Charles E. Hurt, Esq.
Timothy J. LaFon, Esq.
Charleston, West Virginia
Ciccarello, Del Giudice & LaFon
Attorney for Appellants
Charleston, West Virginia
Attorney for Appellee
JUSTICE MAYNARD delivered the Opinion of the Court.
2. The measure of damages in an unjust enrichment claim is the greater of
the enhanced market value of the property or the cost of the improvements to the property.
To the extent that the Syllabus of Somerville v. Jacobs, 153 W.Va. 613, 170 S.E.2d 805
(1969), differs from this holding, it is hereby modified.
Maynard, Justice:
This case is before this Court
for a second time. Realmark Developments, Inc., the appellee herein and plaintiff/counterclaim
defendant below (hereinafter “Realmark”) instituted this action
to recover unpaid rent and real property taxes for property leased to Clyde
and Judith Ranson, the appellants herein and defendants/counterclaim plaintiffs
below (hereinafter “the Ransons”).
(See footnote 1) The Ransons filed a counterclaim contending
that Realmark was unjustly enriched by repairs and improvements they made
to the property. The circuit court granted summary judgment to Realmark on
its claim for unpaid rent and property taxes, and that ruling was upheld by
this Court on appeal in Realmark Developments Inc. v. Ranson, 208 W.Va.
717, 542 S.E.2d 880 (2000) (hereinafter “Realmark I”). However,
we remanded the case for a trial on the Ransons' unjust enrichment claim.
Upon remand, a bench trial was held. After the Ransons presented their case, Realmark filed a motion for a directed verdict. The circuit court granted Realmark's motion and entered judgment in its favor on April 2, 2002. The Ransons' appeal of that order is now before this Court.
In this appeal, the Ransons contend that the circuit court erred by denying them
a jury trial; by refusing to allow their experts to testify regarding the cost of the labor and
materials they expended on the property; and by granting Realmark's motion for a directed
verdict. Upon reviewing the petition for appeal, the entire record, and the briefs and
argument of counsel, we find that the Ransons were entitled to a jury trial. We also find that
the Ransons should have been allowed to present evidence of the cost of the improvements
they made to the property for the purpose of determining damages. Therefore, we reverse
the final order of the circuit court and remand this case for further proceedings consistent
with this opinion.
The Ransons say they relied upon Realmark's promises and, consequently,
expended a substantial sum of money to repair and remodel the building during the five-year-
lease term. The lease agreement executed by the parties on May 31, 1991, included a
purchase price for the property of $195,000.00. However, at the end of the Ransons' five-
year lease, Realmark sold the property to a third party for $270,000.00.
Pursuant to this Court's decision in Realmark I, a trial was held on the
Ransons' unjust enrichment claim on February 5 and 6, 2002. After the Ransons presented
their case, Realmark moved for a directed verdict. The circuit court granted the motion, and
the final order was entered on April 2, 2002. This appeal followed.
“The appellate standard of review for the granting of a motion
for a directed verdict pursuant to Rule 50 of the West Virginia
Rules of Civil Procedure is de novo. On appeal, this court, after
considering the evidence in the light most favorable to the
nonmovant party, will sustain the granting of a directed verdict
when only one reasonable conclusion as to the verdict can be
reached. But if reasonable minds could differ as to the
importance and sufficiency of the evidence, a circuit court's
ruling granting a directed verdict will be reversed.” Syllabus
Point 3, Brannon v. Riffle, 197 W.Va. 97, 475 S.E.2d 97 (1996).
Syllabus Point 6, McCloud v. Salt Rock Water Pub. Serv. Dist., 207 W.Va. 453, 533 S.E.2d
679 (2000).
The Ransons also assign errors in this case which raise questions of law. We
have held that “[w]here the issue on an appeal from the circuit court is clearly a question of
law . . . we apply a de novo standard of review.” Syllabus Point 1, in part, Chrystal R.M.
v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995). With these standards in mind, we
now consider the parties' arguments.
“Prior to the introduction of the Rules of Civil Procedure, a right to a jury trial
existed in an action at law. In an equitable dispute, however, the right to a jury trial did not
exist.” Little v. Little, 184 W.Va. 360, 362, 400 S.E.2d 604, 606 (1990). The distinction
between law and equity was abolished by Rule 2 of the West Virginia Rules of Civil
Procedure which provides that “[t]here shall be one form of action to be known as 'civil
action.'” Nonetheless, “it has been recognized that the right to a jury trial depends upon
whether one had that right prior to the adoption of the Rules.” Warner v. Kittle, 167 W.Va.
719, 725, 280 S.E.2d 276, 280 (1981).
