Is the contractor entitled to reimbursement due to unjust enrichment?

4 weeks ago

In CA, a contractor had a home improvement contract that excluded plumbing fixtures and nothing more. The homeowner understood plumbing fixtures to be sinks, toilets, tubs and faucets, which is in conformity with the Uniform Plumbing Code and the CA Plumbing Code definition. As part of the bathroom remodel floor plan, shower glass was to be installed. The homeowner understood the shower glass to be included in the negotiated contract price, though it was not an expressly included item. During construction, the contractor directed the homeowner to go to a specific glass store to pick out the shower glass and handles. The shower glass company then faxed a schematic and work description to the homeowner that did not show any pricing and required the contractors signature, not the homeowners signature. The contractor signed it and it was returned to the glass company. Subsequently, the glass was installed. Later, the contractor presented the homeowner with a single item “change order” for $3,000. The homeowner refused to pay it based upon the shower glass not being an excluded item, not agreeing to the price / change order in advance, being directed to the glass supplier with no knowledge they were expected to pay an additional charge for the glass. Based upon this and other disputes, the homeowner and contractor are going to Arbitration. Is the contractor entitled to reimbursement under the theory of “unjust enrichment?”

Senior Legal Associate Levelset

Generally, unjust enrichment occurs when one party receives a benefit at the expense of the other party, and the receiving party unjustly retains the benefit without any compensation to the party who provided that benefit. And, unjust enrichment really only comes into play when there’s no contract regarding the benefit – otherwise, contractual claims would be more appropriate.

I can’t predict how an arbitrator will rule on the specific issue above. However, there are some factors worth identifying as crucial. For one, since there’s a contract in place, that will be carefully scrutinized. Unjust enrichment typically won’t be available if, based on the language in the contract, the benefit was contemplated in the agreement. This may be true even where the price of the agreement isn’t fully in line with what might be expected for the benefit. On the other hand, if the price of the agreement clearly doesn’t include what a consumer would be expected for the benefit, then that might point back toward the potential for unjust enrichment.

Additionally, looking at the value of the uncompensated benefit in comparison to the overall contract may be helpful. If the glass, in the situation above, is an incredibly steep deviation from the rest of the contract price, that’d likely point toward the potential for unjust enrichment as well.

I wish I could provide a more black and white answer, but anyone charged with arbitrating whether unjust enrichment has occurred will have to weigh a number of relevant factors before making their determination. Ultimately, the terms of the contract, the value of the benefit, and the proportion of that benefit to the remainder of the overall agreement should be some very relevant factors – and there may be other circumstances not contemplated here that weigh heavily into that decision, too.

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