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Federal District Court Rules That Evidence Did Not Support Unjust Enrichment Claim or Punitive Dama


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In Legurnic v. Ciccone, the United States District Court for the Eastern District of New York (U.S. D.J. Spatt) decided on November 25, 2014 that punitive damages would not be recoverable in a case claiming unjust enrichment and fraud. The case arose out of investments made by the Plaintiff Sean Legurnic in Agape World, Inc. from 2007 to 2008. Agape operated a “Ponzi Scheme,” which was unknown to the Plaintiff at the time of his investments. Plaintiff’s investments were solicited by the Defendant Salvatore Ciccone, a broker for Agape. After a trial was held, the jury found for the Defendant on the fraud cause of action; found for the Plaintiff on the unjust enrichment cause of action; declined to award “monetary damages” to the Plaintiff on either cause of action; awarded “nominal damages” of $1.00 to the Plaintiff; and awarded punitive damages in the amount of $166,025 to the Plaintiff. Judge Spatt agreed with the Defendant’s argument in his motion to set aside the verdict that the jury’s verdict is inconsistent because an award of no monetary damages suggests that the Defendant did not receive a benefit and was therefore not unjustly enriched. Under New York law, the elements of unjust enrichment are: (1) defendant was enriched, (2) at plaintiff’s expense, and (3) equity and good conscience militate against permitting defendant to retain what plaintiff is seeking to recover. In this case because the Plaintiff failed to show that the Defendant received a benefit, there can be no liability for unjust enrichment. Judge Spatt found that the core of the Plaintiff’s unjust enrichment claim was that the Defendant received commissions as a result of the Plaintiff’s investments in Agape, which he should not in equity and good conscience keep because Agape was involved in a Ponzi scheme. Judge Spatt further ruled that, “there was conflicting testimony regarding whether the Defendant received specific commissions as a result of soliciting the Plaintiff’s investments into the fund.” The jury’s decision to award the Plaintiff “$0” in monetary damages and “1.00” in nominal damages strongly suggests that the Plaintiff failed to prove that the Defendant received any commissions from the Plaintiff’s investments. Without any proof of a “direct” and “specific” benefit to the Defendant, Judge Spatt declined to uphold the jury’s verdict that the Defendant is liable for unjust enrichment, and vacated the jury’s awards of nominal and punitive damages. The Court also would have vacated the jury’s punitive damages award on the further ground that New York law does not permit an award of punitive damages based on an unjust enrichment claim.

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