Anita W. Sluck v. Terence E. Rapacz ( 2014 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2012).
STATE OF MINNESOTA
IN COURT OF APPEALS
A13-2268
Anita W. Sluck,
Respondent,
vs.
Terence E. Rapacz,
Appellant.
Filed August 18, 2014
Reversed and remanded
Bjorkman, Judge
Hennepin County District Court
File No. 27-CV-12-14348
Richard S. Eskola, Columbia Heights, Minnesota (for respondent)
Mary M.L. O’Brien, Kathleen M. Ghreichi, Meagher & Geer, P.L.L.P., Minneapolis,
Minnesota (for appellant)
Considered and decided by Bjorkman, Presiding Judge; Rodenberg, Judge; and
Toussaint, Judge.
UNPUBLISHED OPINION
BJORKMAN, Judge
Appellant challenges the judgment in favor of respondent on an unjust-enrichment
claim. Because the district court failed to make findings necessary to a determination

Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
that appellant was unjustly enriched by retaining funds respondent loaned to him and
abused its discretion by concluding that appellant was unjustly enriched by not paying
respondent interest on the loan, we reverse and remand.
FACTS
Appellant Terrence Rapacz1 is a veterinarian whose veterinary business has
struggled financially since 2001. Rapacz invested “substantial amounts” of his own
assets in the business and obtained a $1.5 million commercial loan, but these measures
failed to cure the business’s financial woes. Rapacz then approached respondent Anita
Sluck and her husband John Sluck, longtime clients and personal friends, asking for
funds. In February 2009, Rapacz asked the Slucks for a donation of $20,000 “to establish
a fund for people who could not pay their veterinary bills in emergency situations.” John
Sluck agreed and wrote a check to Rapacz’s business for the requested amount, which
Rapacz used on general hospital and business expenses within one or two months. In
October 2009, Rapacz again approached the Slucks for funds, explaining that his business
was behind on real-estate taxes. This time, John Sluck agreed to loan Rapacz $60,000.
And in March 2010, John Sluck agreed to loan Rapacz an additional $190,000. Rapacz
offered to pay 5% interest on the loans, but Rapacz and the Slucks did not agree to a due
1
Rapacz’s brief indicates that he spells his first name “Terrence,” contrary to the spelling
in the case caption.
2
date or repayment plan, and did not memorialize the loans in any writing other than John
Sluck’s checks.2
Rapacz made several interest payments of $1,041.75 and one double payment in
mid-2010, totaling $5,208.75. He has not made any payments since October 20, 2010.
John Sluck died in early 2011. Shortly thereafter, counsel for Anita Sluck contacted
Rapacz demanding repayment of the loans. Rapacz replied that he would repay them
when he could afford to do so.
Anita Sluck commenced this action in June 2012, alleging breach of contract and
unjust enrichment. After a bench trial, the district court concluded that there was not an
enforceable contract between the parties but found that “it would be unjust for [Rapacz]
to evade repayment” and ordered him to repay $250,000, plus 5% interest from
November 1, 2010. Rapacz moved for additional findings or a new trial, which the
district court denied. Rapacz appeals.
DECISION
We review for abuse of discretion a district court’s application of the equitable
doctrine of unjust enrichment. City of N. Oaks v. Sarpal, 797 N.W.2d 18, 23 (Minn.
2011). A district court abuses its discretion when its decision is based on an erroneous
view of the law or against the facts in the record. Id. But we will not disturb factual
findings unless they are clearly erroneous. Minn. R. Civ. P. 52.01; Rasmussen v. Two
Harbors Fish Co., 832 N.W.2d 790, 797 (Minn. 2013).
2
John Sluck wrote “loan to my good friend” on the memo line of the $60,000 check. On
the $190,000 check, he wrote: “loan at 5% to Dr. Rapacz.”
3
A claim for unjust enrichment requires more than a showing that the defendant
benefited from another’s efforts or obligations. First Nat’l Bank of St. Paul v. Ramier,
311 N.W.2d 502, 504 (Minn. 1981). The plaintiff must prove that (1) the plaintiff
conferred a benefit on the defendant; (2) the defendant accepted the benefit; and (3) the
defendant unjustly or inequitably retained the benefit. Zinter v. Univ. of Minn., 799
N.W.2d 243, 247 (Minn. App. 2011). It is inequitable to retain a benefit “illegally or
unlawfully,” ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544 N.W.2d 302, 306
(Minn. 1996) (quotation omitted), or when it is “morally wrong” to do so, Schumacher v.
Schumacher, 627 N.W.2d 725, 729 (Minn. App. 2001).
Rapacz first argues that the district court abused its discretion by finding that he
has been unjustly enriched by retaining the loaned funds because the record establishes
that he and the Slucks agreed he would repay the funds only if and when he is able. We
agree. The intentions of the parties define the circumstances under which it is unjust to
retain the benefit in question. See Schumacher, 627 N.W.2d at 729 (stating that unjust
enrichment depends on whether “the circumstances are such that it would be unjust for
[the defendant] to retain the benefit”). The district court found that the parties made no
express agreement as to when or how Rapacz is to repay the loaned funds; they agreed
only that Rapacz would “pay back the money as soon as he was able.” 3 Accordingly,
Rapacz’s ability to pay is critical to the determination whether Rapacz is unjustly
3
We observe that Rapacz moved the district court for additional findings expressly
crediting his testimony that the Slucks knew and accepted that he might never be able to
repay the loans. Because the district court expressly found that the parties agreed Rapacz
would repay the loans when he was able, we agree with the court that the additional
findings Rapacz requested were unnecessary.
4
enriched by retaining the loaned funds. It would be unjust for Rapacz to “evade
repayment” if he is able to repay the funds or if he has unlawfully or immorally acted to
undermine his ability to do so. But it would not be unjust for Rapacz to retain the loaned
funds if he remains unable to repay them.
The district court made no findings regarding Rapacz’s current ability to repay the
loaned funds or whether he has unjustly acted to undermine his ability to repay the funds.
Consequently, the district court’s findings do not support its determination that Rapacz
has been unjustly enriched, and we reverse that determination and remand for futher
proceedings consistent with this opinion.
Rapacz next asserts that the district court abused its discretion by finding that he
was unjustly enriched because he has not paid interest on the second loan. This argument
is persuasive. Unjust enrichment requires that the defendant receive and retain
something of value. Zinter, 799 N.W.2d at 247. Rapacz promised to pay interest on the
loans and has not done so. But the district court rejected the contract-based claim and the
Slucks do not challenge that on appeal. And it is undisputed that Rapacz did not receive
anything of value from the Slucks in exchange for the interest payments, as required to
support an unjust-enrichment claim. We conclude the district court abused its discretion
by determining that Rapacz has been unjustly enriched by not paying interest on the
loans.
Reversed and remanded.
5