Unjust enrichment where a contract already governs.

In New York, an unjust enrichment claim ordinarily fails where a valid, enforceable contract between the same parties governs the same subject matter. Clark-Fitzpatrick states that rule, and the Court of Appeals has applied it since. Alternative pleading survives only where formation or coverage is genuinely disputed. Absent that dispute, the count is dismissable.

What is the Clark-Fitzpatrick rule on unjust enrichment?

Clark-Fitzpatrick holds that the existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of that same subject matter. Unjust enrichment and quantum meruit are quasi contract theories. Where a contract between these parties controls the dispute, both theories ordinarily fall away.

Law: Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 (1987).

The reason is structural, not technical. Unjust enrichment is an obligation the law creates in the absence of an agreement. It fills a gap. When the parties have already allocated risk, price, scope, and remedy in a signed document, there is no gap to fill.

Law: Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 572 (2005), quoting State of New York v Barclays Bank of N.Y., 76 NY2d 533, 540 (1990).

Note the limits inside the rule. The contract must be valid and enforceable, and it must cover this subject matter and bind these parties. A contract the defendant never signed does not by itself trigger it.

Apply it to the facts of Clark-Fitzpatrick. A contractor performed a multimillion dollar track improvement project under a written construction contract. It completed the work. It never rescinded the contract. It then sought quasi contract recovery for the burdens of the changed work. Recovery was precluded, because a valid and enforceable written contract covered the subject matter. Therefore, dismissable.

The Court of Appeals said the same thing where policyholders attacked charges that fell entirely within their insurance contract, in a dispute between a company and its investment bank, and in a public works payment case.

Law: Goldman, 5 NY3d at 572; IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 142 (2009); Cox v NAP Constr. Co., Inc., 10 NY3d 592, 607 (2008).

The signed contract is not merely evidence in the case. It is the answer to the question the equitable count is asking.

Can a plaintiff plead unjust enrichment and breach of contract at the same time?

CPLR 3014 permits a plaintiff to state causes of action alternatively or hypothetically, and regardless of consistency. So an unjust enrichment count pleaded next to a breach of contract count is not improper on its face. But CPLR 3014 governs the form of a pleading, not its substance. Where the governing contract is undisputed, alternative pleading buys nothing.

Law: CPLR 3014.

The recognized exception is narrow. Where there is a bona fide dispute as to the existence of a contract, or as to whether the contract applies to the dispute in issue, a plaintiff may proceed on quasi contract as well as breach of contract and will not be required to elect remedies. That exception is earned with the documents, not with adjectives.

Law: Joseph Sternberg, Inc. v Walber 36th St. Assocs., 187 AD2d 225, 228 (1st Dept 1993).

Three things drive it. Formation: if the parties never agreed on price, never signed, or exchanged only a term sheet, a court cannot assume a contract governs. Coverage: if the document is ambiguous about whether the work or payment at issue falls inside it, the quasi contract theory has somewhere to live, and in Joseph Sternberg that ambiguity preserved the quantum meruit theory. Validity: where the agreement is attacked as void or rescinded, the premise of the rule is missing until that is resolved.

What does not work is a plaintiff who pleads the agreement, attaches it, sues on it, then adds a paragraph speculating that some damages might fall outside it. Speculative and conclusory allegations do not create a bona fide dispute over scope.

Why is the unjust enrichment count routinely dismissed as duplicative?

An unjust enrichment count is routinely dismissed because it is not available where it simply duplicates, or replaces, a conventional contract or tort claim. That is the Court of Appeals holding in Corsello. The corollary matters even more to a defendant. If the plaintiff’s other claims are defective, the unjust enrichment claim cannot remedy those defects.

Law: Corsello v Verizon N.Y., Inc., 18 NY3d 777, 790 (2012).

Corsello also describes what a real unjust enrichment case looks like. The typical case is one in which the defendant, though guilty of no wrongdoing, has received money to which he or she is not entitled. That is restitution between parties with no contract. It is not a second theory of breach.

The elements confirm the point. A plaintiff must show that the other party was enriched, at the plaintiff’s expense, and that it is against equity and good conscience to permit that party to retain what is sought to be recovered. The pleading must also show a relationship or connection close enough to have caused reliance or inducement. Awareness of the plaintiff’s existence, standing alone, is not enough.

Law: Georgia Malone & Co., Inc. v Rieder, 19 NY3d 511, 517 (2012); Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 (2011).

So in the ordinary contract case the count is exposed twice. It duplicates the breach claim, and the equity question was answered by the parties in the document they signed.

When does the claim survive and when is it dismissable?

Survival of an unjust enrichment claim in New York turns on one question: is there a valid, enforceable contract covering this subject matter, between these parties? The table below sorts the recurring fact patterns. Locate your case in the left column before you write a line of the motion.

Law: Clark-Fitzpatrick, 70 NY2d 382 (1987); Goldman, 5 NY3d 561 (2005); Cox, 10 NY3d 592 (2008); Corsello, 18 NY3d 777 (2012); Joseph Sternberg, 187 AD2d 225 (1st Dept 1993); Georgia Malone, 19 NY3d 511 (2012); Mandarin Trading, 16 NY3d 173 (2011); Snyder v Bronfman, 13 NY3d 504, 510 (2009); General Obligations Law 5-701(a)(10).

