ALLSTATE LIFE INSURANCE COMPANY v. MCNEAR
2:15-cv-07597
D.N.J.Apr 25, 2017Background
- Allstate overpaid after William's death totaling $1,577,337.39 and seeks restitution from the McNears.
- Allstate filed an Amended Complaint asserting unjust enrichment, conversion, constructive trust, and injunctive relief.
- The McNears counterclaimed for declaratory judgment; both sides moved for summary judgment.
- Court held equitable jurisdiction, rejecting rigid modern rule limits on unjust enrichment.
- Court granted in part Allstate's motion on unjust enrichment and denied on other counts; denied injunctive relief claim as abandoned; granted Allstate's summary judgment on the counterclaim; overall split disposition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is unjust enrichment cognizable here? | Allstate asserts NJ equity allows restitution for mistake-based overpayments. | McNears contend unjust enrichment not applicable under NJ law or without contract. | Yes; unjust enrichment remains viable and damages awarded |
| Does the voluntary payments doctrine apply? | Plaintiff contends doctrine inapplicable due to mistake of fact. | McNears rely on doctrine to bar recovery. | Inapplicable; recovery allowed |
| Is there liability for conversion? | Payments/overpayments were sent and deposited; misappropriation occurred. | No wrongful act; funds were received by defendants. | No; conversion claim denied |
| Should a constructive trust be imposed? | Constructive trust to recover dissipation and preserve funds. | No identifiable property or traceable product to subject to a trust. | No; constructive trust denied |
| What is the fate of the declaratory-judgment counterclaim? | Counterclaim seeks declarations related to voluntary payments. | Respective declarations should be granted if favored by the counterclaim. | Counterclaim denied; plaintiff prevails on unjust enrichment |
Key Cases Cited
- Great American Ins. Co. v. Yellen, 58 N.J. Super. 240 (N.J. Super. Ct. App. Div. 1959) (unjust enrichment restitution for mistake of fact; no prejudice to payee)
- Smith v. Fireworks by Girone, Inc., 380 N.J. Super. 273 (N.J. Super. Ct. App. Div. 2005) (application of Yellen to unilateral mistake cases)
- PaineWebber, Inc. v. Levy, 293 N.J. Super. 325 (N.J. Super. Ct. Law Div. Oct. 26, 1995) (restoration for payment under mistake of fact)
- VRG Corp. v. GKN Realty Corp., 135 N.J. 539 (N.J. 1994) (equitable remedies flexible; no need for strict rules)
- Sears v. Camp, 124 N.J. Eq. 403 (N.J. Eq. 1938) (equity's broad power to fashion remedies; avoid justice sacrificed by formality)
- US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449 (N.J. 2012) (equitable relief; discretion to adapt remedies)