## Facts

- A contractor entered two oral agreements with a landowner: (1) to remove rock in exchange for the value of rock removed, and (2) to install drain tile in exchange for keeping the excavated rock.
- The contractor performed the work, extracted substantial rock, removed only a few loads, and stockpiled the rest on the landowner’s property with the understanding it could be retrieved later.
- Over a year later, the landowner, asserting the contractor had not returned for the stockpiles, authorized a farmer to remove rock from the property at no charge.
- The farmer hauled roughly 50 semi-truck loads, including an estimated 25 loads from the contractor’s stockpiled rock.
- After discovering some stockpiled rock was gone, the contractor demanded payment and invoiced the landowner for excavation and drain-tile work; no payment was made.
- The contractor sued the landowner and the farmer for breach of contract, conversion, and equitable relief including unjust enrichment and constructive trust.

## Issues

1. Whether unjust enrichment and quantum meruit recovery against the landowner is barred because the parties’ rights were governed by express (oral) contracts covering the same subject matter.
2. Whether a non-contracting third party who received rock produced by the contractor’s labor may be liable for unjust enrichment.
3. Whether restitution against the third party should be measured by the contractor’s costs/value of services (quantum meruit) or by the third party’s actual enrichment (value of the rock received).

## Decision

- The Supreme Court of South Dakota affirmed in part, reversed in part, and remanded.
- As to the landowner, the court reversed the unjust enrichment/quantum meruit award because express contracts governed the parties’ relationship, and equity could not be used to reallocate benefits after the jury rejected the contractor’s contract claims.
- As to the farmer, the court affirmed unjust enrichment liability because the farmer received and retained a benefit at the contractor’s expense under circumstances making nonpayment inequitable.
- The court reversed and remanded the damages award against the farmer because the trial court used an improper restitution measure.

## Legal Principles

- Unjust enrichment is generally unavailable when an enforceable contract governs the parties’ rights and duties on the same subject matter.
- Equitable remedies may not be used to nullify or effectively override a jury’s defense verdict on legal claims between contracting parties.
- A non-contracting third party may be liable in restitution when the third party received a benefit at the plaintiff’s expense and equity requires repayment.
- Restitution is limited to the value of the benefit actually received by the defendant; for a recipient of goods, damages should reflect the quantity received and its reasonable (market) value at the time of receipt, not the plaintiff’s total costs.

## Conclusion

The court barred unjust enrichment against the contracting landowner because the parties’ oral contracts controlled and the jury rejected contractual liability, but allowed restitution against the non-contracting recipient of the rock while requiring damages to be recalculated based on the recipient’s actual enrichment.


Johnson v. Larson & Penny, 779 N.W.2d 412 (S.D. 2010)