Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts
Posted: July 28, 2015

Alleged Recipient of Embezzeled Funds Subject to Claim for Unjust Enrichement

On July 10, 2015, the Fourth Department issued a decision in Simpson & Simpson, PLLC v. Lippes Mathias Wexler Friedman LLP, 2015 NY Slip Op. 06065, upholding a claim for unjust enrichment.

In Simpson & Simpson, the trial court dismissed the plaintiff’s claim for unjust enrichment based on allegations that the defendants had received money that a third-party had embezzled from the plaintiffs. The Fourth Department reinstated the claim, explaining:

Unjust enrichment is an obligation that the law creates, in the absence of any agreement, when and because the acts of the parties or others have placed in the possession of one party money under such circumstances that in equity and good conscience the party ought not to retain it. Unjust enrichment does not require the performance of any wrongful act by the ones enriched, and even innocent parties may frequently be unjustly enriched. Although the equitable cause of action for unjust enrichment is closely related to the cause of action for conversion based on wrongful detention of property after demand for its return by the rightful owner, it is nevertheless a separate cause of action from the cause of action for conversion.

(Internal quotations and citations omitted).

View posts