Contract – Unjust Enrichment – Restitution – Tort/Negligence – Breach of Fiduciary Duty

SRS Arlington Offices 1, LLC v. Arlington Condominium Owners Association, Inc. (Lawyers Weekly No. 14-07-0620, 17 pp.) (Wanda Bryant, J.) Appealed from Mecklenburg County Superior Court (F. Lane Williamson, J.) N.C. App.

Holding: Where (1) a developer’s holding company sold an office building and agreed to provide certain ongoing services to the buyer for a fee, (2) the holding company accepted the fees from the buyer, (3) the services were actually provided by an adjacent complex’s owners’ association (of which the developer served as president of the board of directors), but (4) the holding company kept the fees, the trial court properly allowed the owners’ association an award of restitution in the amount of fees collected from the buyer by the holding company. This result is not affected by the owners’ association’s settlement with the buyer because the purpose of such restitution is to prevent the holding company from keeping money it should not have.

We affirm summary judgment for the owners’ association on its restitution claim. We affirm summary judgment for the developer on the owners’ association’s punitive damages claim.

Since the services agreement between the plaintiff-buyer and the defendant-holding company harmed the owners’ association – defendant Arlington Condominium Owners Association (ACO) – by depriving ACO of payment for the services which ACO provided to the buyer, the loss of payment for services rendered injured ACO. Thus, ACO has standing to sue.

One is held to have made an election of remedies when one chooses with knowledge of the facts between two inconsistent remedial rights. The doctrine does not apply to co-existing and consistent remedies.

Here, ACO sought consistent remedies, based on quantum meruit, to force all parties – the buyer, the holding company, and the defendant-developer – to disgorge ill-gotten profits. ACO settled its claims against the buyer. The settlement agreement does not appear to address compensation for services provided by ACO, as the holding company and the developer assert. Instead, the settlement agreement between ACO and the buyer appeared to be a global settlement as it required the buyer to pay ACO a lump sum of $125,000.

The holding company’s contention that ACO’s claim is barred by the doctrine of election of remedies is without merit, as ACO’s claims sought restitution based on quantum meruit, not compensatory damages.

ACO’s claim was for restitution, rather than compensation; ACO sought to force the holding to disgorge benefits that it would be unjust for it to keep. Therefore, ACO has neither sought nor obtained an impermissible double recovery based on its settlement agreement with the buyer, as ACO has consistently sought restitution by seeking to force all parties to disgorge “ill-gotten profits” rather than compensation.

The trial court awarded summary judgment to ACO, finding the holding company and the developer to be jointly and severally liable for the amount of $101,544.50. This amount represented the benefits received by the holding company and the developer based on their actions in this case. Therefore, the trial court did not err in awarding summary judgment to ACO on its claim against the holding company and the developer.

Where ACO clearly stated to the trial court several times that ACO was “not asking for punitive damages,” and where ACO acknowledged that it lacked sufficient evidence to bring a claim for punitive damages, ACO waived its claim for punitive damages.

Affirmed.