Bank of America Corp. v. Gibbons
918 A.2d 565, 2007 Md. App. LEXIS 35, 173 Md. App. 261 (2007)
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Rule of Law:
A claim for unjust enrichment may be brought against an innocent third-party transferee who received stolen funds without knowledge of the theft and without having direct dealings with the plaintiff, as liability turns on whether the transferee received a benefit without paying value for it.
Facts:
- Thomas Patrick Gibbons, an employee of Bank of America, misappropriated over $1.5 million by making unauthorized sales of securities owned by the Bank's customers over a six-year period.
- Gibbons deposited the stolen funds into a business account and then transferred portions of that money into joint bank accounts he held with his wife, Lynne Margaret Gibbons.
- The misappropriated funds were commingled in the joint accounts with approximately $502,331 of Gibbons' legitimate salary and bonus earnings.
- Lynne Gibbons had no knowledge of her husband's theft and believed that all the funds deposited into their joint accounts were from his legitimate earnings.
- Mrs. Gibbons wrote most of the checks from the joint account, using the commingled funds primarily for household and family expenses.
Procedural Posture:
- Bank of America Corporation sued Lynne Margaret Gibbons in the Circuit Court for Harford County, a state trial court, alleging conversion and unjust enrichment.
- Both parties filed cross-motions for summary judgment.
- The trial court granted summary judgment in favor of Mrs. Gibbons, ruling that the Bank failed to establish the required elements for its claims.
- Bank of America, as the appellant, appealed the summary judgment ruling to the Court of Special Appeals of Maryland, an intermediate appellate court.
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Issue:
Does a claim for unjust enrichment against an innocent spouse fail as a matter of law if the spouse received stolen funds from the wrongdoing spouse without knowledge of the theft and without any direct dealings with the victim from whom the funds were stolen?
Opinions:
Majority - Adkins, J.
No. A claim for unjust enrichment does not fail as a matter of law merely because the recipient of stolen funds was innocent of the wrongdoing and had no direct dealings with the victim. The claim can proceed if the plaintiff can show the defendant received a benefit without giving value in return, as the defendant's innocence is not a complete bar to recovery. The court reversed the lower court's grant of summary judgment, finding that the trial court applied incorrect legal principles to all three elements of unjust enrichment. First, the trial court wrongly required a 'meeting of the minds' and direct dealings between the parties, when unjust enrichment is a quasi-contract theory that does not require privity; the key question is whether the transferee paid value. Second, the court incorrectly required the defendant to have knowledge of the theft itself; the 'knowledge' element is satisfied if the defendant appreciated receiving the benefit (the money), not necessarily its illicit source. Third, the trial court improperly concluded that the defendant's innocence made it equitable for her to retain the funds; while good faith is a factor, it is not determinative, and the case must be remanded to consider other equitable factors, such as whether she paid value or experienced a change of circumstances.
Analysis:
This decision clarifies Maryland's law on unjust enrichment by affirming that a claim can extend to an innocent third-party transferee who did not pay value for a benefit received. It prevents a wrongdoer from effectively laundering stolen funds by simply transferring them to an unknowing spouse or family member. The ruling reinforces that the core of an unjust enrichment claim is the inequity of retaining a benefit without consideration, rather than the recipient's culpability or knowledge of the original wrongdoing. This precedent strengthens the ability of victims of theft and fraud to trace and recover misappropriated assets from those who were gratuitously benefited by the crime.
