Third Time's the Charm : The Coming Impact of the Restatement (Third) Restitution and Unjust Enrichment in Bankruptcy

When not thinking of equity as tool of interpretation or mitigation, most lawyers, judges, and academics identify equity with remedies; the tail wagged by the dog of substantive law. Equity as a subset of remedies dominates the contemporary conceptual landscape. But this was not always so. Equity was once understood as a substantial and substantive body of law.If equity once boasted a meaningful content, what was it? The answer is found in the title of the Restatement (Third) of Restitution and Unjust Enrichment (R3RUE). Unjust enrichment long provided the conceptual core of this body of law. As the converse of tort law, which identifies unjustified harms to another, unjust enrichment recognizes unjustified benefits to another, at least to the extent they come at the claimant's expense. But here is another problem: how can a concept as contentious as “unjust” enrichment provide a workable basis of law? With a deft recasting of concepts from unjust to “unjustified,” the R3RUE articulates a standard that should prove more workable in the contemporary legal climate.Notwithstanding the merger of law and equity, and in spite of the long-standing failure of law schools to teach the law of equity, in the mid-1990's the American Law Institute appointed Andrew Kull as the reporter for the R3RUE. With seven drafts completed and final approval received at the 2010 meeting of the American Law Institute, we can expect to see the R3RUE begin to affect the legal landscape in the near future. It is that impending impact in bankruptcy that constitutes the burden of my article.Part I summarizes the substantive law of equity as expressed in the R3RUE. The R3RUE contends that it is the law of equity - rather than ungrounded judicial discretion - that characterizes the concept of unjust enrichment. Part II focuses on the remedial aspects of the R3RUE to the extent that they articulate the so-called proprietary remedies for unjust enrichment. Part III in turn examines how courts operating under bankruptcy law have applied these remedies and how the R3RUE might change their application in the future