At Complaint Stage, Plaintiffs May Plead Contract and Quasi Contract Claims in the Alternative

On October 4, 2019, Justice Borrok of the New York County Commercial Division issued a decision in Shandong Yuyuan Logistics Co., Ltd. v. Soleil Chartered Bank, 2019 NY Slip Op. 33033(U), holding that at the complaint stage, a plaintiff can plead both contract and quasi-contract claims, explaining:

To prevail on a cause of action for unjust enrichment, a plaintiff must establish (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered. The Amended Complaint alleges that Shandong is the rightful owner of the urea, and that the defendants wrongfully used the Sale Documents to obtain the urea and then sold it to a third party and retained the proceeds. The Amended Complaint argues that the defendants have therefore been unjustly enriched at Shandong's expense. Accordingly, the Amended Complaint states a cause of action for unjust enrichment.

To the extent that the defendants argue that the unjust enrichment cause of action must be dismissed because an express agreement governs the dispute, this argument is unpersuasive. At this stage of the proceedings, the plaintiffs are permitted to plead contract and quasi contract claims in the alternative. In any event, the cause of action for unjust enrichment is not premised on the alleged breach of the Letter Agreement, but rather it arises from facts wholly independent of any contract upon which plaintiff sues. The defendants' alleged failure to remit payment to Shandong upon proper presentment of the Sale Documents or, in the alternative, to return the Sale Documents to Shandong constitute a breach of the Letter of Credit. The defendant's alleged use of the Sale Documents to take possession of the urea and subsequent sale of the urea and retention of the profits constitute a factually distinct cause of action for unjust enrichment separate and apart from the cause of action for breach of contract.

(Internal quotations and citations omitted).

Unjust enrichment is a common claim in commercial litigation. It is used when there was not a contract between the litigants, but the defendant received an unfair benefit at the plaintiff's expense. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether you have, or are the subject of, a claim for unjust enrichment.