Abrams, Richard N. v. Unity Mutual Life ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-4108
Richard N. Abrams,
Plaintiff-Appellant,
v.
Unity Mutual Life Insurance Co.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 3182--Ruben Castillo, Judge.
Argued October 25, 2000--Decided January 18, 2001
Before Bauer, Coffey, and Diane P. Wood, Circuit
Judges.
Diane P. Wood, Circuit Judge. In the funeral
business, the term "preneed" insurance refers to
a product that a person may buy to provide in
advance for funeral and burial expenses. Richard
Abrams, who owned a number of funeral businesses,
had some expertise in this kind of preneed life
insurance. Unity Mutual Life Insurance (Unity)
was interested in moving into the preneed market
and decided to use Abrams as its general agent.
Although the parties never entered into a written
contract, Abrams provided several services to
Unity in connection with various preneed
products. The relationship soured, however, in
1997, over a dispute relating to Unity’s
compensation for Abrams’s services. Abrams
eventually sued Unity under several contract
theories, but the district court granted summary
judgment in Unity’s favor on all of his claims.
Abrams now appeals only the grant of summary
judgment on his unjust enrichment claim. We
affirm.
I
In 1991, Abrams and Unity began discussing the
possibility of a business arrangement in which
Abrams would become a general agent for Unity,
helping Unity develop and market its first
preneed insurance program. In return, Abrams was
to receive commission payments in an amount equal
to a percentage of preneed products ultimately
sold. The parties’ discussions led to a series of
six draft agreements, but no formal agreement was
ever signed. Nevertheless, Abrams kept working
for Unity, based on a "handshake" agreement and
an oral promise from Unity employee Shirley
Cruickshank that, although the contract
negotiations were "getting cumbersome," Abrams
would receive commission payments for his
services.
Abrams claims that between 1991 and 1997, he
developed and marketed preneed insurance products
for Unity and also trained Unity’s employees and
agents on selling the products. These efforts
were significant in scope. Abrams asserted that
he introduced Unity’s product to about 12,000
funeral homes by including a reference to Unity
in a newsletter he regularly sent out. He also
mentioned Unity a few times in a regular column
he wrote in a trade publication. Notwithstanding
these efforts, however, sales of Unity’s preneed
insurance products were not as high as
anticipated, and Unity terminated its
relationship with Abrams in 1997.
Abrams then brought this lawsuit under the
federal courts’ diversity jurisdiction, alleging
that Unity owed him commissions for the sales of
all insurance polices resulting from his efforts
under the putative oral agreement. He relied upon
theories of breach of contract, promissory
estoppel, and unjust enrichment and sought
damages in excess of $75,000.
Abrams’s first complaint was dismissed without
prejudice because it did not meet the
particularity requirement of Fed. Rule Civ. Pro.
12(e). Abrams then filed a first amended
complaint. Unity responded by taking Abrams’s
deposition and promptly thereafter moving for
summary judgment. The court agreed that this was
the proper disposition of the case and granted
summary judgment on all counts, finding that
there was no signed written agreement and that
any oral agreement violated New York’s Statute of
Frauds. (The district court decided that New York
law applied, following the "most significant
contacts" test of the Second Restatement of
Conflicts that would be used in an Illinois
court. See Ingersoll v. Klein, 262 N.E.2d 593,
596 (Ill. 1970). Abrams has not contested this
decision on appeal.) The promissory estoppel
claim failed because Abrams could show neither a
clear and unambiguous promise by Unity nor
unconscionable injury resulting from Unity’s
actions. Most relevant to this appeal, the court
held that the unjust enrichment claim was an
improper effort to circumvent the Statute of
Frauds.
II
We review the district court’s grant of summary
judgment de novo. Doe v. Howe Military School,
227 F.3d 981, 990 (7th Cir. 2000). Summary
judgment should be granted only if the pleadings,
depositions, answers to interrogatories,
admissions, and affidavits leave no genuine issue
of material fact, and the moving party is
entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(c).
The district court concluded that the unjust
enrichment claim was based on an unenforceable
underlying contract and thus was an impermissible
attempt to circumvent New York’s Statute of
Frauds, N.Y. Gen. Oblig. Law sec. 5-701(a)(1).
Abrams has not appealed the district court’s
finding that the underlying oral contract between
himself and Unity was unenforceable as a
violation of New York’s Statute of Frauds. He
challenges only the district court’s dismissal of
the unjust enrichment claim.
The existence of an enforceable contract is not
a prerequisite for a claim for unjust enrichment
when a plaintiff is seeking payment for services
that he has provided to the defendant. See Farash
v. Sykes Datatronics, Inc., 452 N.E.2d 1245, 1247
(N.Y. 1983); Bradkin v. Leverton, 257 N.E.2d 643,
645 (N.Y. 1970). Nevertheless, such a claim may
be barred if it is based on the same promise and
seeks the same relief as an otherwise barred
contract claim. See Sater v. Wyckoff Heights
Hospital, 643 N.Y.S.2d 664, 665 (N.Y. App. Div.
