Skip to main content



Koehler v. Ultimate Automotive Industries, Inc.

A-4469-03T1 (N.J. Super. App. Div. 2005) (Unpublished)

CONTRACTS; UNJUST ENRICHMENT—A person does not have to prove the existence of an oral or written agreement to establish a cause of action for unjust enrichment.

A man and an owner of a company entered into an oral agreement in which the man agreed to work for the company for a number of years. For the first couple of months of employment, the man was regularly paid by the company. The company then stopped paying the man for his services. After several discussions, the man and the owner agreed that the man would be paid a lump sum of money for his services or be given a one-half interest in the company. This agreement was not memorialized in writing. The man never received the large payment or an interest in the company. Shortly thereafter, the owner died in a car accident and the man was fired from the company. The man filed an action against the company for unpaid compensation for six months of employment. The lower court ruled in favor of the man and awarded him six months of unpaid compensation. The man then filed an action against the estate of the deceased owner asserting that the owner breached an oral contract between the parties to pay the man a one-half interest in the company. In addition, the man sought damages for unjust enrichment. The lower court ruled in favor of the estate. Both the man and estate appealed.

On appeal, the man argued, among other things, that the lower court erred in instructing the jury with respect to his unjust enrichment claim. He asserted that the lower court improperly instructed the jury that he had to establish that an oral contract existed between the parties in order to prove his unjust enrichment action. The Appellate Division disagreed with the lower court’s jury instruction. It ruled that the man’s unjust enrichment claim was based on a quasi-contract action, and that the very essence of a quasi-contract claim is the absence of an agreement. In order to succeed on a quasi-contract action, a person does not have to show the presence of a contract. Instead, the man was required to show that the company received a benefit from his services and that he received no compensation for the services, which unjustly enriched the company. The Court ruled that the lower court erred in instructing the jury that the man had to show the presence of an agreement and remanded the matter to the lower court.

The Court also rejected the estate’s appeal regarding the burden of proof to establish a cause of action for unpaid compensation. The estate had argued that the man was required to prove, by clear and convincing evidence, that he was not paid for his services. The Court disagreed with the estate, holding that the man was only required to establish by a preponderance of the evidence that the company did not compensate him for his services.


MEISLIK & MEISLIK
66 Park Street • Montclair, New Jersey 07042
tel: 973-783-3000 • fax: 973-744-5757 • info@meislik.com