Unjust Enrichment, Restitution, and Wrongs

I. Introduction In the 1937 Restatement of Restitution,1 the effect of an award of is the restoration of person the position formerly occupied either by the return of something which formerly had or by the receipt of its equivalent in money.2 Additionally, section 1 of the Restatement considers all instances of to be governed by principle of enrichment; that is, a person who has been unjustly enriched at the expense of another is required to make to the other. 3 This synonymous use of and unjust enrichment-referring to all instances of reversing transfer with money award-has become prevalent.4 This approach, however, is flawed. All awards of cannot be treated alike because all claims for do not rest solely upon unjust enrichment. This Comment attempts to demonstrate that can be awarded for wrong and that an award in response to wrong has nothing to do with any principle of unjust enrichment. As such, restitution should be term that refers only to particular remedy, and should be phrase that describes particular group of actionable causes, none of which is wrong. One way to demonstrate the disunion between awards of made for wrongs and those made for non-wrongs is to examine the differing consequences that flow from each. For example, person A might be deceived into paying $100 to person B. Person A could claim of the money for the wrong of deceit or for the non-wrong of the mistaken payment. To treat each as based upon unjust enrichment ignores the fact that different consequences follow from different causes of action. For instance, choice-of-law rules, statutes of limitation and repose, varying interest rates, and available defenses are all differences dictated by specific causes of action. This Comment, however, focuses upon different problem caused by the conflation of unjust enrichment and awards of for wrongs. The principal problem is that gain-based awards for wrongs can be of two types. They can be awards that focus upon stripping defendant of profits (labelled disgorgement damages), or they can be awards that operate to reverse transfers pursuant to the wrong (labelled damages). The two awards are available in different circumstances and are motivated by different concerns. By creating tautologous relationship between and unjust enrichment, the independent rationales for varietal gain-based awards for wrongs are often ignored, and the value of damage awards can never be certain. A recent article by James Gordley briefly recognizes this point: gain-- based awards for wrongs are informed by different principles and cannot fit squarely within theory of unjust enrichment.5 But Gordley commits the same error of equating unjust enrichment with restitution. This leads him to the conclusion that these gain-based awards for wrongs have nothing to do with restitution.6 The better view is that awards of restitution-or perhaps better said, restitutionary damages-can be given for wrongs but that those awards have nothing to do with unjust enrichment. This Comment seeks to demonstrate why this is the better view. II. The Problem The problem is evident in the very first section of the Restatement, which explains that person is unjustly enriched if retention of benefit would be unjust and that must therefore be made to plaintiff so that he is restored to the position which formerly occupied.7 However, as soon as wrongs are conjoined with the principle of unjust enrichment, some qualification is necessary. It is acknowledged that benefit in the form of profit wrongfully made by defendant must also be given to the plaintiff even in cases in which the plaintiff has suffered no loss.8 In short, the plaintiff will be placed in better position than the one formerly occupied. …