## Facts

- An employee-stockholder of American Roofing embezzled over $200,000 from the company.
- The employee and his wife used embezzled funds to:
  - Pay $50,000 as a down payment to Cedar Lane for real property under an installment land contract;
  - Make about $22,300 in installment payments; and
  - Fund about $16,000 in improvements to the property.
- Under the installment land contract, the buyers obtained possession while Cedar Lane retained legal title pending full payment.
- The buyers defaulted, and Cedar Lane brought a forcible entry and detainer action to regain possession.
- American Roofing obtained a money judgment against the employee, then recorded a judgment lien and filed a lis pendens against the property, asserting the property value was traceable to stolen funds.
- Cedar Lane later filed a quiet title action against American Roofing; American Roofing counterclaimed for unjust enrichment based on Cedar Lane’s receipt of payments and improvements derived from embezzled money.
- The trial court granted summary judgment for Cedar Lane, quieted title in Cedar Lane, and rejected unjust enrichment on the ground that Cedar Lane was a bona fide purchaser for value without notice.

## Issues

1. Whether Cedar Lane’s legal title as vendor under an installment land contract was superior to American Roofing’s judgment lien and lis pendens filed against the buyers’ interest.
2. Whether Cedar Lane’s lack of notice and alleged bona fide purchaser status barred American Roofing’s unjust enrichment claim as a matter of law for payments and improvements traceable to embezzled funds.

## Decision

- The court affirmed the quiet title judgment for Cedar Lane.
- The court held American Roofing’s judgment lien could attach only to the debtor’s actual interest, which was not Cedar Lane’s legal title.
- The court reversed the summary judgment dismissing American Roofing’s unjust enrichment counterclaim.
- The court remanded for further proceedings because factual and equitable questions remained regarding whether Cedar Lane retained a benefit unjustly and, if so, the proper restitution.

## Legal Principles

- In an installment land contract, the vendor retains legal title until performance; the purchaser typically holds an equitable interest subject to the contract’s terms and default consequences.
- A judgment lien attaches only to the judgment debtor’s interest in property and cannot enlarge that interest or defeat superior existing rights.
- Unjust enrichment requires: (1) a benefit conferred on the defendant; (2) the defendant’s appreciation or knowledge of the benefit; and (3) retention of the benefit under circumstances making it inequitable to retain without payment.
- An innocent recipient’s lack of wrongdoing, including bona fide purchaser status, does not automatically bar restitution where the benefit is traceable to another’s loss; the remedy depends on a fact-specific equitable assessment.

## Conclusion

Cedar Lane’s legal title prevailed over American Roofing’s lien-based claim to the property, but Cedar Lane was not entitled to summary judgment on unjust enrichment because restitution may be available for embezzled funds used as payments and improvements, depending on the equities and the value retained after repossession.


Cedar Lane Invs. v. Am. Roofing Supply of Colo. Springs, Inc., 919 P.2d 879 (Colo. App. 1996)