Dispute Between Rival Brokerages: Court of Appeals Weighs In On The Standard For Unjust Enrichment Claim

In a case that appears to allow a real estate brokerage firm to benefit from work prepared by a rival, the New York Court of Appeals recently redefined the standard required for a claim of unjust third-party enrichment. By definition, the concept of “unjust enrichment” is an obligation imposed by equity to prevent an injustice in the absence of an actual agreement between the parties.

The Court, in Georgia Malone & Co., Inc. v. Rieder et. al, focused on whether or not such a claim could be proven by one real estate brokerage firm against a rival company, when the latter used the former’s due diligence materials without permission to profit from the sale of a property portfolio in Midtown Manhattan. In this case, the Court determined that the relationship between the two companies was too attenuated to allow a claim for unjust enrichment, despite the fact that the competitor had received a significant commission based on the diligence materials prepared by the first company.