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THE COMPLAINT STATED CAUSES OF ACTION FOR CONSTRUCTIVE TRUST AND PROMISSORY ESTOPPEL; THE UNJUST ENRICHMENT ELEMENT OF THE CONSTRUCTIVE TRUST WAS NOT PRECLUDED BY A CONTRACT SIGNED BY PLAINTIFF AS A TRUSTEE (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, over a partial dissent, determined the complaint stated a cause of action for a constructive trust, the unjust enrichment element of the constructive trust was not precluded by a contract, and the alleged promise to take care of plaintiff in return for an interest in an LLC was clear and unambiguous enough to support a cause of action for promissory estoppel:

According to plaintiff, defendant [plaintiff’s daughter] had promised that, if plaintiff created the LLC and gave her a 90% membership interest in the LLC and control as sole manager, she would “help [plaintiff] manage his businesses and real property interests, help take care of [plaintiff and his wife], help ensure their financial well-being, and visit them often.” After plaintiff’s wife died, defendant allegedly ended all direct communication with plaintiff and gave “sporadic and cursory” attention to plaintiff’s business and real property interests, prompting him to commence this action. * * *

Inasmuch as the amended complaint alleged a confidential or fiduciary relation, a promise, and a transfer made in reliance on that promise, the issue concerning the [constructive trust] cause of action is whether the amended complaint adequately alleged unjust enrichment.

“[I]n order to sustain an unjust enrichment claim, ‘[a] plaintiff must show that (1) the other party was enriched, (2) at [the plaintiff’s] expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered’ ” … . … Where the parties executed a valid and enforceable written contract governing a particular subject matter, recovery on a theory of unjust enrichment for events arising out of that subject matter is ordinarily precluded” … .

Here, there is a written contract that covers the particular subject matter, i.e., the LLC’s operating agreement. That agreement, however, was executed by defendant and plaintiff in his role as trustee. … Inasmuch as plaintiff, individually, was not a party to the operating agreement, his first cause of action, insofar as it was asserted by him, individually, is not precluded by the written contract … . Van Scoter v Porter, 2021 NY Slip Op 02692, Fourth Dept 4-30-21

 

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