Tennessee Court of Appeals Rules in Unjust Enrichment Case

In the case of In re Estate of Jane Kathryn Ross et al., Tenn. Ct. App. (2014), the Tennessee Court of Appeals had to decide on an appeal of a decision reached regarding a somewhat complicated real estate/family/estate planning issue.

In the case, the son had agreed with his mother that he would construct a home on his land in Tennessee so that he and the mother could live together. Sometime thereafter, the son married, and his new wife moved in. Following some tensions, partly due to the mother’s increasing dementia, the sister instituted this action seeking to recover the mother’s contributions to the property in order to subsidize the care she needed. The son claimed that the mother did not intend to be reimbursed for her contributions and that it was a sort of gift since she would be living in the home as well.

The trial court sided with the mother’s estate, finding that the mother did not mean to give the son a gift and that the estate was entitled to a reimbursement for the amount that the son’s property was enhanced — namely the mother’s contribution, which was in excess of $400,000. The court, therefore, imposed an equitable trust, in the form of a decree of resulting trust. The son appealed the decision, and the court of appeals held that the imposition of the trust was improper, and it remanded to the trial court, finding that the imposition of a trust relating to an improvement of real property is typically improper.

Thereafter, the trial court changed the remedy to a judgment for unjust enrichment in the amount that the mother’s contributions enhanced the property’s value. The son then appealed, which resulted in this opinion.

Unjust enrichment is a legal principle upon which an individual is somehow the recipient of an unfair gain. For example, if a painter is supposed to paint house A, but instead paints house B, house B has been unjustly enriched. Unjust enrichment is applied to cases, such as this one, when the terms of a contract are somewhat unclear or were never necessarily memorialized in a contract or other concrete terms. The award amount is equal to the amount that the property is enhanced, typically, unless some other measure is proper.

The court of appeals went through a lengthy discussion of how unjust enrichment operates under Tennessee law, and since this particular fact scenario met the various requirements, the court upheld the lower court’s decision. It further agreed that the son would be “unjustly enriched,” in the amount of the improvement to the property if the award was not imposed. For example, it looked at the son’s antenuptial agreement with his wife to support the amount that his real property was improved from the time he purchased the land to after the construction was finished.

In other words, “[t]he amount a plaintiff may recover for unjust enrichment for improvements made to another’s land is the amount by which the improvements enhance the value of the land.”

Therefore, the decision was affirmed, and the mother’s estate was granted the unjust enrichment award amount.

The death of a loved one and the task of tending to the decedent’s affairs is a stressful and emotionally trying experience at its best. When heirs dispute the validity of a will or their share of the estate, the process can be even more stressful, delayed, and costly. An experienced estate planning lawyer can represent your legal interests while ensuring that the estate is administered properly.  If you find yourself in need of assistance with estate, probate, or trust litigation, contact us at 615-800-7096 or through our website.

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