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In determining whether it would be unjust to allow the retention of benefits without compensation, a court need not find that the defendant intended to compensate the plaintiff for the services rendered or that the plaintiff intended that the defendant be the party to make compensation. This is because the duty to compensate for unjust enrichment is an obligation implied by law without reference to the intention of the parties. What is important is that it be shown that it was not intended or expected that the services be rendered or the benefit conferred gratuitously, and that the benefit was not conferred officiously.
In October 1985, Radisson chose Five Star Services, Inc. as the general contractor for the renovations and an agreement was executed. Five Star then entered into a subcontract agreement with Flooring for the same carpeting work included in Flooring's bid that CSA accepted. Neither Radisson nor CSA was a party to this subcontract agreement. During renovation, Flooring submitted all payment requests to Five Star, not Radisson. Although Flooring completed its work, Five Star failed to pay Flooring the full amount due under the subcontract. Because of Five Star's default, Radisson withheld approximately $ 25,000 due under its general contract with Five Star. Section 6.2 of Radisson's general contract with Five Star permitted Radisson to withhold final payment until Five Star satisfied "all known indebtedness" connected with the work. Flooring sued Radisson, CSA and Five Star to recover the amount due. Five Star later filed for bankruptcy and was dismissed as a party. In its complaint, Flooring alleged breach of contract and unjust enrichment. Radisson and CSA moved for summary judgment, arguing that, even if a contract existed between CSA and Flooring, the subsequent contract entered into by Flooring and Five Star worked a novation and barred any recovery by Flooring from Radisson or CSA. Radisson and CSA also argued that the existence of a subcontract agreement between Five Star and Flooring precluded any recovery from Radisson and CSA under an unjust enrichment theory. The trial court granted summary judgment against Flooring. The court of appeals affirmed, relying on "common practice in the construction industry" to support its decision that a novation had occurred. In its petition for review, Flooring argued, inter alia, that the court of appeals erred by rejecting Flooring's unjust enrichment claim.
Was Flooring entitled to recover on its unjust enrichment?
The court found that Radisson and CSA were not entitled as a matter of law to prevail on Flooring’s unjust enrichment claim. The court held that Flooring clearly did not intend to provide carpeting work gratuitously or officiously. The court held that CSA invited Flooring to bid on the job and accepted the bid. The court held that Radisson obviously knew that the subcontractor had not been paid and on that basis Radisson withheld final payment from Flooring. The court held that under these circumstances, to permit the Radisson and CSA to retain the full benefit of the subcontractor's work at the subcontractor's expense may have been unjust. The court therefore held that summary judgment in favor of Radisson and CSA on this issue was improper.