Hitchcock v. Delaney

• Decision Date: 10 March 2004
• Citation: 192 Or. App. 453,86 P.3d 73
• Parties: Walter P. HITCHCOCK, Trustee of the Angelini Trust; Paulette Botti and Charles Botti, Trustees of the Botti Family Trust; Alexander Briones; Dominador Briones, III; Donato Carreta; Alice M. Carreta; Frank R. Delosa; Clella Delosa; John M. Doyle; Robert Galligani; Diane Galligani; Albino A. Ravella; Antonia T. Ravella; and Donna Reich, Personal Representative of the Estate of Michael J. Rush, Appellants, v. Richard DELANEY; and Dolphin Real Estate Group Investments, Inc., Respondents.
• Court: Oregon Court of Appeals

86 P.3d 73

192 Or. App. 453

Walter P. HITCHCOCK, Trustee of the Angelini Trust; Paulette Botti and Charles Botti, Trustees of the Botti Family Trust; Alexander Briones; Dominador Briones, III; Donato Carreta; Alice M. Carreta; Frank R. Delosa; Clella Delosa; John M. Doyle; Robert Galligani; Diane Galligani; Albino A. Ravella; Antonia T. Ravella; and Donna Reich, Personal Representative of the Estate of Michael J. Rush, Appellants, v. Richard DELANEY; and Dolphin Real Estate Group Investments, Inc., Respondents.

9505-02954; A117540.

Court of Appeals of Oregon.

Argued and Submitted July 17, 2003.

Decided March 10, 2004.

David J. Sweeney, Multnomah, argued the cause for appellants. With him on the briefs were Paul G. Dodds and Brownstein, Rask, Sweeney, Kerr, Grim, DeSylvia & Hay, LLP.

Lynn R. Nakamoto, Portland, argued the cause for respondents. With her on the brief were Lynn R. Stafford and Markowitz, Herbold, Glade & Mehlhaf.

Before HASELTON, Presiding Judge, and DEITS, Chief Judge, and LINDER, Judge.

LINDER, J.

In this action for, among other things, breach of contract and unjust enrichment, the trial court originally found plaintiffs¹ (who are the owners of a mobile home park) liable to defendants Dolphin Real Estate Group, Inc. (Dolphin) and Richard Delaney. The trial court accordingly entered a money judgment in defendants' favor. While plaintiffs' appeal of that judgment was pending, they paid Delaney, who turned the money over to Dolphin. Meanwhile, we resolved that first appeal. In doing so, we determined that Delaney was not a proper judgment creditor and that the amount of the money judgment imposed was too great. See Angelini v. Delaney, 156 Or.App. 293, 966 P.2d 223 (1998),

rev. den., 328 Or. 594, 987 P.2d 514 (1999). On remand, the trial court removed Delaney as a judgment creditor and ordered Dolphin to reimburse plaintiffs for the excess amount that plaintiffs had paid to satisfy the original judgment. Plaintiffs now appeal for a second time, arguing that Delaney should have been liable to plaintiffs for that excess. We affirm.

The facts are not in dispute. Plaintiffs purchased the Vista Park Mobile Home Estates (Vista), a mobile home park in Hermiston, employing defendant Dolphin to manage the property. Dolphin was operated by plaintiff Charles Botti, defendant Delaney, and a third principal, Konrad von Emster. Vista experienced cash flow problems and, as a result, plaintiffs ultimately authorized Dolphin to borrow funds from third parties to operate Vista. To obtain funds to pay off the promissory notes, Dolphin established a line of credit with Dolphin Mortgage Co., a related entity. That line of credit was secured by the personal residences of Delaney, Botti, and von Emster. When Dolphin Mortgage later went out of business, the loan was "rolled over" to another entity, Investek Financial Corp., which obtained additional promissory notes from Delaney and Botti, also secured by their residences. Plaintiffs eventually dismissed Dolphin from its position as the manager of Vista, and defendants Dolphin and Delaney demanded that plaintiffs repay the Vista-related loans.

The original judgment is not at issue in this appeal but did lead to the dispute that resulted in the current appeal. Plaintiffs sought to quiet title in Vista against potential adverse possession claims by defendants Delaney and Dolphin. Defendants counterclaimed for, inter alia, breach of contract and unjust enrichment. The trial court granted plaintiffs' motion for summary judgment to quiet title in the land and, following trial, entered a money judgment on the counterclaims, along with prejudgment interest and attorney fees, in favor of defendants Delaney and Dolphin. As noted, plaintiffs appealed and, while their appeal was pending, plaintiffs tendered payment in satisfaction of the judgment with three checks. The checks were made payable to Delaney, despite escrow instructions and a letter to plaintiffs directing that they be made payable to Dolphin. Immediately on receiving them, Delaney endorsed the checks over to Dolphin.

