Unjust Enrichment – Statute of Limitations

Protective Life Insurance Company v. Jenkins, [Ms. SC-2022-1047, June 2, 2023] __ So. 3d __ (Ala. 2023). The Court (Sellers, J.; Wise, Bryan, Mendheim, Stewart, and Mitchell, JJ., concur; Cook, J., concurs in part and concurs in the result; Shaw, J., concurs in the result; Parker, C.J., dissents) reverses the Jefferson Circuit Court’s order dismissing Protective Life Insurance Company’s (“Protective”) complaint against Andrew Jenkins. A month after Jenkins resigned as an executive with the company, $105,230 was entered into Protective’s accounting system as the amount of deferred compensation owed to him. However, Protective only owed Jenkins $1,052.30 in deferred compensation. After deduction of tax withholdings, Jenkins was mistakenly overpaid by $73,752.64. Protective alleged that the two-digit mistake resulted from a data-entry error. Ms. *2.

The Court first notes “‘[w]here the appellant submits the cause on brief and no brief is filed by the appellee, the court considers the cause on its merits on the assumption that appellee is interested in having the judgment sustained.’ United Sec. Life Ins. Co. v. Dupree, 41 Ala. App. 601, 602-03, 146 So. 2d 91, 93 (1962) (citing Tri-City Gas Co. v. Britton, 230 Ala. 283, 160 So. 896 (1935).” Ms. *4.

The circuit court dismissed the action based on § 6-2-38(m), Ala. Code 1975, the two-year statute of limitations applicable to actions “‘accruing under laws respecting the payment of wages, overtime, damages, fees, and penalties.’” Ms. *5. The Court reverses and holds “the overpayment that Protective mistakenly paid to Jenkins was neither ‘payment for labor or services’ nor ‘remuneration.’ It was not based upon any action undertaken by Jenkins; rather, its sole basis is a data-entry error.” Ms. *6.

The Court explains further “[w]hether Protective’s unjust-enrichment claim falls into either category [tort or contract] requires a factual inquiry, and, therefore, Protective’s allegations in its complaint were sufficient to survive Jenkins’s motion to dismiss .…” Ms. *10.

Chief Justice Parker’s dissent argues “that unjust-enrichment claims are always governed ... by the two-year catchall statute of limitations for noncontractual and otherwise nonenumerated claims. Until this Court decides this question, I encourage future parties to carefully address it.” Ms. *18.

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