The Guide is an invaluable online tool for litigation and transactional attorneys. The Guide provides for more than 70 common law causes of action:

- Each action’s elements;
- The most recent state and federal cases that cite the actions’ elements;
- The applicable statute of limitations for each action; and
- Defenses to each cause of action.
- AND, The Guide is updated annually.

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Constructive Trust

1 Elements and Case Citations

Constructive Trusts are governed generally by California Civil Code sections 2223 and 2224. Specifically, Section 2224 provides that “[o]ne who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it.” Cal. Civ. Code § 2224 (2013); see Haskel Engineering & Supply Co. v. Hartford Acc. & Indem. Co., 78 Cal. App. 3d 371, 374 (1978) (“Civil Code section 2223 and 2224 codify the equitable principle that one who wrongfully acquires property of another holds the property as an involuntary constructive trustee. The constructive trust extends to property acquired in exchange for that wrongfully acquired . . ., and includes ‘the direct product,’ i.e., profit on and enhancement in value of the property traced into the trust.”).

“A cause of action for constructive trust is not based on the establishment of a trust, but consists of fraud, breach of fiduciary duty or other act which entitles the plaintiff to some relief. Relief, in a proper case, may be to make the defendant a constructive trustee with a duty to transfer to the plaintiff. Pleading requirements are: (1) facts constituting the underlying cause of action, and (2) specific identifiable property to which defendant has title.”

Michaelian v. State Comp. Ins. Fund, 50 Cal. App. 4th 1093, 1114 (1996).

“Under these statutes and the case law applying them, a constructive trust may only be imposed where the following three conditions are satisfied: (1) the existence of a res (property or some interest in property); (2) the right of a complaining party to that res; and (3) some wrongful acquisition or detention of the res by another party who is not entitled to it.”

Communist Party v. 522 Valencia, Inc., 35 Cal. App. 4th 980, 990 (1995) (emphasis in original).

CALIFORNIA STATE COURTS

Supreme Court of California: Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1149-50 (2003).

California 1st District: Burlesci v. Petersen, 68 Cal. App. 4th 1062, 1069 (1998); Communist Party v. 522 Valencia, Inc., 35 Cal. App. 4th 980, 990 (1995).

California 2d District: Martin v. Kehl, 145 Cal. App. 3d 228, 237-38 (1983).

California 3d District: Farmers Ins. Exchange v. Zerin, 53 Cal. App. 4th 445, 457 (1997)..

California 4th District: Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga, 175 Cal. App. 4th 1306. 1332 (2009).

California 5th District: Michaelian v. State Comp. Ins. Fund, 50 Cal. App. 4th 1093, 1114 (1996).

California 6th District: None.

CALIFORNIA FEDERAL COURTS

United States Court of Appeal for the 9th Circuit: Mattel, Inc. v. MGA Entertainment, Inc., 616 F.3d 904, 909 (9th Cir. 2010).

Central District: Internet Direct Response, Inc. v. Buckley, No. SA CV 09-1335 ABC (MLG), 2011 U.S. Dist. LEXIS 28344, at *23-24 (C.D. Cal. Mar.7, 2011); Deirmenjian v. Deutsche Bank, A.G., 526 F. Supp. 2d 1068, 1075 n.36 (2007).

Eastern District: PNC Equip. Fin., LLC v. Cal. Fairs Fin. Auth., No. 2:11-cv-02019-GEB-CKD, 2012 U.S. Dist. LEXIS 126185, at *24-25 (E.D. Cal. Sept. 5, 2012).

Northern District: Farahani v. Floria, No. 12-CV-04637-LHK, 2013 U.S. Dist. LEXIS 56679, at *37-38 (N.D. Cal. Apr. 19, 2013); Clifford v. Concord Music Group, Inc., No. C-11-2519 EMC, 2012 U.S. Dist. LEXIS 14084, at *10-11 (N.D. Cal. Feb. 6, 2012).

Southern District: In re Am. Principals Holdings, Inc., No. M.D.L. 653, 1987 U.S. Dist. LEXIS 16945, at *59-60 (S.D. Cal. July 9, 1987).

2 Issues and Defenses to Claim for Constructive Trust

(1) Cal. Code Civ. Proc. § 431.30(b)(2) (pleading affirmative defenses), and other standard defenses. See Chapter 1 for all defenses.

(2) Statute of Limitations: “Since ‘[a] constructive trust is not a substantive device but merely a remedy to compel a person not justly entitled to property to transfer it to another who is entitled thereto’ [*516] an action seeking to establish a constructive trust is subject to the limitation period of the underlying substantive right.” Davies v. Krasna, 14 Cal. 3d 502, 515-16 (1975).

(3) Dispersed Property: “Where . . . the property sought to be recovered has been dissipated, the plaintiff cannot enforce a constructive trust and the claim is one like that of a general creditor.” SEC v. Vassallo, No. 2:09-cv-0665 LKK DAD, 2010 U.S. Dist. LEXIS 73792, at *43 (E.D. Cal. July 21, 2010).

(4) ERISA Preemption: “‘[A] state law constructive trust cannot be used to contravene the dictates of ERISA.’” Orr v. Orr, No. 12-35560, 2013 U.S. App. LEXIS 20809, at *2 (9th Cir. Oct. 15, 2013).