Menu

AZAPP Blog Your resource for news and analysis of cases in Arizona's appellate courts.

AZAPP Blog header image

Loiselle v. Cosas Management Group, LLC - 4/20/2009

Arizona Court of Appeals Division One Holds That A Person Need Not Pay Restitution to Another for the Unjust Receipt of Funds Where a Subsequent Change of Circumstance Would Cause the Recipient to Suffer Entire or Partial Loss.


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

Posted On: 5/4/2010