In determining whether an action is legal or equitable in nature, both the issues
involved and the remedy sought are examined. 47 Am.Jur.2d Jury § 34 (1995). Generally,
an action is one in equity if it is based on equitable rights and equitable relief is sought. Id.
at § 33. For example, an action for specific performance is purely equitable in nature, and
traditionally, there has been no right to a jury trial in that type of case. West Virginia Human
Rights Comm'n v. Tenpin Lounge, Inc., 158 W.Va. 349, 354, 211 S.E.2d 349, 352 (1974)
(citations omitted). By contrast, a “right to trial by jury generally applies to an action for the
recovery of money or damages, or a legal action for the recovery of money only, or an action
in which only a money judgment is sought.” 50A C.J.S. Juries § 50 (1997). Essentially,
“the right applies where the legal remedy of damages is full and adequate and can do
complete justice between the parties.” Id.
In the case sub judice, the Ransons claim that Realmark was unjustly enriched
by the improvements they made to the property at issue. In Realmark I, this Court explained
that “if benefits have been received and retained under such circumstance that it would be
inequitable and unconscionable to permit the party receiving them to avoid payment therefor,
the law requires the party receiving the benefits to pay their reasonable value.” 208 W.Va.
at 721-22, 542 S.E.2d at 884-85. Clearly, the right to recover for unjust enrichment is based
on the principles of equity. However, the remedy sought in this case is a money judgment
and, thus, is governed by law. In other words, “unjust enrichment . . . is but the equitable
reason for requiring payment for value of goods and services received.” Nehi Beverage Co.,
Inc. of Indianapolis v. Petri, 537 N.E.2d 78, 85 (Ind. Ct. App. 1989) (emphasis in original).
As the Petri court explained:
“The theory on which the plaintiff in this suit seeks money
damages, unjust enrichment, sometimes referred to as
restitution, a contract implied in law, quasi-contract, or an action
in assumpsit, is the product of a long tradition in law, and is an
action at law. (Board of Highway Commissioners v. City of
Bloomington (1911), 253 Ill. 164, 173, 97 N.E. 280, 284-85;
Dickerson Realtors, Inc. v. Frewert (1974), 16 Ill.App.3d 1060,
1063, 307 N.E.2d 445, 448; see Restatement of Restitution,
Introductory Note (1937); 1 Palmer, Restitution sec. 1.2 (1978);
1 A. Corbin, Contracts, sections 19, 20 (1 vol. ed. 1952);
Dobbs, Remedies sec. 4.2, at 232 (1976).) The confusion with
equity emanates from the decision of the King's Bench in 1760
in the case of Moses v. Macferlan, 2 Burr. 1005, 97 Eng.Rep.
676, where Lord Mansfield stated that the defendant's obligation
came 'from the ties of natural justice' founded in 'the equity of
the plaintiff's case.' (See 1 Palmer, Restitution sec. 1.2, at 7
(1978); Board of Highway Commissioners v. City of
Bloomington (1911), 253 Ill. 164, 173, 97 N.E. 280, 285.) As
Palmer explains, the statement concerning the action of
quasi-contract being equitable has been repeated many times,
but merely refers to the way in which a claim should be
approached 'since it is clear that the action is at law and the
relief given is a simple money judgment.' (1 Palmer, Law of
Restitution sec. 1.2, at 7 (1978).) ...”
Id., quoting Partipilo v. Hallman, 156 Ill.App.3d 806, 510 N.E.2d 8,
11 (1987). Accordingly, we now hold that a suit seeking monetary recovery
under a theory of unjust enrichment is an action at law and therefore, can
be tried before a jury. Thus, the Ransons are entitled to a jury trial.
(See footnote 3)
Although we have determined that this case must be remanded for a new trial,
we feel it is necessary to address the Ransons' contention that the circuit court erred by not
allowing them to present expert testimony regarding the cost of labor and materials they
expended on the building. Prior to trial, Realmark filed a motion in limine to exclude the
testimony of Hurford Bolyard and James White concerning the cost of the labor and materials
which were used to improve the building leased by the Ransons. The Ransons claimed that
they had not preserved all of the bills for the labor and materials, and therefore, they intended
to present the testimony of Mr. Bolyard and Mr. White to establish their costs and the
damages they sought to recover. However, Realmark asserted that the measure of damages
in this instance is the increased value of the property as the result of the improvements.
Since Mr. Bolyard and Mr. White were not qualified to render such an opinion, Realmark
argued that their testimony should be excluded. The circuit court agreed.
