Credit Bureau Enterprises, Inc. v. Pelo

608 N.W.2d 20 (Iowa 2000).

Pelo is the defendant. Lost in trial court and appealed.

Question

Who is going to pay for the mental services provided by the private hospital to a patient who was involuntarily committed?

Rule

§116 Restatement of Restitution:

A person who has supplied things or services to another, although acting without the other’s knowledge or consent, is entitled to restitution therefor form the other if

a) he acted unofficiously and with intent to charge therefor, and
b) the things or services were necessary to prevent the other from suffering serious bodily harm or pain, and
c) the person supplying them had no reason to know that the other would not consent to receiving them, if mentally competent; and
d) it was impossible for the other to give consent or, because of extreme youth or mental impairment, the other’s consent would have been immaterial.

§116(d) is at issue here.

Holding

Affirmed, Pelo needs to pay up.

Facts

After an argument with his wife, Pelo went to a hotel, called his wife and threatened self-harm. Other circumstances caused her to call the police and Pelo become emergency involuntarily hospitalized for his mental condition. Turns out he was bipolar. He was not happy about the hospitalization and would not agree to sign the form to pay his hospital bills. Under duress, he signed but refused to pay when the bill came. The collection agency brought this suit for the payment.

Analysis

Pelo benefited from the hospital services (at the very least he was no diagnosed) and he should expect to pay for those service. The hospital expects to be paid for providing services. Additionally, his consent does not matter because of his mental impairment at the time of the hospitalization. Therefore, because of the law of restitution, the hospital is entitled to payment.

Because this is an implied contract (quasi), there is no need to explore whether he made an actual contract by signing under duress.

Additional Notes

This is another time where this could have been resolved earlier instead of needing to rely on §116. This should be used for remedial purposes only.

Why did the hospital care about getting the signature of the defendant when he wasn’t even able to consent? Not sure.

Here, there was no real contract, so we use a quasi-contract (restitution and unjust enrichment).

What does officiously mean? Interference in the affairs of other not justified by the circumstances under which the interference takes place. §2 Restatement on Restitution.

Say you are the lawyer for the hospital. What should you do to avoid this kind of situation? You have someone with the power of attorney sign in behalf of the person seeing how he does not have the mental capacity to do so. However, if this isn’t possible, you may need to go forward and end up relying on this doctrine.

Commerce Partnership 8098 Limited Partnership v. Equity Contracting Co.

695 So. 2d 383 (Flo. App. 1997).

Equity is the plaintiff. Won in trial and Commerce appealed.

Question

Two questions, is this a Implied in Fact or a Quasi Contract claim? And is the owner liable to pay restitution to the subcontractor?

Rule

A subcontractor may be able to recover restitution if they can show:

  1. The subcontractor exhausted all other possible remedies
  2. The owner had not given consideration for the services provided.

Holding

The owner gave consideration. Reversed and Remanded for further trial to collect additional evidence.

Facts

Equity was a subcontractor for a general contractor who was hired to work on a project for Commerce. The subcontractor was to be paid by the general contractor who received payments from the owner. Here, Equity had completed Stucco work and requested payment. He claimed that Commerce had not paid the general contractor in full who did not pay Equity at all. The general contractor declared bankruptcy and is no longer a part of this case.

Evidence at trial was dismissed for lack of relevance that the general contractor had made out a number of payments to the general contractor. This resulted in a judgment for the plaintiff for the cost of the project.

Analysis

The first issue was that the term “quantum meruit” was confusing because it has applied to both implied in fact cases and quasi contract cases. Ultimately, for our purposes, the court determined that this was a quasi contract case. Because of this, the plaintiff would need to show that there was no other remedy and that the owner paid no consideration (this proves the unjust part of a quasi-contract).

Here, the owners payments to the general contractors and individual subcontractors is relevant because the sum they paid exceeded the cost of the contract the owner had with the general contractor. Therefore, consideration was paid and the case needs to be remanded for further trial.

Additional Notes

The requirements for Quasi-contract is:

  1. know of the benefit
  2. have the benefit
  3. did not pay the fair value of it.

Parts 1 and 2 are met, but the question is the 3rd part. Who should have the risk? Should the owner pay twice or should the subcontractor not be paid at all? The court says that it is not unjust if the owner already paid once and is not obligated to pay a second time.

Restatement (Third) Restitution §1: A person who is unjustly enriched at the cost of the person who provided the services. If it looks like we have a contract, we will not use Restitution (§2(1)).

If someone can consent, then they should be free to refuse the service (§2(4)).

Watts v. Watts

137 Wis. 2d 506 (1987).

Cohabitant Sue Ann Watts, filed complaint against defendant James Watts. Her claim was dismissed for not stating a claim and she appealed.

Question

Did she state a claim under one of the possible avenues she listed?

Rule

Express or implied in fact contract requires actions or words to show that there was a promise.

Unjust enrichment is:

  1. Benefit for the defendant from the plaintiff
  2. Defendant appreciates the benefit
  3. Retention of benefit by the defendant makes it inequitable.

Holding

She can state a claim as a cohabitate under the implied in fact and the implied in law (quasi contract) theories. Reversed and remanded for further trial.

Facts

The plaintiff and defendant had been cohabiting for nearly 12 years, had two kids together, and completed business ventures together. Differences arose and she left. She wanted part of the estate saying that his income had substantially increased because of her services and that she was not compensated for the services. The case was dismissed for failure to bring a claim (she tried five different ways).

Analysis

The court addresses those five potential avenues for stating a claim. Briefly, she can’t state a claim under the marriage statutes because she was not married, family and acting married is not sufficient.

However, she can state a claim for breach of contract (not that she should, only that she could). This is because both parties provided adequate consideration through their conduct. She left her job under the promise that he would “take care of her.” Therefore, she can state a claim of implied-in-fact.

She can also state an implied-in-law aka quasi contract aka unjust enrichment. This is because she conferred a benefit of childbearing, housekeeping, business services, etc. This she did which resulted in the defendant having a substantial income increase during the cohabitation. Therefore, she can also make this restitution claim.

Takeaway

Not all courts allow cohabitation claims like this to occur. Even Wisconsin which allowed this claim to pass but did not allow a future case where the defendant did not have a substantial income increase. Takeaway, if you ever want a claim to property, get married.

Disclaimer

The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.

Categories: 1L Fall, Contracts I

Will Laursen

Show Your Support

$5/month

Share
Table of Contents