Walker v. Cotter Properties Inc.

The unjust enrichment doctrine applies principles of restitution to disputes where there is no actual contract and is based on the equitable principle that one who receives benefits that would be unjust for him to retain ought to make restitution.

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Click here for the full text of this decision FACTS:Skip Shaw, Bart Shaw and Vernon Walker were partners in Capital Equipment Leasing Co. (CELC). From 1994 to 2000, Jerry Walker (no relation to Vernon), as trustee for three trusts (Lou Miller Trust, Miller Family B-1 Trust and Miller Family B-2 Trust), loaned money to CELC, through Skip, at least 75 times for what he thought were legitimate investments in equipment leases. Jerry received a $1,000 fee for each transaction. Meanwhile, from 1997 to July 7, 1999, Skip’s daughter, Amy Cotter, and her husband, Brandon, began investing with Skip, too. For the 11 investments Amy and Brandon made, Brandon transferred funds from their account at Wells Fargo into an account Skip operated at the same bank under the name Corporate Holdings Corp. A few months later, Brandon would get a check from CELC, signed by Vernon, for the amount transferred, plus a profit. Brandon believed these checks to be legitimate returns on investment, though the investment’s terms were never spelled out. Skip also recruited L.L. Cotter, Brandon’s father, to make investments from March 5, 1997, to Nov. 12, 1999. L.L., his wife, Mary, and their company, Cotter Properties Inc., wrote checks to CELC for eight investments. As with Brandon, a few months later, L.L. would get a check for the original amount, plus a profit. The terms of L.L.’s agreement said that L.L. would get a percentage of the expected profit. On July 7, 1999, Brandon transferred $23,000 to Corporate Holdings, but was never repaid. L.L. wrote a $34,000 check to CELC on Nov. 12, 1999, and he was never repaid. Jerry Walker learned in September 2000, when Skip confessed to him, that most of the lease transactions had been fraudulent. Brandon and L.L. learned of the deceit the following year. Jerry worked out a restitution deal with CELC that included an assignment of any claims CELC might have against third parties. On April 17, 2002, Jerry sued Amy, Brandon, L.L., Mary and their companies on theories of quasi-contract, unjust enrichment and conversion. Jerry said the funds they all got from CELC were loans, not investments, totaling $210,609. The trial court granted partial summary judgment to the Cotters on their contention that some of Jerry’s claims for advances or payments were made more than four years before the date suit was filed, past the limitations period under Texas Civil Practice. & Remedies Code �16.003. The rest of the case went to a bench trial, where the trial court granted the Cotters’ motion for a directed verdict and entered a take-nothing judgment against Jerry. The trial court then entered findings of fact involving the points above. Jerry challenges the sufficiency of the evidence. HOLDING:Affirmed. “Viewing the trial court’s finding in the appropriate light, we conclude there is ample evidence in this record to support it. The evidence shows that the Cotters, like [Jerry], lost thousands of dollars through fraudulent business dealings with Skip Shaw. There is no evidence any of the payments the Cotters received from CELC were advances, loans, or mistaken payments, nor is there evidence of any mutual intention between CELC and the Cotters for them to pay that money back. Brandon and L.L. Cotter believed they were making legitimate business investments with Skip Shaw. They thought the checks they were receiving from CELC represented returns on those investments, and the payments were never intended to be loans or advances. Shaw, the perpetrator of the scheme, testified that none of the payments to Brandon and Amy Cotter were intended to be loans or advances.” OPINION:Amos L. Mazzant, J.; FitzGerald, Lang-Miers and Mazzant, JJ.

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