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How New York Courts Limit Unjust Enrichment Claims

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As we explained in "How to Prove an 'Unjust Enrichment' Claim Under New York Law," in order to adequately plead such a claim, the plaintiff's complaint must allege "that (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered" (Mandarin Trading Ltd. v. Wildenstein, 16 NY3d 173, 182 [2011] [alterations and quotation marks omitted]).

One of the beauties of this claim is that you don't need a valid contract with the defendants in order to pursue the claim; in fact, and to the contrary, if there was an enforceable agreement between the parties, then the plaintiff cannot recover under an unjust enrichment theory.

As a result, unjust enrichment is often the claim of choice (or of last resort) to those who failed to reduce their agreements to writing with their close business associates, and then have their fiduciary duties breached.

There are other limitations with respect to the unjust enrichment cause of action. Most important, as New York's Court of Appeals held in Sperry v. Crompton Corp. (8 NY3d 204 [2007]), a plaintiff cannot succeed on an unjust enrichment claim "unless it has a sufficiently close relationship with the other party ... that is not too attenuated," which was later interpreted to mean "at least an awareness by [the defendant] of [the plaintiff's] existence." See, Mandarin, supra.

Unfortunately, this formula is not exactly a model of clarity, and therefore, whether the parties' relationship is "too attenuated" or not will likely be decided on a case-by-case basis, particularly given that the Court of Appeals itself has been sharply divided on this issue, as recently as June 28 in its Malone v. Rieder decision.


Jonathan Cooper
Employment Litigation and School Negligence Lawyer