Georgia Malone & Co., Inc. v. Rieder, 19 N.Y.3d 511 (2012)
To succeed on a claim for unjust enrichment, a plaintiff must demonstrate that (1) the defendant was enriched, (2) at the plaintiff’s expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought, and that the connection between the enriched party and the party conferring the benefit is not too attenuated.
Summary
Georgia Malone & Co. sued Rosewood Realty Group for unjust enrichment, alleging that Rosewood used Malone’s due diligence materials to close a real estate deal and collect a commission, without compensating Malone. The New York Court of Appeals affirmed the dismissal of the unjust enrichment claim, holding that Malone failed to establish a sufficiently direct relationship with Rosewood to sustain the claim. The Court emphasized that while privity is not required, the connection between the plaintiff and defendant must not be too attenuated, and the defendant must be aware of the plaintiff’s existence.
Facts
Malone, a real estate broker, performed due diligence work for potential buyers (the Rieders) of commercial properties. The Rieders ultimately did not purchase the properties from CenterRock. Subsequently, CenterRock provided Malone’s due diligence materials to Rosewood, another real estate broker. Rosewood then used these materials to facilitate a sale of the properties to a different buyer, earning a commission. Malone claimed that Rosewood was aware that the diligence materials were generated by Malone.
Procedural History
Malone sued Rosewood for unjust enrichment. The Supreme Court dismissed the claim. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal and affirmed the dismissal.
Issue(s)
Whether Malone established a sufficiently direct relationship with Rosewood to sustain a claim for unjust enrichment, given that Rosewood received the benefit of Malone’s work through an intermediary (CenterRock and the Rieders).
Holding
No, because the connection between Malone and Rosewood was too attenuated, and there were no direct dealings between them that would support an unjust enrichment claim.
Court’s Reasoning
The Court of Appeals emphasized that while privity is not required for an unjust enrichment claim, there must be a sufficiently close relationship between the parties. The Court cited Sperry v Crompton Corp., stating that the connection between the party conferring the benefit and the enriched party cannot be “too attenuated.” The court found that Malone’s relationship with Rosewood was too attenuated because Rosewood received the benefit of Malone’s work through CenterRock and the Rieders. There was no evidence of direct contact or dealings between Malone and Rosewood, and Rosewood was not aware that Malone expected to be compensated by Rosewood directly. The Court distinguished the case from situations where the defendant directly induced the plaintiff to perform services or knowingly exploited the plaintiff’s work. The Court reasoned that allowing Malone’s claim to proceed would create an unreasonable burden on commercial transactions, requiring parties to investigate the source of all information they receive. The dissent argued that Rosewood’s awareness that the diligence materials originated from Malone, a competitor, was sufficient to establish the necessary connection. Chief Judge Lippman, dissenting, stated, “[W]e indicated that ‘an awareness’ by defendant of plaintiffs existence was sufficient for an unjust enrichment claim.” (16 NY3d at 182). The dissent also argued that the majority’s ruling condoned willful ignorance, as Rosewood should have inquired about the circumstances of the materials’ transmission given Malone’s name on the documents.