Plaintiffs appealed that judgment. We reversed in part and remanded. Angelini, 156 Or.App. at 296,966 P.2d 223. Among other grounds for our disposition, we agreed with plaintiffs that the trial court had miscalculated the amount of the money judgment and that Delaney was not properly a judgment creditor. Id. at 300-07, 966 P.2d 223. On remand, plaintiffs filed a supplemental complaint seeking various forms of relief, including restitution of the overpayment from both Dolphin and Delaney. The trial court recalculated the judgment to a lesser amount (resulting in an overpayment by plaintiffs), removed Delaney as a judgment creditor, and entered an amended money judgment naming Dolphin as the sole judgment debtor for purposes of the overage amount.

In this second appeal, plaintiffs assign error to the trial court's determination that Delaney is not a judgment debtor for purposes of the overpayment. Plaintiffs argue that they are entitled to repayment from Delaney on two theories. First, plaintiffs assert that a judgment creditor who receives payment pursuant to a subsequently modified judgment is liable as a matter of law for repayment of any overage regardless of the circumstances. Alternatively, plaintiffs argue that Delaney is liable for repayment under principles of equitable restitution. We consider each argument in turn.

In arguing that Delaney is liable for the overpayment as a matter of law, plaintiffs rely principally on Coker & Belamy v. Richey, 108 Or. 479, 217 P. 638 (1923), and Arnold v. Arnold, 193 Or. 490, 239 P.2d 595 (1952). Neither case, however, establishes an absolute right to repayment of an erroneous judgment as a matter of law. The sole issue presented in Coker was whether a party who satisfies a judgment that is later vacated must pursue an independent action for the money's return or may seek the money's return in the same action in which the original judgment was imposed. 108 Or. at 485, 217 P. 638. In holding that an independent action was not necessary, the court in Coker preliminarily observed that a party who has paid a judgment that is later vacated "is entitled to have restored to him all that he lost under the erroneous judgment; and the party to whom such payment was made is obliged to make restoration." Id. at 484, 217 P. 638. As the ensuing discussion in Coker made clear, however, the mechanism for repayment was to seek restitution pursuant to conventional common-law principles of equity. See id. at 484-87, 217 P. 638.

Arnold likewise stands for the proposition that the "right" involved is the right to invoke equitable principles of restitution. There, a party who prevailed on appeal to the Oregon Supreme Court filed a motion with the court seeking "restitution" of property and rights lost under the circuit court judgment that was reversed on appeal. Arnold, 193 Or. at 506, 239 P.2d 595. The court rejected the proposition that any remedy was merely "discretionary" with the court and concluded, instead, that "restitution" was available as a matter of right. Id. at 507, 239 P.2d 595. Significantly, in support of that proposition, the court cited Lytle v. Payette-Oregon Irr. Dist., 175 Or. 276, 286, 152 P.2d 934 (1944), which applied the restitution principles set forth in the Restatement of Restitution § 74 (1937) to determine the scope of the debtor's right of restitution under the particular facts presented in that case. Arnold, 193 Or. at 507, 239 P.2d 595. Because the determination of an appropriate award of restitution depended on facts that were not a matter of record, the court in Arnold remanded the case for "such further proceedings as may be proper" instead of ordering whatever restitution might be due as part of the appeal. Id. at 508, 239 P.2d 595.

We understand Coker and Arnold to stand for a more narrow proposition than plaintiffs assert. Neither case holds that a party who has paid a judgment that is later reduced or reversed on appeal has an absolute legal right to full repayment or restoration of all things paid or lost under the judgment. Rather, those cases, and the authorities on which they rely, stand for the more limited proposition that a party in that position has a right to restitution on equitable terms.² Plaintiffs' "alternative" argument therefore frames the correct inquiry: Are plaintiffs entitled to repayment from Delaney based on traditional principles of equitable restitution?

In turning to that question, we begin with the settled equitable principles that guide the inquiry. "The basis of the restitution remedy is unjust enrichment." Fleming v. Wineberg, 253 Or. 472, 479, 455 P.2d 600 (1969). A claim for restitution based on unjust enrichment is limited to what has "actually been received and retained by the creditor for his own benefit." Lytle, 175 Or. at 287, 152 P.2d 934. A benefit received and retained can consist of any form of advantage and exists, for example, where one party adds to the property of another or saves another from expense or loss. Restatement at § 1 comment b. But the mere receipt of a benefit is not enough. Rather, its receipt and retention must be unjust under all of the circumstances. Tum-A-Lum Lumber v. Patrick, 95 Or.App. 719, 721, 770 P.2d 964 (1989) (citing Restatement at § 1 comment c). Thus, an entitlement to restitution based on a theory of unjust enrichment depends on a showing, first, that a benefit was conferred and, second, that the benefit was unjust.

We review de novo the trial court's finding that Delaney was not unjustly enriched and that plaintiffs therefore are not entitled to restitution from him rather than from Dolphin. ORS 19.415(3) (2001).³ Plaintiffs advance three arguments in support of their...