Harris Family Limited Partnership v. Brighton Investments LLC, Docket No. 36410
Supreme Court of Idaho
March 18, 2011
Opinion Author: Justice Joel D. Horton
Concurring in Opinion: Eismann, Chief Justice; Burdick, Justice; J. Jones, Justice; W. Jones, Justice
Whether a purchaser is unjustly enriched if it pays a lower price for property subject to restrictive covenants and then sells the property for a profit to another purchaser who can condemn the covenants.
Summary of Ruling:
Appellant sold Respondent property that allegedly was burdened by covenants restricting its use to residential purposes. Respondent later sold the property to a local university, allegedly with knowledge that the university intended to trade the land with a local school district with the power of eminent domain. After the local school district received title to the property, it exercised its power of eminent domain to condemn the restrictive covenants for the purpose of building a junior high school. Appellant then asserted various claims against Respondent, including a claim for unjust enrichment. (Appellant’s claims for breach of contract and for breach of the duty of good faith and fair dealing are summarized here.) In particular, Appellant contended that Respondent was unjustly enriched because Respondent paid a lower price for the property subject to restrictive covenants and sold the property at a higher price because of the eventual owner’s power to condemn the restrictive covenants. The district court granted Respondent’s motion for summary judgment on this claim, and Appellant appealed.
Citing prior Supreme Court precedent, the Court first stated the prima facie case for unjust enrichment: “(1) a benefit conferred upon the defendant by the plaintiff; (2) appreciation by the defendant of such benefit; and (3) acceptance of the benefit under circumstances that would be inequitable for the defendant to retain the benefit without payment to the plaintiff of the value thereof.” The Court further noted that the doctrine does not, however, “rescue a party from the consequences of a bargain which turns out to be a bad one.”
Turning to the facts of this case, the Court held that Appellants had not shown that it conferred any benefit upon Respondent that it would be inequitable for Respondent to retain. First, the uncontroverted evidence established that Appellant had sold Respondent the land in question at fair market value with no mention in the sale agreement of any restriction on Respondent’s ability to divide and resell the property. Indeed, since Respondent is an investment company, Appellant’s claim of unjust enrichment ignores the commonly understood profit motive of investment companies in land transactions. Unjust enrichment is not meant as a protective measure to a party for his own bad bargaining, but rather a protective measure to preserve equity.
Second, there was nothing about the transaction between Appellant and Respondent that was inherently unfair. The Court rejected Appellant’s premise that “a party to a land transaction implicitly agrees not to convey that property to an entity endowed with the power of eminent domain.” Therefore, the Court affirmed the district court’s dismissal of Appellant’s unjust enrichment claim.
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