Hernandez v. Lopez
Filed November 30, 2009, modification published December 28,2009, Fourth District, Div. Three
Cite asG040956

Claims for Unjust Enrichment and Conversion Sufficiently Alleged

Spouses Leonor and Jose Hernandez (Hernandezes) were the owners of Wet Burrito restaurant situated in a shopping mall. The Hernandezes sold the restaurant to Spouses Antonio Lopez and Irma Taira (Lopezes).

Among others, the contract to sell required the Lopezes to assume the existing lease and pay $50,000 deposit and the remaining amount in installments. On the other hand, the Hernandezes were obliged to transfer their liquor license to the Lopezes.

The parties made an escrow agreement instructing the escrow officer to pay the Hernadezes $10,000 should the Lopezes fail to close the escrow and complete the sale.

During the existence of the escrow and before the completion of the sale, the Lopezes took control of the restaurant. Subsequently, they signed a new five-year lease with the landlord.

When the escrow was cancelled, the remainder of the deposit was returned. Consequently, the Hernandezes regained control of the restaurant. However, these changes were unknown to the California Department of Alcoholic Beverage Control (the Department). The Department approved the transfer of the liquor license application from the Hernandezes to the Lopezes.

The Lopezes sold the restaurant to a third party and nothing was given to the Hernandezes. In turn, the Hernandezes filed for breach of contract, intentional tort and fraud.

The Hernandezes amended the complaint to allege unjust enrichment and conversion. The trial court declined to rule in favor of the Hernandezes because it failed to see circumstances labeled as unjust enrichment or conversion.

Thereafter, the Hernandezes filed a supplemental brief. However, the trial court ruled in favor of the Lopezes.

On appeal, the California Court of Appeal, Fourth Appellate District made the following findings:

• The Hernandezes fully raised all facts and circumstances giving rise to a quasi-contractual remedy of unjust enrichment.
  
  The Hernandezes conferred benefits to the Lopezes which they knowingly accepted. Hence, it would be inequitable for the Lopezes to retain the benefit without paying for its value.


• Claims for conversion and trespass were sufficiently raised when the Hernandezes alleged that the Lopezes “took full control of their business without paying the agreed price or any price at all.”

Hence, the appellate court resolved the case in favor of the Hernandezes and remanded it to the trial court for new trial.