## Facts

- A fire damaged the Bakersfield Inn, owned by Reichert and subject to a deed of trust naming American National Insurance Company as beneficiary.
- The deed of trust required fire insurance protecting the beneficiary’s interest; the policies included coverage for debris removal.
- Reichert contracted with Peter Kossian to remove fire debris for $18,900; American National did not know of, request, or induce the contract.
- Kossian performed and completed the work, after which Reichert filed bankruptcy.
- The bankruptcy trustee abandoned the property and any interest in the fire insurance policies up to a stated amount.
- Reichert and his wife assigned their policy interests to American National under the deed of trust.
- American National submitted proofs of loss including an amount for debris removal; it later received a negotiated insurance payment that included at least part of the cost of debris removal/demolition.
- Kossian remained unpaid and sued American National on an unjust enrichment/restitution theory, asserting it retained both the benefit of his work and insurance proceeds attributable to that work.

## Issues

1. Whether a contractor who lacked privity with, and was not induced by, an insurer-assignee may recover in restitution when the assignee later receives insurance proceeds that include compensation for the contractor’s completed work.

## Decision

- The Court of Appeal reversed the summary judgment for American National.
- The court held that Kossian stated a viable restitution claim based on unjust enrichment.
- The case was remanded for further proceedings to determine the amount of insurance proceeds attributable to Kossian’s debris-removal work.

## Legal Principles

- Restitution may be available without privity when a defendant retains a benefit in circumstances where, in equity and good conscience, payment should be made.
- A party that receives insurance proceeds representing the cost of labor and materials already furnished by another may be required to reimburse that provider to prevent retention of both the benefit and the corresponding indemnity.
- Lack of request or inducement does not necessarily bar restitution where the defendant’s recovery includes amounts tied to the plaintiff’s completed performance.
- When the record does not establish the amount of enrichment attributable to the plaintiff’s work, the proper remedy is reversal of summary judgment and a trial on the restitutionary amount.

## Conclusion

The court permitted a contractor to pursue restitution against a deed-of-trust beneficiary that, though not a contracting party, received insurance proceeds covering debris removal the contractor had already completed and for which he had not been paid.


Kossian v. American Nat’l Ins. Co., 254 Cal. App. 2d 647 (Ct. App. 1967)