This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
George H. Elliott Veterans of Foreign Wars Post 7902,
Filed July 25, 2006
Todd County District Court
File No. C2-04-862
Charles A. Cox, Cox, Goudy, McNulty & Wallace, P.L.L.P., 100 North Sixth Street, Suite 676A, Minneapolis, MN 55403 (for appellant)
Michael J. Dolan, Thomas J. Reif, Thornton, Hegg, Reif, Dolan & Bowen, P.A., 1017 Broadway, P.O. Box 819, Alexandria, MN 56308
Considered and decided by Shumaker, Presiding Judge; Kalitowski, Judge; and Ross, Judge.
U N P U B L I S H E D O P I N I O N
On appeal from summary judgment, appellant Calvin Abers argues that the district court (1) erred in finding that no fact issues remained regarding his unjust-enrichment claim; and (2) abused its discretion by concluding that appellant was barred from seeking equitable relief under the doctrines of in pari delicto and unclean hands. We affirm.
D E C I S I O N
“On an appeal from summary
judgment, we ask two questions: (1) whether there are any genuine issues of
material fact and (2) whether the [district court] erred in [its] application
of the law.” State by Cooper v. French, 460 N.W.2d 2, 4 (
order to establish a claim of unjust enrichment, a claimant must show that
another party knowingly received something of value to which he was not
entitled and that the circumstances are such that it would be unjust for that
person to retain the benefit. ServiceMaster of
Here, appellant was elected gambling manager of respondent Veterans of Foreign Wars Post 7902 in 1997. As gambling manager, appellant’s salary was to be paid from gambling funds. Initially, appellant volunteered to receive no salary for his work until he increased respondent’s gambling income. In September 1998, appellant began receiving a salary of $500 per month. The record indicates that in March 2000, respondent’s board and officers authorized a raise for appellant so that he could make payments out of his personal account on a loan respondent had taken out for a remodeling project. Respondent had previously entertained a motion to pay a different loan with gambling proceeds, but the state gambling board informed it that it could not lawfully do so. As gambling manager, appellant knew that gambling proceeds, with few narrow exceptions, were required to be given to charities. Thus, appellant acknowledged in his deposition that he knew that the transaction proposed would constitute “laundering money” and that it would be “an unlawful expenditure of gambling dollars.”
Nonetheless, appellant’s salary was increased to $1,000 per month, retroactive to January 1, 2000. And appellant began making payments of $400 on respondent’s loan in January 2000. When respondent increased his monthly salary to $1,600 in October 2000, appellant increased his monthly payments to $800. Appellant paid off the loan in April 2004 and was terminated from his position of gambling manager in May 2004.
Appellant filed suit, alleging that respondent was unjustly enriched because it failed to reimburse appellant for the amounts he paid on respondent’s loan. The district court granted respondent’s motion for summary judgment, concluding that the record reflected a “complete lack of proof” as to the essential elements of an unjust-enrichment claim. The court added that appellant’s relief was also barred by the doctrine of in pari delicto and the doctrine of unclean hands.
Appellant argues that fact issues remained on his unjust-enrichment claim. We agree. Specifically, the record indicates that there are disputed facts regarding the exact nature of the arrangement, if any, between appellant and respondent concerning reimbursement of appellant’s loan payments. And viewing the facts in a light most favorable to appellant, this issue could determine the extent to which respondent condoned the transaction and was therefore unjustly enriched by the fraudulent arrangement.
But we conclude that even if the district court erred in granting summary judgment on appellant’s unjust-enrichment claim, the district court properly determined that appellant was barred from obtaining equitable relief as discussed below.
Appellant argues that the district court abused its discretion by holding that appellant’s unjust-enrichment claim was barred by the doctrine of in pari delicto and the doctrine of unclean hands. We disagree.
The decision to grant
equitable relief is within the discretion of the court and will not be reversed
unless there is a clear abuse of that discretion. Medtronic,
Inc. v. Advanced Bionics Corp., 630 N.W.2d 438, 450 (
1. In pari delicto
The doctrine of in pari
delicto may operate to prevent the enforcement of an equitable remedy when the
parties have been involved in mutually unlawful activity. Brubaker
v. Hi-Banks Resort Corp., 415 N.W.2d 680, 684 (Minn. App. 1987), review denied (Minn. Jan. 28,
1988). Minnesota’s leading case on in
pari delicto is State by Head v. AAMCO
Automatic Transmissions, Inc., 293
Here, the district court
held that the doctrine of in pari delicto barred appellant’s claim for
relief. The court found that appellant
willfully participated in a fraudulent scheme with respondent to underhandedly
use gambling proceeds to make payments on respondent’s remodeling loan. Thus the court stated that it was
“disinclined to provide [appellant] any judicial relief by virtue of his
knowing participation in a deceptive, fraudulent scheme to circumvent
The record indicates that
appellant agreed to and executed a plan to fraudulently evade
By filtering the proceeds
through his personal accounts, appellant was a knowing and willing participant
in a scheme to avoid
2. Unclean hands
Unclean hands is an
equitable defense that restricts the availability of equitable remedies to
parties who are guilty of unconscionable conduct. Fred O.
Watson Co. v. U.S. Life Ins. Co., 258 N.W.2d 776, 778 (
Under reasoning similar to its analysis of the doctrine of in pari delicto, the district court held that appellant’s claim was also barred under the doctrine of unclean hands. The court stated that appellant used funds disguised as a pay raise to pay respondent’s loan in a manner proscribed by law.
Appellant knew that gambling proceeds could only be used for charitable purposes and that applying them toward respondent’s loan was unlawful. Nonetheless, he tried to circumvent the gambling regulations when he received gambling proceeds through a salary increase and then applied that excess salary toward respondent’s loan. Moreover, he sought to evade the same regulations he was licensed to uphold as gambling manager. See Minn. Stat. § 349.167, subd. 1(a) (2004) (stating that a gambling manager “is responsible for the gross receipts of the organization and for its conduct in compliance with all laws and rules”). We conclude that the district court did not abuse its discretion by holding that the doctrine of unclean hands barred appellant from seeking equitable relief.