Unjust Enrichment: A Strong Weapon Against Financial Abuse

“Opportunity makes a thief.” 
Francis Bacon

When a vulnerable person, such as an elderly person, has been taken advantage of by unscrupulous family, friends, caregivers, or others, claims of undue influence, fraud, duress, conversion, and breach of fiduciary duty may be available. But a Colorado Supreme Court decision in 2008 has made a claim of unjust enrichment potentially the strongest claim to make when an elderly person has fallen victim to financial exploitation.

The law in Colorado permits recovery for unjust enrichment upon proof that (1) the defendant received a benefit (2) at the plaintiff’s expense (3) under circumstances that would make it unjust for the benefit to be retained without commensurate compensation. In the case of Lewis v. Lewis, 189 P.3d 1134 (Colo. 2008), the Colorado Supreme Court held that in cases involving failed gifts or agreements, when the plaintiff and defendant are close family members or confidants, “unjust enrichment occurs when one party benefits from an action that is a significant deviation from that mutual purpose.” The Court held that in such close family or confidential relationships, “malfeasance” (a wrongful act, for example, fraud) is not necessary to prove an unjust enrichment claim.

In many cases of financial abuse involving family members or others in a close relationship with the victim, it is readily apparent that the abuser received a benefit at the victim’s expense. In such cases, a valid claim for unjust enrichment can be brought when it can be shown that the parties engaged in the arrangement in pursuit of a mutual purpose and the abuser has benefited from a significant deviation from that mutual purpose. An example would be if a parent transfers ownership of the parent’s home to a child, so the child could live with the parent and be compensated to provide assistance to the elderly parent in the activities of daily life. If the child then neglected the parent’s daily needs, the benefit to the child of ownership of the home plainly deviates significantly from the mutual purpose of the arrangement. A claim for unjust enrichment could be made out, regardless of whether the neglectful child can be shown to have engaged in wrongful conduct, such as fraud or conversion, and despite the fact that the arrangement was made without any written agreement.

The relief granted by the court is equitable in nature,
giving the court substantial latitude in determining the appropriate remedy. In the example given, the appropriate relief could be court-ordered transfer of title to the home back to the parent. An alternative remedy appropriate
in some cases of financial exploitation is to impose a “constructive trust” on the property to require that the property be used for the benefit of the
victim.

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