St. Joe Company v. Norfolk Redev. and Housing Authority, 722 S.E.2d 622

NRHA engaged Advantis as its agent to contract and pay contractors for NRHA building repairs; funds were provided by NRHA for a specific purpose.
Advantis deposited NRHA funds into its Wachovia master operating account under a deposit account control agreement with St. Joe; no trust account was created for NRHA under that agreement.
St. Joe, as a secured creditor, seized control of Advantis’s account and instructed funds be transferred to St. Joe after NRHA demanded payment to contractors.
NRHA demanded the funds be transmitted to contractors; St. Joe refused to return the funds, asserting they were not NRHA property.
Circuit court granted NRHA summary judgment on constructive trust and unjust enrichment claims; St. Joe appeals.
Balance of the Advantis account exceeded the contractors’ total due, and St. Joe admitted holding the disputed funds during litigation.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether NRHA’s funds remained NRHA property for a constructive trust	NRHA: funds were entrusted for a specific purpose and remained NRHA property	St. Joe: funds were not NRHA property once deposited and controlled by Advantis	Yes; funds remained NRHA property and subject to its control
Whether a constructive trust can be imposed absent fraud or abuse	NRHA: constructive trust allowed to prevent unjust enrichment	St. Joe: no need for constructive trust absent wrongdoing	Yes; constructive trust may be imposed to prevent injustice even absent fraud
Whether funds can be traced into St. Joe’s possession	NRHA: tracing possible under lowest intermediate balance or direct trace	St. Joe: tracing unavailable due to commingling	Yes; funds traced; balance remained at or above trust amount; constructive trust proper

Baldwin v. Adkerson, 156 Va. 447, 158 S.E. 864 (1931) (Va. 1931) (trust follows funds when entrusted for a purpose)
Broaddus v. Gresham, 181 Va. 725, 26 S.E.2d 33 (1943) (Va. 1943) (trust vs. ownership based on use of funds)
Faulknier v. Shafer, 264 Va. 210, 563 S.E.2d 755 (2002) (Va. 2002) (constructive trust to prevent unjust enrichment even without wrongdoing)
Jones v. Harrison, 250 Va. 64, 458 S.E.2d 766 (1995) (Va. 1995) (constructive trust may apply to breach of contract context)
Richardson v. Richardson, 242 Va. 242, 409 S.E.2d 148 (1991) (Va. 1991) (imposition of constructive trust absence of donor’s wrongdoing)
Crestar Bank v. Williams, 250 Va. 198, 462 S.E.2d 333 (1995) (Va. 1995) (distinguished tracing and trust concepts in commingled funds)
Old Republic Nat’l Title Ins. Co. v. Tyler, 155 F.3d 718 (4th Cir. 1998) (4th Cir. 1998) (lowest intermediate balance rule for tracing commingled funds)
Federal Reserve Bank of Richmond v. Peters, 139 Va. 45, 123 S.E. 379 (1924) (Va. 1924) (trust property remains identified in commingled funds)