Verderose was Loiselle’s employee. Verderose proposed that Loiselle provide a short-term $25,000 loan to Cosas Management Group (“CMG”). He told Loiselle that CMG would pay the loan back within a week, along with a $10,000 loan fee. Loiselle agreed and issued CMG a $25,000 check. In fact, Verderose used the money to pay down a debt he owed to CMG. Allegedly based on the payment, CMG allowed Verderose to borrow an additional $21,000. Verderose later committed suicide. When Loiselle demanded repayment, CMG responded that it would not be returning any funds to Loiselle. Loiselle filed a complaint asserting an unjust enrichment claim for $25,000 against CMG. The trial court granted summary judgment in Loiselle’s favor, requiring CMG to return $25,000. This appeal followed.
The Arizona Appeals Court held that CMG must return $4,000, but that a trial was required with respect to the remaining $21,000. The Court explained that a person is ordinarily entitled to restitution if he mistakenly believes he is party to a contract and makes payment to another based on that mistake. The general rule does not apply, however, when a subsequent change of circumstances would cause the recipient entire or partial loss. This includes a situation where the recipient incurs business expenses because of the mistaken payment. Here, the Court concluded that fact questions existed as to whether CMG loaned an additional $21,000 to Verderose because of Loiselle‘s mistaken payment. Thus, CMG was required to return $4,000 (the difference between $25,000 and $21,000), but fact questions prevented summary judgment as to the remaining $21,000.
Judge Gemmill authored the opinion; Judges Weisberg and Hall concurred.
Posted By: Michael S. Catlett