Using Constructive Trusts

Oftentimes when people sue, they are suing because there is a dispute over some control of property or an item. In a lawsuit, the Plaintiff (the party suing) wants to make sure that the property wrongfully held by the Defendant is not wasted, transferred, or lost, and further, wants to compel the transfer of that property back to its rightful owner.

Alleging Constructive Trust

Although not an actual, legal trust, like what you may use in estate planning, a constructive trust is a cause of action which asks a court to take control of property—essentially, to create a trust by operation of law—and to put the property in dispute into that trust, so that it can be held, preserved, and ultimately given to whomever has the right to own or possess the property.

There are two main elements which warrant the imposition of a constructive trust.

First the parties who are arguing over possession of the property must have some kind of relationship. This is often a fiduciary relationship, but it can be any kind of relationship where there is some type of trust placed in the other party.

Additionally, the party that is keeping or threatens to wrongfully keep the property must be unjustly enriched by keeping the property—put another way, given the circumstances, it would be wholly unfair to let a party benefit by retaining the property that is at issue.

Because of the element of unjust enrichment, constructive trusts are usually imposed in cases that involve fraud or deceit or misrepresentation or some breach of a duty of loyalty between two people or entities.

Specifically Identified Assets

To have a constructive trust, specific assets must be identified, which can be put into the constructive, court-imposed trust.

Money can be what is at issue, but the money must be specific—that is, a sum of money from a specific transaction, or from a specific alleged wrong. Imagine, for example, an architect who takes a deposit to do architectural work for a client, but it turns out that architect was lying and never intended to do any work at all, but has retained the money.

Or, imagine that someone steals trade secrets and uses those trade secrets to make money.

In scenarios where someone may be hiding assets, or concealing money or property under a separate name, a Plaintiff could ask the Court to impose a trust on those identifiable assets.

In all these examples, an exact sum of money can be identified and it can be traced to the fraud or wrongful behavior that is at issue in the case.

That means that when asking the court to impose a constructive trust, you must identify exactly what items should be put in the trust, or else, should identify the source of whatever funds or monies you are seeking to have put into the trust and ultimately, transferred to you as a remedy.

Contact the West Palm Beach commercial litigation attorneys at Pike & Lustig if you have a dispute over money, property, or ownership of items that may belong to you.

Source:

casemine.com/judgement/us/59146fbbadd7b0493434f95b