Pentagon Federal Credit Union v. McMahan, [Ms. 1191075, June 25, 2021], ___ So. 3d ___ (Ala. 2021). The Court (Mitchell, J.; Bolin, Shaw, Bryan, Sellers, Mendheim, and Stewart, JJ., concur; Parker, C.J., concurs in the result; Wise, J., recuses) reverses a judgment of the Baldwin Circuit Court dividing the sales proceeds from a mortgage foreclosure sale upon finding that the doctrine of unjust enrichment serves as a complete defense to the breach-of-contract claim and other claims the former homeowner (McMahan) asserted against the second mortgagor (Pen Fed). The circuit court therefore erred in permitting McMahan to recover the sum Pen Fed paid to the primary mortgage holder in satisfaction of the mortgage and for a release of its lien thereby entitling the second mortgage holder (Pen Fed) to resell the property.
To prevail on an unjust enrichment argument, a party must make two showings: “First, it must establish that [the other] was ‘enriched’ – i.e., that she knowingly accepted and retained a benefit provided by [the first party], which had a reasonable expectation of compensation.” Ms. *6, citing Matador Holdings, Inc. v. HoPo Realty Invs., L.L.C., 77 So. 3d 139, 145 (Ala. 2011). Upon making this showing, the party “must next demonstrate that [the other party] would be ‘unjustly’ enriched if she were awarded the disputed [sum].” Ms. **6-7, citing Matador Holdings. Here, McMahan knowingly accepted the benefit because she had knowledge of Pen Fed’s payment to the first mortgage holder before she commenced her action against Pen Fed and there is no evidence that she offered to reimburse Pen Fed for that payment. Had the payment not been made, McMahan would have continued to owe the first mortgage holder about $112,000. The Court concludes (Ms. *9) “[u]nder the circumstances, we are satisfied that McMahan has knowingly accepted and retained a benefit provided by Pen Fed.” As for the second element, Pen Fed asserted before the trial court that it had a right to reimbursement under § 6-5-253(a)(4) and Springer v. Baldwin County Federal Savings Bank, 597 So. 2d 677 (Ala. 1992) to the sum it paid to the first mortgagor in exchange for a release of the mortgage and satisfaction of the lien, but that because the circuit court rejected these contentions Pen Fed’s misreliance on those authorities justified its invocation of the doctrine of unjust enrichment. The Supreme Court agreed, noting “the doctrine of unjust enrichment is an old equitable remedy permitting the court in equity and good conscience to disallow one to be unjustly enriched at the expense of another.” Ms. *11, quoting Avis Rent A Car Sys., Inc. v. Heilman, 876 So. 2d 1111, 1123 (Ala. 2003). Whether this doctrine applies in any given case “depends on the particular facts and circumstances” of that case. Ms. **11-12, quoting Mantiply v. Mantiply, 951 So. 2d 638, 655 (Ala. 2006). In this case, McMahan sought to recover $91,256.54 from Pen Fed even though she already retains the approximately $112,000 benefit she received from Pen Fed’s settlement of the note and mortgage with the first mortgagor. “Equity and good conscience will not allow McMahan to recover that windfall at the expense of Pen Fed.” Ms. *12. Accordingly, the circuit court erred in awarding McMahan the disputed $91,256.54 and the judgment was due to be reversed.