otherwise wrongful” interference “w/ claimant’s legally protected interest”◦ Note grounds defined as misconduct at p. 519 n.1

Disgorgement of profits/gain is appropriate for “misconduct” (aka conscious wrongdoers)◦ Disgorgement = D must return to P the “net profit

attributable to underlying wrong” (p.518 n. 9b)◦ Profit = use/rental value of property taken, proceeds

from sale/exchange of property taken & any consequential gains from use of property

Note that Rstmt(3d)/courts recognize wrongdoers of lesser degree of culpability (p. 519 n.3)◦ Courts adjust measure of restitution depending on

whether they think D is closer to innocent or culpable D