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McAnulty v. McAnulty.

No. 22-1099. 8/28/2023. D.Colo. Judge Hartz. Dissolution of Marriage—Requirement to Obtain and Maintain Life Insurance for Former Spouse—Failure to Obtain and Maintain Policy—Unjust Enrichment—Constructive Trust—Restatement (Third) of Restitution and Unjust Enrichment.

August 28, 2023

Steven and Elizabeth McAnulty divorced in Missouri. Their divorce decree required Steven to maintain a life insurance policy with at least a $100,000 death benefit and name Elizabeth as the sole beneficiary until Steven’s maintenance obligation terminated. Steven later married Melanie Rae, and he died during this marriage. Steven’s maintenance obligation to Elizabeth had not terminated at the time of his death, and his only life insurance policy (the policy) named Melanie Rae as the sole beneficiary of a $207,000 payable benefit. Elizabeth sued Melanie Rae and Standard Insurance Company (Standard), the policy issuer, claiming unjust enrichment and seeking the imposition of a constructive trust on the life insurance proceeds in the amount of $100,000 and payment to her of that amount. Standard removed the case to the US District Court for the District of Colorado based on diversity of citizenship. The district court granted Melanie Rae’s motion to dismiss the complaint for failure to state a claim. Elizabeth appealed, and the parties stipulated to Standard’s dismissal from the appeal.

On appeal, Elizabeth argued that her complaint alleges sufficient facts to support a claim for unjust enrichment and impose a constructive trust as a remedy. To resolve this issue, the Tenth Circuit predicted that the Colorado Supreme Court would endorse Illustration 26 in Comment g, § 48 of the Restatement (Third) of Restitution and Unjust Enrichment (Am. L. Inst. 2011) (Restatement (Third)), which concerns a cause of action in essentially the circumstances presented here. The Tenth Circuit determined that Restatement (Third) identifies a liability category where the defendant’s enrichment at the plaintiff’s expense results from the defendant’s receipt of a benefit from someone else. In such case, if the benefit in question is one to which the plaintiff has a superior entitlement, the defendant is unjustly enriched. Accordingly, if a third person makes a payment to the defendant to which the plaintiff has a better legal or equitable right, the plaintiff is entitled to restitution from the defendant as necessary to prevent unjust enrichment, including by imposition of a constructive trust. Therefore, under the circumstances alleged here, Elizabeth has stated a claim of unjust enrichment against Melanie Rae and adequately alleged facts supporting her request for a constructive trust.

The order was reversed and the case was remanded for further proceedings.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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