Salzman v. Bachrach

• Decision Date: 20 March 2000
• Docket Number: No. 99SC166.,99SC166.
• Citation: 996 P.2d 1263
• Parties: Roberta F. SALZMAN, Petitioner, v. Erwin BACHRACH, Respondent, and Countrywide Home Loans, Inc., a New York corporation, and Terry Schall, the Public Trustee of Eagle County, Colorado, Defendants.
• Court: Colorado Supreme Court

996 P.2d 1263

Roberta F. SALZMAN, Petitioner, v. Erwin BACHRACH, Respondent, and Countrywide Home Loans, Inc., a New York corporation, and Terry Schall, the Public Trustee of Eagle County, Colorado, Defendants.

No. 99SC166.

Supreme Court of Colorado, En Banc.

March 20, 2000.

Rehearing Denied April 10, 2000.

Dunn, Abplanalp & Mauriello, P.C., Arthur A. Abplanalp, Jr., Vail, Colorado, Attorneys for Petitioner.

Law Office of Steven M. Segall, Steven M. Segall, Andrew D. Haas, Lakewood, Colorado, Attorneys for Respondent.

Justice KOURLIS delivered the Opinion of the Court.

We granted certiorari to review the court of appeals' decision in Bachrach v. Salzman, 981 P.2d 219 (Colo.App.1999).¹ We conclude that the Respondent, Erwin Bachrach, established a claim of unjust enrichment and is entitled to restitution of at least some of his contributions to the residence titled in the name of Petitioner Roberta F. Salzman. Accordingly, we affirm the court of appeals and remand this case to the trial court for a determination of the amount of restitution based upon the principles set out in this opinion.

I.

Bachrach and Salzman met in 1986 when Salzman, a divorcee, responded to a personal advertisement in the Vail Trail newspaper placed by Bachrach, a widower. Bachrach and Salzman enjoyed a relationship that included dining, travel, and visiting with family and friends. The two maintained separate residences during the first several years of their relationship. Bachrach lived in a one-bedroom condominium that he owned, and Salzman resided in a townhouse. Salzman disliked her townhouse because of its small size, poor winter access, and because she had difficulty climbing the stairs.

In 1993, Bachrach and Salzman agreed to build a home together. Bachrach placed the condominium that he owned on the market late that year, and sold it in February 1994. Bachrach netted roughly $100,000 from the sale. On March 31, 1994, Bachrach and Salzman purchased a lot in Eagle, Colorado for $49,000, and titled it in both of their names. They contributed approximately equally to the price.

Bachrach, a designer and drafter of residential properties for fifty years, designed the new home. Initially, he estimated a total construction cost of $370,000. The construction crew broke ground on July 19, 1994 and substantially completed construction by April 1995, when the two moved into the home together. The home ultimately cost $520,876.50 to build. Bachrach contributed $167,528.86 and Salzman paid $353,347.64 of the total cost. In March 1995, the residence appraised for $445,000; in November 1996, it appraised for $584,000. On April 18, 1995, Bachrach quitclaimed his interest in the property to Salzman, and Salzman closed on the sale of her townhouse. Bachrach's delivery of the deed to Salzman at that time served two functions. It facilitated Salzman's ability to obtain a favorable mortgage on the home, and offered tax advantages to Salzman. However, there was a third purpose that came to light approximately six months later.

In November 1995, Salzman's ex-husband notified her that he intended to terminate his monthly maintenance payment of $1800 because of her alleged marriage to Bachrach, cohabitation, and joint homeownership. Bachrach replied to Salzman's ex-husband in writing that they were not married, but lived together for convenience and companionship; that they maintained separate financial accounts; that she alone owned the home; and that his contribution was in exchange for an indefinite period of free rent. After receiving the letter, Salzman's ex-spouse did not further pursue termination of maintenance. Hence, in a written document, Bachrach disavowed any interest in the home—equitable or otherwise.

During their cohabitation in the new home, Salzman made all of the mortgage payments and Bachrach paid only for some utilities and food. He did not pay rent. Initially, the parties shared a bedroom, but after about a year, they found one another intolerable and Bachrach moved into a separate bedroom. In August 1996, Salzman asked Bachrach to move out, and he refused. On January 15, 1997, Salzman changed the locks and posted a No Trespassing sign on the property, with the added phrase "This means you Erwin." Bachrach has not lived in the home since that day.

On January 17, 1997, Bachrach filed suit in the District Court in the County of Eagle, Colorado against Salzman, seeking a partition of the property under the theory that the two were joint venturers in the construction of the home. Salzman asserted counterclaims that Bachrach negligently designed the home, poorly managed its construction, misrepresented himself as an architect, and miscalculated the cost of the home, among others. The parties tried the case before the District Court in November 1997. The court denied both parties the relief that they sought.

