## Facts

- Larry and Pamela Hoskins (debtors) owned about 364 acres of rural land in West Virginia.
- A prior owner had long permitted Mr. Kungle to access and use an old, dilapidated cabin on the land for hunting and recreation; after purchasing the property, the Hoskinses continued to allow Kungle similar access.
- In 1997 or 1998, with the Hoskinses’ agreement, Kungle constructed a larger, nicer cabin on the Hoskinses’ property at his own expense; Larry Hoskins assisted with labor and other services.
- The Hoskinses declined to sell any portion of the land to Kungle, and the parties never reached a clear agreement defining Kungle’s continuing right to use the new cabin (or any ownership interest in it).
- Over time, Kungle’s use of the new cabin became a source of conflict; the Hoskinses believed Kungle was using the cabin excessively.
- On November 7, 2004, the Hoskinses barred Kungle from further access to the cabin.
- In 2008, the Hoskinses filed a Chapter 13 bankruptcy case, and Kungle filed a proof of claim seeking the value of the cabin based on unjust enrichment.
- It was undisputed that the cabin increased the market value of the Hoskinses’ property, but the debtors argued the cabin had no value to them because they would prefer it removed.
- The parties presented valuation opinions addressing the cabin’s effect on the property’s value as of August 25, 2007 (Kungle’s valuation higher; the Hoskinses’ valuation lower), leaving a mismatch between the valuation date and the date Kungle was excluded.

## Issues

1. Whether Kungle held an allowable claim in the Hoskinses’ Chapter 13 case based on unjust enrichment arising from constructing a cabin on the debtors’ land with their consent.
2. If so, what measure of restitution applies (cost of construction, the debtors’ subjective valuation, or the market-value increase to the land) and what date controls the valuation.

## Decision

- The court determined that Kungle stated an allowable claim for restitution based on unjust enrichment after the Hoskinses excluded him from using the cabin while retaining the benefit of the improvement.
- The court treated Kungle’s permission to use the property as a license and concluded that, because Kungle built the cabin in reliance on the Hoskinses’ consent, the arrangement functioned as a license coupled with an interest sufficient to support equitable relief when access was revoked.
- The court rejected the debtors’ argument that the cabin’s value should be treated as zero because they personally did not want it; restitution turns on an objective economic benefit, not a landowner’s subjective preference.
- The court held the proper measure of restitution was the amount by which the cabin increased the fair market value of the Hoskinses’ real property, rather than Kungle’s costs or the debtors’ personal views about the cabin.
- The court set November 7, 2004 (the date Kungle was barred from access) as the relevant valuation date for measuring the unjust benefit retained.
- Because the valuation testimony in the record addressed a later date, the court set further proceedings to determine the property’s value increase attributable to the cabin as of November 7, 2004 and to fix the allowed amount of Kungle’s claim.

## Legal Principles

- Under West Virginia unjust-enrichment law, restitution may be awarded when (1) a benefit is conferred, (2) the defendant knows of and accepts or retains the benefit, and (3) it would be inequitable to permit retention without payment.
- When a landowner consents to another’s construction of a substantial, permanent improvement on the land and later terminates the improver’s ability to use it while keeping the improvement, equity may require restitution.
- In an improvements-to-land dispute, the relevant “benefit” is typically the objective increase in the property’s fair market value attributable to the improvement, not the improver’s expenditures and not the owner’s subjective dislike of the improvement.
- The valuation for restitution is measured as of the time the retention becomes wrongful or inequitable—here, when the owners excluded the builder from access and kept the improved property.
- In bankruptcy, a state-law restitution claim based on unjust enrichment can constitute an allowable unsecured claim, with the bankruptcy court determining both allowability and the proper valuation method and date.

## Conclusion

In re Hoskins held that a builder who constructed a cabin on debtors’ land with their consent could assert an allowable unjust-enrichment claim in the debtors’ Chapter 13 case after the debtors barred him from access and kept the improvement; the court measured restitution by the cabin’s market-value increase to the property as of the exclusion date (November 7, 2004) and set further proceedings to determine the amount.


In re Hoskins, 405 B.R. 576 (2009)