The last row deserves its own sentence. In Snyder the Court of Appeals held that quantum meruit and unjust enrichment claims for the value of services in helping to achieve a corporate acquisition fall within the statute of frauds for business-opportunity compensation, which reaches contracts implied in fact and in law. Check the carve-outs, then move.

Why do plaintiffs plead it anyway if a contract governs?

Plaintiffs plead unjust enrichment alongside breach of contract for tactical reasons, not doctrinal ones. Each reason is answerable, and each one tells you something about the weakness the plaintiff is trying to cover. Read the count as a confession of the drafting problem rather than as a second claim.

• Damages escape. The contract measure may be capped by a limitation-of-liability clause or an exclusion of consequential damages. Restitution of a benefit sounds unlimited. The Clark-Fitzpatrick rule exists to stop that end run.
• Reach for older conduct. Plaintiffs hope for the six-year period under CPLR 213(1). That is not automatic. Where the remedy sought is purely monetary, courts look to the substance of the claim and may apply the three-year period for injury to property under CPLR 214(4).
• Non-signatory defendants. The count is used to pull in a parent, affiliate, or owner who never signed. Georgia Malone answers that where the connection is too attenuated.
• Hedging a defective breach claim. If the contract claim has a condition-precedent or notice problem, the equitable count looks like insurance. Corsello removes that insurance.
• Atmosphere. “Unjust” is a word for a jury, not a pleading standard.

Law: CPLR 213(1); CPLR 214(4); IDT Corp., 12 NY3d at 139.

An unjust enrichment count pleaded on top of a signed contract is often the plaintiff’s own signal that the contract claim has a hole in it.

What does the duplicative count signal about the rest of the complaint?

A duplicative unjust enrichment count signals a complaint assembled by adding theories rather than by proving one. That habit leaves a trail, and the trail is usually visible in the same document. Once you find one count that the contract itself defeats, audit every other count against the contract.

Look for four things. First, whether the contract is attached. Under CPLR 3014 a writing attached to a pleading is part of it for all purposes, so a plaintiff who attaches the agreement has handed you the governing instrument. Second, whether the damages figure is tied to a provision of that document or is simply a number. Third, whether tort counts restate the breach; Clark-Fitzpatrick also holds that a breach of contract is not a tort unless a legal duty independent of the contract has been violated. Fourth, whether the defendants are pleaded as a group, which is often how a non-signatory ends up in the caption.

Law: CPLR 3014; Clark-Fitzpatrick, 70 NY2d at 389.

The consequence is cumulative. A motion that removes the quasi contract count, the duplicative tort count, and the non-signatory defendant leaves a narrower case, narrower discovery, and a plaintiff who must litigate the contract on its terms.

How do you move to dismiss it?

Dismissal of an unjust enrichment count usually rests on CPLR 3211(a)(1) and CPLR 3211(a)(7). The contract is the documentary evidence. To carry the (a)(1) ground it must be of undisputed authenticity and unambiguous, and it must utterly refute the allegations and establish a defense as a matter of law. The failure-to-state ground carries the duplication argument in the alternative.

Law: CPLR 3211(a)(1); CPLR 3211(a)(7); CPLR 3211(a)(5).

On the (a)(7) branch the court accepts the allegations as true and gives the plaintiff every favorable inference, which is why the clarity of the writing decides these motions. Where the theory depends on unwritten compensation for arranging a transaction, add the statute of frauds ground under CPLR 3211(a)(5) and General Obligations Law 5-701(a)(10). Where the claim reaches back years, test accrual under CPLR 213(1) and CPLR 214(4); it generally runs from the alleged wrongful act, not from discovery.

Partial dismissal is worth the motion even when the breach count survives, because it can eliminate a disgorgement theory before discovery is defined. Only one motion under CPLR 3211(a) is permitted, so raise every available ground in it.

One caution. A defendant who argues that no contract exists, or that it does not cover the disputed work, may hand the plaintiff the bona fide dispute that keeps the count alive. Pick a position and hold it.

What should you do before your response deadline?

You have been served with a complaint that pleads breach of contract and then pleads unjust enrichment over the same facts. Under New York law that second count is usually vulnerable, and how vulnerable depends almost entirely on documents you already have. Work the list below now, not after the answer is drafted.

• Pull the operative documents and name them precisely. The supply agreement, the guaranty, the subcontract, the purchase order and its terms on the reverse.
• Confirm signature, date, and completeness of each, including amendments and any integration clause.
• Mark the paragraphs alleging that a contract exists, and check them against the documents.
• Compare the subject matter of the unjust enrichment count to the subject matter of the contract, line by line. Overlap is the dismissal argument.
• Identify every defendant who signed nothing, and every payment demand never reduced to writing.
• Note the limitation-of-liability and damages clauses. They explain why the plaintiff wants equity.
• Fix your response date from the trigger. Under CPLR 3211(e) a subdivision (a) motion must be made before the responsive pleading is required, generally 20 days after personal delivery of the summons and complaint in New York and 30 days where service was completed by other means. The (a)(1) and (a)(5) grounds are waived if raised neither by motion nor in your answer; an (a)(7) objection may come later. Moving first extends your time to answer to ten days after service of notice of entry.

Law: CPLR 3211(e); CPLR 3211(f).

Prencipe International represents defendants in New York business litigation. Where a contract governs, that document is where analysis of the equitable count pleaded beside it begins, and often where it ends.