Navigating Unjust Enrichment Claims in Florida: Direct (and Indirect) Lessons from CFLB Partnership, LLC v. Diamond Blue Int’l, Inc., and Its Predecessors

A sometimes-overlooked factor in unjust enrichment claims is that the claimant must directly confer a benefit on the defendant—not indirectly, not effectively, not practically, but directly. The Florida Supreme Court made this clear in Kopel v. Kopel, 229 So. 3d 812, 818 (Fla. 2017), holding that “to prevail on an unjust enrichment claim, the plaintiff must directly confer a benefit to the defendant.” (Emphasis added).

The elements of an unjust enrichment claim are well known: “a benefit conferred upon a defendant by the plaintiff, the defendant’s appreciation of the benefit, and the defendant’s acceptance and retention of the benefit under circumstances that make it inequitable for him to retain it without paying the value thereof.” Fla. Power Corp. v. City of Winter Park, 887 So. 2d 1237, 1241-42 n. 4 (Fla. 2004) (quotation omitted). Less known is that a claim is not viable if the benefit was indirectly conferred on the defendant. A recent decision by the Third District Court of Appeal, CFLB P’ship, LLC v. Diamond Blue Int’l, Inc., 47 Fla. L. Weekly D1812a (Fla. 3d DCA Aug. 31, 2022), emphasizes that directness is a black-and-white requirement that brooks no shades of grey.

In a business world in which it is common for corporate affiliates to be owned and managed by the same persons and share the same office space, it is easy to lose sight of who exactly is a direct beneficiary in an unjust enrichment claim. In Diamond Blue, CFLP Management, LLC (“Management”) made a promissory note to the plaintiffs for the development of a resort owned by its affiliate, CFLP Partnership, LLC (“Partnership”). Indeed, Management immediately transferred the borrowed money to Partnership, which Partnership deployed for the development of the property. Management, which owned 50% of the equity interest in Partnership and “shared the same manager, identical officers, directors, corporate counsel, and office space,” defaulted on the note. Id.

With undisputed facts like these, it is difficult to blame the plaintiffs for suing Partnership for unjust enrichment and for the trial court to rule in the plaintiffs’ favor. In granting summary judgment for the plaintiffs, the trial court found that the plaintiffs “conferred a direct benefit on Partnership because there was no true economic transaction between Management and Partnership with respect to Plaintiffs’ funds…. no real consideration changed hands in exchange for Partnership’s receipt of Plaintiffs’ funds, and any book entry or documented capital contribution was legally irrelevant because identical beneficial owners ultimately owned 100% of both Management and Partnership.” Yet, the close relationship between Partnership and Management was irrelevant because plaintiffs did not loan the money directly to Partnership. Instead, they loaned the money to Management, who then transferred it to Partnership. The Third District held that while Partnership received a benefit, the benefit was not directly from plaintiffs.

Close as a relationship may be, and inequitable as the situation may seem, Diamond Blue calls upon litigants to resist the temptation of suing an affiliate for unjust enrichment just because the affiliate ultimately benefits from the transaction. To Diamond Blue, we add the following examples where the equities seemed to favor an unjust enrichment claim, only to crash into the legal requirement that the benefit be directly conferred on a defendant:

