What is Unjust Enrichment?
Unjust enrichment is a judicially created, equitable cause of action – it is a “contract implied in law.” Lewis v. Lewis, 189 P.3d 1134, 1141 (Colo. 2008). It is a means for courts to attempt to create a just result even when there is no contract or promise that may be enforced.
What are the Elements of Unjust Enrichment?
There are three elements that a plaintiff must prove to recover under an unjust-enrichment theory:
(1) the defendant received a benefit;
(2) at the plaintiff’s expense;
(3) under circumstances that would make it unjust for the defendant to retain the benefit without commensurate compensation.
City of Arvada v. Denver Health, 403 P.3d 609, 616 (Colo. 2017).
Here’s an example that also helps differentiate unjust enrichment from breach of contract and promissory estoppel: A paving company arrives to pave a quarter-mile rural driveway. The property owner comes out to meet the pavers and introduces himself. For three days, the property owner watches as the paving company completes his new driveway. Then the foreman approaches him and says “Ok, Mr. Smith, here’s the bill per the contract we signed last month.” The property owner politely refuses to pay, explaining that his name is Mr. Jones, and that Mr. Smith owns the next section over. The paving company does not have a valid breach of contract or promissory estoppel claim against Mr. Jones—he never signed a contract or made any promise. It does, however, likely have a valid claim for unjust enrichment. It is also important to note that the damages the paving company can recover under an unjust-enrichment theory are only for the value received by Mr. Jones, not the contracted price Mr. Smith had agreed to pay – in many cases this results in a lower value as negotiated profit may be excluded.
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