Cablevision of Breckenridge, Inc. v. Tannhauser Condominium Ass'n
1982 Colo. LEXIS 676, 649 P.2d 1093 (1982)
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Rule of Law:
A party that knowingly receives and benefits from a service that is customarily paid for, and actively facilitates the reception of that service without payment, is liable for the value of the service under the doctrine of quasi-contract or unjust enrichment to prevent an inequitable result.
Facts:
- Cablevision of Breckenridge, Inc. (Cablevision) entered into an oral agreement to provide subscription cable services to all 33 condominium units in the Tannhauser I development.
- From January 1972 through March 1974, Tannhauser I paid for the service for all 33 units as agreed.
- In May 1974, at the request of a Tannhauser representative, Cablevision began billing for only three units, and its amplifier inside the building was removed.
- A Tannhauser representative then installed a private amplifier, connected it to Cablevision's incoming line, and continued to distribute the signal to all 33 units in Tannhauser I.
- In November 1974, Tannhauser representatives installed a cable between Tannhauser I and the newly built Tannhauser II, extending the Cablevision service to an additional 25 units.
- From May 1974 until December 1976, a total of 58 condominium units in Tannhauser I and II received Cablevision's service while Tannhauser paid for only three units.
- Upon discovering the unauthorized use, Cablevision terminated all service to the condominiums.
Procedural Posture:
- Cablevision filed suit against the Tannhauser Condominium Associations in the Summit County District Court (trial court) alleging multiple claims, including breach of contract and unjust enrichment.
- The parties submitted the case on a stipulated set of facts and a single stipulated issue asking if the defendants breached any 'in fact or implied' contract.
- The trial court, using a theory of conversion, found in favor of Cablevision and awarded damages of $11,597.50.
- The defendants (Tannhauser) appealed to the Colorado Court of Appeals.
- The Court of Appeals reversed the trial court's judgment, holding that the trial court erred by deciding the case on conversion, a theory not included in the stipulated issue, and that no contract was proven.
- The Colorado Supreme Court granted Cablevision's petition for certiorari to review the decision of the Court of Appeals.
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Issue:
Does a condominium association that uses its own equipment to amplify and distribute a paid cable subscription service to numerous non-paying units become liable for the value of that service under a theory of quasi-contract or unjust enrichment?
Opinions:
Majority - Lohr, J.
Yes. A condominium association that uses its own equipment to amplify and distribute a paid subscription service to non-paying units is liable for the value of that service under a theory of quasi-contract, or unjust enrichment. The court reasoned that the stipulated issue for trial, concerning breach of an 'implied' contract, properly included the equitable doctrine of unjust enrichment. Applying the three-part test for unjust enrichment, the court found: (1) a benefit (cable service) was conferred by Cablevision upon the defendants; (2) the defendants appreciated the benefit, as evidenced by their initial and continued payments for some units; and (3) the defendants accepted the benefit under circumstances making it inequitable to retain it without payment. The defendants were not innocent recipients; they actively facilitated the unauthorized use, thereby undercutting Cablevision's subscription-based business model. While Cablevision does not own the broadcast signals, it has a legally protected interest in the service provided by its complex distribution system.
Analysis:
This decision establishes that intangible services delivered via a subscription model are protectable interests under the equitable doctrine of unjust enrichment. It clarifies that the value lies not just in the raw content (the broadcast signals), but in the entire processing and distribution system a company builds. The ruling prevents consumers from using technical workarounds to pirate services, thereby safeguarding the economic viability of subscription-based businesses. This precedent is significant for any industry reliant on charging for access to a distributed service, from media to software.
