Hambleton v. R.G. Barry Corp.
1984 Ohio LEXIS 1195, 12 Ohio B. 246, 12 Ohio St. 3d 179 (1984)
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Rule of Law:
A claim for unjust enrichment, which arises when a defendant retains a benefit from a plaintiff under circumstances that make it unjust to do so without payment, is a quasi-contract action subject to the six-year statute of limitations for contracts, even if the underlying facts could also support a tort claim for conversion that is barred by a shorter, four-year statute of limitations.
Facts:
- Appellants developed an idea to use self-skinning polyurethane in footwear and presented it to appellee as part of a project.
- Appellee later fired the appellants but retained one of their colleagues who had also worked on the project.
- Appellants' attorney sent a letter to the appellee in 1971, to which no response was received.
- Information regarding the development of a polyurethane sole appeared in appellee's annual reports starting in 1971.
- In late 1974, appellee began manufacturing and marketing a line of footwear using the polyurethane sole process developed by appellants.
- Appellants did not become aware that appellee was marketing the shoes until the Fall of 1978.
Procedural Posture:
- Appellants filed a two-count complaint against appellee in a trial court in late 1979.
- The first count alleged wrongful taking of personal property (tort), and the second alleged unjust enrichment (quasi-contract).
- The trial court granted summary judgment for the appellee, finding both counts were time-barred by the four-year statute of limitations for torts.
- Appellants appealed to the intermediate court of appeals.
- The court of appeals affirmed the trial court's judgment, holding that the essence of both claims was tortious and thus both were barred.
- The appellants appealed to the Supreme Court of Ohio.
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Issue:
Where a plaintiff's claim for the wrongful taking of an idea is time-barred by the four-year tort statute of limitations, may the plaintiff still bring a timely claim for unjust enrichment under the six-year quasi-contract statute of limitations based on the same underlying facts?
Opinions:
Majority - Per Curiam
Yes. Even if a tort claim for wrongful taking is time-barred, a plaintiff may still bring a timely claim for unjust enrichment under the longer, six-year quasi-contract statute of limitations if the complaint sufficiently alleges the elements of a quasi-contract. The court determined that the appellants' tort claim for wrongful taking of property was barred by the four-year statute of limitations because the cause of action accrued in late 1974. Under the discovery rule, a person is charged with constructive knowledge if they possess facts that would lead a reasonably prudent person to make inquiry. The court found that appellants' firing, their colleague's retention, and the public marketing of the shoes in 1974 were sufficient to put them on notice, and a reasonably diligent inquiry would have revealed the wrongdoing then. Since the suit was not filed until 1979, the tort claim was untimely. However, the court found their second claim for unjust enrichment was a distinct action in quasi-contract, governed by a six-year statute of limitations. The court held that the complaint sufficiently alleged the elements of quasi-contract: (1) a benefit conferred on the appellee (the idea), (2) appellee's knowledge of the benefit, and (3) retention of the benefit under circumstances making it unjust without payment. Because this claim was filed within six years of its accrual in 1974, it was timely.
Analysis:
This decision illustrates the critical importance of claim characterization for statute of limitations purposes. It establishes that a single set of facts can give rise to distinct legal claims (e.g., tort and quasi-contract) with different limitation periods. The ruling provides a potential avenue for relief for plaintiffs whose tort claims might be barred, allowing them to 'plead around' the shorter tort statute of limitations by framing their action as one for unjust enrichment. This reinforces the principle that courts look to the substantive nature of a claim, not its label, and preserves the distinct legal identity of quasi-contract as a remedy based on preventing unjust enrichment.