The court of appeals reversed the order of the trial court holding that Salzman would be unjustly enriched were she allowed to keep Bachrach's contributions to the home. The court of appeals opined, however, that on remand, in determining the amount owed Bachrach, the trial court could consider the reasonable rental value Bachrach received while he resided in the house.

II.

We begin our analysis by addressing Bachrach's argument that Salzman should reimburse him for his design work, construction management services, and his $170,000 contribution on principles of unjust enrichment. The Restatement of Restitution states "[a] person who has been unjustly enriched at the expense of another is required to make restitution to the other." Restatement of Restitution § 1 (1937). "A person obtains restitution when he is restored to the position he formerly occupied either by the return of something which he formerly had or by the receipt of its monetary equivalent." Id. § 1 cmt.a.

Unjust enrichment is a form of quasi-contract or a contract implied in law. See Dove Valley Bus. Park Assocs., Ltd. v. Board of County Comm'rs of Arapahoe County, 945 P.2d 395, 403 (Colo.1997)

. As such, it is an equitable remedy and does not depend on any contract, oral or written. See Cablevision of Breckenridge, Inc. v. Tannhauser Condominium Ass'n, 649 P.2d 1093, 1097 (Colo.1982). The theory does not require any promise or privity between the parties. See Wistrand v. Leach Realty Co., 147 Colo. 573, 576, 364 P.2d 396, 397 (1961). Rather, it is a judicially created remedy designed to avoid benefit to one to the unfair detriment of another. See Cablevision, 649 P.2d at 1097.

In Colorado, a plaintiff seeking recovery for unjust enrichment must prove: (1) at plaintiff's expense (2) defendant received a benefit (3) under circumstances that would make it unjust for defendant to retain the benefit without paying. See DCB Constr. Co. v. Central City Dev. Co., 965 P.2d 115, 119-20 (Colo.1998)

.²

Applying the first element to the facts present here, we find that Bachrach's payment of nearly $170,000 and efforts in designing the home and managing the project certainly came at his expense. It is hardly arguable that Bachrach did not suffer in some way after paying for nearly one-third of the final construction cost of a home from which he has been evicted.³

Considering the second prong, we conclude that Salzman benefited from Bachrach's expenditure on the construction of the home in which she now resides. Salzman owns and lives in an expensive custom home that Bachrach helped design and purchase.⁴

The final prong then asks the dispositive question: whether it would be unjust for the defendant to retain the benefit conferred. Absent some countervailing consideration, the answer to this question is that it would be unjust to allow Salzman to keep Bachrach's entire contribution to the home.⁵

III.

A.

Salzman argues that Bachrach is without a remedy because he delivered the funds to her in exchange for a cohabitation agreement. She contends that public policy disapproves of such an arrangement and any decision in favor of Bachrach would operate to defeat that policy, citing three cases. See Houlton v. Prosser, 118 Colo. 304, 194 P.2d 911 (1948); Baker v. Sockwell, 80 Colo. 309, 251 P. 543 (1926); Baker v. Couch, 74 Colo. 380, 221 P. 1089 (1923).

In Baker v. Couch, this court declined to order the return of thirty-five promissory notes to the plaintiff, Paul Couch. Couch, a twenty-three year old man, and Alma Baker, a woman in her early thirties, lived together, in an intimate relationship. See 74 Colo. at 381-83, 221 P. at 1089-90. Couch had been married and divorced previously, and Baker had been married three times. See id. at 382, 221 P. at 1089. Couch argued that Baker obtained the notes through undue influence, and Baker contended they were a gift. The parties did execute a contract, which Couch argued was without consideration. See id. at 381, 221 P. at 1090. The contract closed with the following language: "Party to the first part [Baker] agrees to permit the party of the second part [Couch] to call at her home at reasonable hours and to continue the friendship already begun, until such time as the parties hereto agree to terminate this agreement." Id. at 383, 221 P. at 1089. The court concluded that past, present, and future sexual relations were the sole consideration for the original delivery of the promissory notes and the "so-called written contract." Id., 221 P. at 1090. Thus, the court held, because the contract was immoral, "neither law nor equity will aid either to enforce, revoke or rescind."⁶ Id. In Houlton, a single man and a married woman cohabited as husband and wife during a five-year period in the 1940s. See Houlton, 118 Colo. at 305, 194 P.2d at 911. Houlton purchased a home and the two took title as joint tenants. See id. When the relationship soured, Houlton sought to have the court order his female cohabitant, Prosser, to convey to him any interest she held in the home. See id. The court noted that Houlton knew that...