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

The Court, in Georgia Malone & Co., Inc. v. Rieder et.al, focused on whether or not such a claim could be proven byone real estate brokerage firm against a rival company, when thelatter used the former’s due diligence materials without permissionto profit from the sale of a property portfolio in MidtownManhattan. In this case, the Court determined that the relationshipbetween the two companies was too attenuated to allow a claim forunjust enrichment, despite the fact that the competitor hadreceived a significant commission based on the diligence materialsprepared by the first company.

The facts of the case are relatively simple. Plaintiff GeorgiaMalone & Co., Inc., a licensed real estate brokerage andconsulting firm that provides clients with information on thepurchase and sale of properties not yet on the market, introduceddeveloper CenterRock Realty, LLC to the sellers of residentialapartment buildings in New York. Shortly after that meeting, Malonecontracted to provide CenterRock with due diligence materials onthe properties for a commission of 1.25% of the total purchaseprice. The information was to remain confidential.