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Day v. Credit Corp.

August 29, 2007


The opinion of the court was delivered by: Wm. R. Wilson, Jr. United States District Judge


Pending is Defendant/Counter Plaintiff Case Credit Corporation's ("Case") Motion for Reconsideration,*fn1 to which Plaintiffs/Counter Defendants, Raymond Day, Boren Holtoff, Mike Moreland, and Steve Ross ("the farmers") responded.*fn2 Case replied to the farmers,*fn3 and the farmers filed a surreply.*fn4

Case wants reconsideration of the February 22, 2007 order*fn5 denying its Motion for Summary Judgment*fn6 on unjust enrichment. That order held that the farmers were not unjustly enriched, and, therefore, it was not necessary to discuss the clean hands doctrine. Case argues that my unjust enrichment finding should be reconsidered because it is not the "law of the case" that was established by an earlier order,*fn7 and the Eighth Circuit Court of Appeals's opinion.*fn8

I. Background

This case began as a complaint for fraud by the farmers against Case, and Ron Kaufman ("Kaufman") because Kaufman forged the farmers' names on sales contracts with higher purchase prices. Case financed Kaufman's sales of farming equipment. Kaufman's purpose for the forgeries was to pocket the extra money. Kaufman was dismissed from the suit, leaving Case and the farmers as the only parties.

Case counter-claimed against the farmers to enforce the sales contracts and recover unpaid balances on the equipment. Case filed a summary judgment motion on the farmers' liability*fn9 and a motion for contract damages.*fn10 Both motions were granted*fn11 and a Judgment*fn12 was entered, setting out specific sums owed by the farmers.

The farmers appealed,*fn13 raising two issues -- (1) they challenged my findings that Kaufman was not Case's agent and (2) they denied that Case had an enforceable contract.

The Eighth Circuit Court of Appeals affirmed that no agency relationship existed, but reversed on the contract issue, holding that there was no enforceable contract, and, therefore, the farmers were not liable for contract damages.*fn14

The Circuit Court turned its attention to possible equitable remedies, and made the following observations:

Having concluded Case may not recover under its contract theory, we turn to its claim of unjust enrichment. The phrase "unjust enrichment" does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so. The party claiming unjust enrichment must prove another's receipt of 'something of value to which he is not entitled and which he should restore. There must be some operative act, intent, or situation to make the enrichment unjust and compensable. It is not necessary to show the party unjustly enriched committed any wrongdoing -- even an innocent party "may be compelled to surrender the fruits to another more deserving party." Rather, "[i]f one has money belonging to another, which, in equity and good conscience, he ought not to retain, it can be recovered although there is no privity between the parties." Parties seeking to invoke the court's equitable powers, however, must be themselves deserving of equity. "The clean hands maxim bars relief to those guilty of improper conduct in the matter as to which they seek relief."*fn15

The Court also outlined the allegations that Case intentionally compounded fraud by inducing the farmers to sign account verifications that mirrored fraudulent terms, and by using the verifications to make the farmers pay higher prices. After outlining the law and the facts presented, the Court concluded: "Because the farmers' allegations of misconduct against Case create a genuine issue of material fact as to whether equity should intervene, we reverse and remand."*fn16 Judgment on the issue of liability and damages was reversed and this case was remanded for further proceedings "consistent with this opinion."*fn17

After the Eighth Circuit's opinion was filed, Case filed an unjust enrichment summary judgment motion.*fn18 Case asserted that, because the farmers admitted they possessed equipment financed by Case, there was no question that the farmers were unjustly enriched. I disagreed and denied the motion. Now Case argues that a proper application of "the law of the case" doctrine, the unjust enrichment doctrine, and the clean hands doctrine will produce a different result.

II. Law of the Case

When an appellate court remands a case to the district court for further proceedings consistent with the appellate decision, all issues the appellate court decides become the law of the case.*fn19 The "law of the case" doctrine directs courts to follow decisions made in earlier proceedings to prevent the relitigation of issues in a case, to protect the expectations of the parties, to ensure consistency, and promote judicial ...

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