Can Utah courts impose constructive trusts based on unjust enrichment alone? Rawlings v. Rawlings Explained

The Utah Supreme Court’s decision in Rawlings v. Rawlings provides crucial guidance for practitioners handling property disputes involving constructive trusts. The case clarifies that constructive trusts may be imposed under two distinct legal theories that can be pursued independently.

Background and Facts

Arnold Rawlings transferred farm property to his oldest son Donald via warranty deed in 1967, purportedly to qualify for welfare assistance while battling cancer. Donald’s siblings claimed their father intended to create a family trust, with Donald serving as trustee. For decades, the siblings contributed labor, money, and property to maintain the farm, believing Donald held it in trust. The district court found Donald was unjustly enriched by these contributions and imposed a constructive trust in favor of the siblings.

Key Legal Issues

The court of appeals reversed, concluding that because the trial court’s findings did not support an oral express trust, the siblings could not prevail on unjust enrichment either. This created the central question: whether a constructive trust claim based on unjust enrichment requires proof of an oral express trust.

Court’s Analysis and Holding

The Utah Supreme Court reversed, holding that constructive trusts may be imposed under two independent theories. First, to give effect to an oral express trust under Restatement (Second) of Trusts § 45, requiring proof of the transferor’s intent and specific circumstances. Second, as a remedy for unjust enrichment, requiring: (1) benefit conferred, (2) appreciation of the benefit, and (3) inequitable retention without payment.

The Court emphasized that trial courts have broad discretion in applying unjust enrichment law to facts, particularly given their superior position to assess credibility and determine what is equitable under the circumstances.

Practice Implications

This decision establishes that practitioners challenging property transfers should plead both theories as alternatives. The unjust enrichment theory may succeed even where an oral express trust cannot be proven, provided the elements of inequitable benefit retention are established with clear and convincing evidence.