As set forth above, we determined in Realmark I that the Ransons had a viable unjust enrichment claim because there was evidence that indicated that the Ransons made improvements to the property based upon their belief that Realmark would give them financial assistance so that they could exercise their option to purchase at the end of their five-year lease. In that regard, we said:
As indicated in Restatement, Restitution § 53(3), where a person
acquires an interest in land as a result of an agreement with the
owner, such as the leasehold interest acquired by the Ransons in
the present case, under a mistake of law, that person is entitled
to restitution for improvements which he places on the land as
a result of the mistake. In the present case, it is the Ransons'
claim that they believed that Realmark Developments, Inc., was
legally obligated to assist them in financing their purchase of the
property in question. While they may have been legally
mistaken, their belief, if factually established, may entitle them
to restitution under the restitution count of their amended
counterclaim.
208 W.Va. at 722, 542 S.E.2d at 885.
It is well established that “[r]estitution is allowed only to the extent the injured party has conferred a benefit on the other party by way of part performance or reliance.” 22 Am.Jur.2d Damages § 56 (1988). Consistent with this principle, this Court has held:
An improver of land owned by another, who through a
reasonable mistake of fact and in good faith erects a building
entirely upon the land of the owner, with reasonable belief that
such land was owned by the improver, is entitled to recover the
value of the improvements from the landowner and to a lien
upon such property which may be sold to enforce the payment
of such lien, or, in the alternative, to purchase the land so
improved upon payment to the landowner of the value of the
land less the improvements and such landowner, even though
free from any inequitable conduct in connection with the
construction of the building upon his land, who, however,
retains but refuses to pay for the improvements, must, within a
reasonable time, either pay the improver the amount by which
the value of his land has been improved or convey such land to
the improver upon the payment by the improver to the
landowner of the value of the land without the improvements.
Syllabus, Somerville v. Jacobs, 153 W.Va. 613, 170 S.E.2d 805 (1969).
The plaintiffs in Sommerville reasonably relied upon a surveyor's report and
mistakenly constructed a warehouse building on a lot owned by the defendants. The
plaintiffs filed suit seeking $20,500.00, the cost of the improvements they made to the
defendants' property. The parties stipulated that the property in question had a fair market
value of $2,000.00 immediately prior to the erection of the building by the plaintiffs. They
also agreed that the fair market value of the property after the improvements were made was
$19,500.00.
The trial court in Somerville
entered judgment in favor of the plaintiffs and required the defendants to
decide whether they wished to retain the building and pay the plaintiffs $17,500.00
or convey title to the property to the plaintiffs for $2,000.00 cash. This
Court upheld the trial court's decision stating that “if the defendants
retain the building and refuse to pay any sum as compensation to the plaintiff
. . . they will be unjustly enriched in the amount of $17,500.00, the agreed
value of the building[.]” 153 W.Va. at 628, 170 S.E.2d at 813.
In the case at bar, Realmark contends that the Somerville decision supports its
contention that the Ransons can only recover the increased market value of the property after
the improvements were made. However, since Somerville was decided, the rule with respect
to the measure of damages in claims of unjust enrichment has evolved. It is now recognized
that,
If a sum of money is awarded to protect a party's restitution
interest, it may, as justice requires, be measured by either (a) the
reasonable value to the other party of what he received in terms
of what it would have cost him to obtain it from a person in the
claimant's position, or (b) the extent to which the other party's
property has been increased in value or his other interests
advanced. The greater of the above two measures should be
used in cases in which work has increased the value of the
defendant's property, but there is some discrepancy between the
reasonable value of that work and the amount of enhancement.
22 Am.Jur.2d Damages § 56 (1988).
In Robertus v. Candee, 205 Mont. 403, 670 P.2d 540 (1983), the Supreme Court of Montana explained why the measure of damages in this type of case can be either the quantum meruit value of the plaintiff's labor and materials or the value of the enhancement to the defendant's property. The Court stated:
There may be cases where the enhancement to the
defendant's property will be far less than the quantum meruit
value of the plaintiff's efforts. For example, where the
improvement did not enhance the value of the property but did
result in a pecuniary saving to the defendant, the enhancement
measure would not reflect the unjust enrichment. Conversely,
there may be cases where the value of the enhancement greatly
exceeds the cost of the improvement, as in this case.
Thus the rule has evolved that the proper measure of
damages in unjust enrichment should be the greater of the two
measures. Restatement of Law, Contracts 2d § 371 comment
b [(1981)]; 12 Williston, Contracts § 1480.
205 Mont. at 408-09, 670 P.2d at 543 (emphasis in original). In light of the above, we now
hold that the measure of damages in an unjust enrichment claim is the greater of the
enhanced market value of the property or the cost of the improvements to the property. To
the extent that the Syllabus of Somerville differs from this holding, it is hereby modified.
Therefore, upon remand, the Ransons should be afforded the opportunity to present evidence
of the cost of the improvements they made to the property.
Reversed and remanded.