1996) ("To the extent the plaintiff seeks to
recover . . . for unjust enrichment . . . those
claims, which are based on the alleged oral
agreement, must also be dismissed."); American-
European Art Assoc., Inc. v. Trend Galleries,
Inc., 641 N.Y.S.2d 835, 836 (N.Y. App. Div. 1996)
("[P]laintiffs may not utilize a quantum meruit
theory of recovery to circumvent the Statute of
Frauds").
For our purposes, the relevant question is
whether Abrams’s unjust enrichment claim is
sufficiently distinct from the underlying
contract claims to permit him to go forward with
it, or if instead it falls under the rule
articulated in cases like Sater. Abrams’s case
might have been stronger if he had detailed the
particulars of the services he claimed to have
provided to Unity, including the number of hours
and the reasonable value of the services, because
this would have clarified both the difference
between the basis of the unjust enrichment claim
and the basis of the contract claims and the
difference between the recovery for the unjust
enrichment claim and a contract recovery. But
Abrams offered no such particulars, either in his
first amended complaint or in his response to
Unity’s summary judgment motion, even after Unity
complained that the unjust enrichment claim was
an effort to evade the Statute of Frauds. Abrams
only provided a vague list of services that he
performed for Unity, including training Unity
employees on selling preneed insurance,
introducing Unity to several insurance agents and
brokers, visiting funeral homes on Unity’s
behalf, preparing a newsletter sent to funeral
homes, and developing a marketing and
distribution system. He does not tell us how many
hours he spent working for Unity. He does not
tell us the reasonable value of those services;
nor does he point to any document in the record
from which a court could glean such facts.
Instead, Abrams relied on the commissions
structure discussed by the parties as a basis for
determining the reasonable value of his services.
Herein lies the fatal flaw in his claim. By
asking us to look to the alleged contract to
demonstrate the value of his services, he depends
on proof of either an unenforceable oral contract
or unenforceable written draft agreements. (We
presume he is suggesting that he receive
commissions on the sales Unity entered into over
the years he was providing services, but not even
this is clear; he may be asserting a claim to
commissions on all sales of preneed contracts to
funeral homes Unity learned about through his
efforts--perhaps for all eternity--and it is hard
if not impossible to distinguish this claim from
his contract claim.) If we were to give him the
relief he seeks, i.e., the commissions, we would
be enforcing the oral agreement and circumventing
the Statute of Frauds. Such a result is clearly
barred by New York law. See Tallini v. Business
Air, Inc., 538 N.Y.S.2d 664, 666 (N.Y. App. Div.
1989) ("[P]laintiff’s claim that he was denied
commissions which he was entitled to under a
theory of unjust enrichment depends on proof of
the oral contract and therefore is also barred by
the Statute of Frauds."). Abrams’s unjust
enrichment claim is, in effect, indistinguishable
from his claim for breach of contract. Sadly
enough for Abrams, the parties never entered an
enforceable agreement regarding the commissions,
and the Statute of Frauds makes "handshake"
agreements of the kind he had worthless. On the
facts presented here, Abrams cannot recover the
commissions either through a breach of contract
claim or as an indirect way of proving the value
of his services for an unjust enrichment claim.
As a side note, the lack of specific evidence
also precludes a court from determining whether
any of Abrams’s services were provided in order
to prepare for a future contract or to advance
Abrams’s own economic interests. Many of the
activities which Abrams alleges were done to
benefit Unity were also the type of activities
that he engaged in as a part of his regular work
activities, such as contacting funeral homes,
making sales calls, and attending conventions.
Unjust enrichment damages are not available for
activities that are simply preparatory to
performance, see Absher Constr. Corp. v. Colin,
649 N.Y.S.2d 174, 175 (N.Y. App. Div. 1996), or
activities that otherwise further the plaintiff’s
own economic interests. See Songbird Jet, Ltd. v.
Amax, Inc., 581 F. Supp. 912, 926-27 (S.D.N.Y.
1984).
Finally, even if New York would recognize this
kind of unjust enrichment claim in principle,
Abrams would still lose because he failed to meet
his burden to establish one of the key elements
of the claim--the reasonable value of his
services. See Singerman v. Reyes, 659 N.Y.S.2d
762, 763 (N.Y. App. Div. 1997); Geraldi v.
Melamid, 622 N.Y.S.2d 742, 743 (N.Y. App. Div.
1995). Once Unity moved for summary judgment, the
burden shifted to Abrams to establish that there
was "sufficient evidence favoring the nonmoving
party for a jury to return a verdict for that
party." Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 249 (1986). Although we must view the
evidence in a way most favorable to the nonmoving
party, a nonmoving party cannot survive summary
judgment without pointing to evidence that, if
believed by the trier of fact, would support a
verdict in its favor. Even though the question
whether a defendant has been enriched, and how
much, is usually a question of fact, Abrams
simply has not provided any information regarding
the services he provided and their value. This
amounts to a failure to meet his summary judgment
burden on a critical element of his claim, and
thus independently supports the district court’s
decision.
Because Abrams’s unjust enrichment claim depends
on proof of an unenforceable contract, it is
barred by the Statute of Frauds. Furthermore,
Abrams did not produce the evidence necessary to
create a genuine issue of fact on the question of
the value of his services for unjust enrichment
purposes. For both of these reasons, we AFFIRM the
judgment of the district court.