• Extraordinary Title Services, LLC v. Florida Power & Light Company, 1 So. 3d 400 (Fla. 3d DCA 2009).
  • Action against Florida Power & Light Company (“FPL”) and its parent company, FPL Group, Inc.
  • FPL collected monies from customers for taxes it expected to pay but ultimately only partially paid; the government refunded the remainder to FPL Group.
  • Plaintiff argued that FPL’s customers thus conferred a benefit on FPL Group.
  • Dismissal affirmed: plaintiff contracted with FPL and paid FPL, and FPL Group provided no services to plaintiff. Thus, plaintiff had absolutely no relationship with FPL Group and did not confer a direct benefit on FPL Group.
  • Kopel v. Kopel, 117 So. 3d 1147 (Fla. 3d DCA 2013), quashed on other grounds, Kopel v. Kopel, 229 So. 3d 812 (Fla. 2017).
    • Plaintiff paid millions into his father’s company and into two corporations in which he held a one-third interest.
    • Defendant #1 (Plaintiff’s brother) held the remaining two-thirds interest.
    • Defendant #2 (Defendant #1’s son) had nothing to do with either corporation.
    • Plaintiff sued defendants for repayment of these alleged loans.
    • Judgment for plaintiff reversed: defendants were not unjustly enriched because plaintiff’s investment in father’s company did not directly benefit them and only indirectly benefited Defendant #1 through the corporation he part-owned.
    • Marrache v. Bacardi U.S.A., Inc., 17 F.4th 1084 (11th Cir. 2021)
      • Action by consumer against Bacardi for selling gin containing improper ingredient.
      • Gin was produced by Bacardi but purchased by consumer at retailer’s store.
      • Dismissal affirmed: plaintiff “failed to allege that he … conferred a direct benefit to Bacardi…. At most, [he] … conferred an indirect benefit to Bacardi and, as such, cannot satisfy the first element of an unjust enrichment claim against Bacardi.”
      • Hyundai Motor America Corp. v. North American Automotive Services, Inc., 2021 WL 7083014 (S.D. Fla. May 26, 2021)
        • Action by Hyundai against automobile dealership and dealership’s managers.
        • Hyundai alleged that it conferred a benefit on the dealership by paying it for fraudulent warranty claims and that the dealership’s profits “were artificially inflated” as a result, which in turn led to the dealership paying bonuses to the managers that they were not entitled to because of those inflated profits.
        • Dismissal affirmed: even if the bonuses can be traced to the dealership’s profits from the fraudulent scheme, “there is no reasonable way to construe such a benefit as There is no allegation whatsoever that [Hyundai] directly conferred a benefit on the [managers], only that the [managers] received a derivative benefit through the Dealership as a result of its inflated profits.”
        • Johnson v. Catamaran Health Sols., LLC, 687 F. Appx 825, 830 (11th Cir. 2017)
          • Action by purchasers of insurance products against broker who sold them.
          • One product was underwritten by Stonebridge.
          • Purchasers argued they conferred a benefit on Stonebridge by paying fees to broker, who in turn paid premiums to Stonebridge.
          • Dismissal affirmed: “even if Stonebridge ultimately retained a portion of the [purchasers’] payments … the [purchasers’] conferred (at best) an indirect benefit on Stonebridge. As a result, they cannot satisfy the first element of an unjust enrichment case ….”

          In short, equitable considerations in the unjust enrichment context must yield to the fact that “a corporation is a separate legal entity, distinct from the persons comprising them.” Gasparini v. Prodomingo, 972 So. 2d 1053, 1055 (Fla. 3d DCA 2008). Should the temptation to sue a wrongdoer’s shareholders or affiliates for unjust enrichment prove irresistible, the litigant’s remedy is to pierce the corporate veil, for which these factors must be proven:

          (1) the shareholder dominated and controlled the corporation to such an extent that the corporation’s independent existence, was in fact non-existent and the shareholders were in fact alter egos of the corporation;

          (2) the corporate form must have been used fraudulently or for an improper purpose; and

          (3) the fraudulent or improper use of the corporate form caused injury to the claimant.

          Seminole Boatyard, Inc. v. Christoph, 715 So. 2d 987, 990 (Fla. 4th DCA 1998) (quoting In re Hillsborough Holdings Corp., 166 B.R. 461, 468 (Bankr. M.D. Fla. 1994)). See also Lipsig v. Ramlawi, 760 So. 2d 170, 187 (Fla. 3d DCA 2000) (“even if a corporation is merely an alter ego of its dominant shareholder or shareholders, the corporate veil cannot be pierced so long as the corporation’s separate identity was lawfully maintained.”).

          Short of proving that they conferred a direct benefit on Partnership, piercing Management’s corporate veil is what the plaintiffs in Diamond Blue should have done to successfully prosecute Partnership for unjust enrichment. Based on the facts, a veil piercing may have been successful. But the plaintiffs skipped that step. Unjust or inequitable though it may seem, they had no viable claim again Partnership under the law of unjust enrichment.

          Regardless of which side you are on, FIDJ’s seasoned trial and appellate litigators can help you. For more information on how we can assist in your appellate or trial support needs, contact us at 305-350-5690 or info@fidjlaw.com