Evergreen West Business Center, LLC v. Emmert
323 P.3d 250
Or.2014Background
- Evergreen West (plaintiff), an LLC, sued member Terry Emmert (defendant) for breach of fiduciary duty after he bought the LLC’s encumbered property at foreclosure, paid $613,979.49, then encumbered it with a $900,000 loan.
- Plaintiff pleaded alternative remedies: unjust-enrichment damages (seeking approx. $800,000 plus punitive damages) and, alternatively, a constructive trust on the property (alleging the property was worth $1,390,000 when acquired).
- Jury found breach and awarded actual damages of $1 and punitive damages of $600,000.
- Trial court reduced punitive damages to $4 and offered plaintiff a choice: $5 money judgment or entry of a constructive trust; plaintiff chose the constructive trust and the court ordered sale with proceeds allocated to reimburse defendant and pay plaintiff’s creditors/members.
- Court of Appeals reversed the constructive trust (holding equitable relief barred where legal damages were adequate and the jury had awarded damages), and reinstated punitive damages; both parties sought review.
- Oregon Supreme Court reversed the Court of Appeals, holding plaintiff could elect the constructive trust despite the nominal jury damage award and vacating the jury verdict (including punitive damages) as moot given plaintiff’s election of equity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a constructive trust was available after a jury awarded nominal damages | Plaintiff argued equitable constructive trust is available to restore property and is not foreclosed by a nominal jury damages award; election of remedy belongs to plaintiff before final judgment | Emmert argued the jury’s unlawful-gain (unjust-enrichment) damage finding of $1 controlled and barred a constructive trust exceeding that amount | Court held constructive trust was available; jury damage award did not preclude equitable relief because the remedies differ and plaintiff was entitled to elect equity before final judgment |
| Whether unjust enrichment requires proof of defendant’s profit to support constructive trust | Plaintiff argued profit is not required; constructive trust focuses on wrongful acquisition of plaintiff’s property | Emmert argued entitlement to constructive trust depends on unjust enrichment and jury found the enrichment was only $1 | Court held profit is not necessary; wrongful acquisition and relationship suffice to support constructive trust when elements from Tupper are met |
| Whether ordering sale of the property makes the constructive trust identical to a money judgment (and thus superfluous) | Plaintiff argued sale of the property was consistent with constructive trust (proceeds traceable) and necessary given plaintiff’s inability to reimburse defendant; remedy not identical to money damages | Emmert/Ct. of Appeals argued sale is functionally equivalent to money relief, so equity is superfluous | Court held sale-ordered constructive trust was not identical to the damage award because it affords different rights (ownership, tracing, priority) and could secure full restitution |
| Whether plaintiff was required to elect remedies before the jury verdict or before final judgment | Plaintiff argued election may be made before entry of final judgment and election is plaintiff’s prerogative | Emmert argued plaintiff’s post-verdict election was improper and cannot be used to evade jury findings | Court held a party need only elect between inconsistent remedies before entry of final judgment; plaintiff properly elected the equitable remedy |
Key Cases Cited
- Tupper v. Roan, 349 Or 211 (2010) (sets out elements for constructive-trust relief based on unjust enrichment)
- Kroll v. Coach, 45 Or 459 (1904) (constructive trust may be imposed even when damages are available; claimant may elect remedy)
- M. K. F. v. Miramontes, 352 Or 401 (2012) (analysis of jury-trial right and mixed law-equity issues after abolition of procedural distinctions)
- Liles v. Damon Corp., 345 Or 420 (2008) (standard for stating facts in favor of the prevailing party on review)
- Alsea Veneer, Inc. v. State of Oregon, 318 Or 33 (1993) (discussion of the traditional equitable principle that equitable relief is not available when legal remedy is adequate)