Constructive Trust Defined

“A constructive trust is an equitable remedy to prevent unjust enrichment and to enforce restitution, under which one who wrongfully acquires property of another holds it involuntarily as a constructive trustee.” (Haskel Engineering & Supply Co. v. Hartford Acc. & Indem. Co. (1978) 78 Cal.App.3d 371, 375.) “The trust extends to property acquired in exchange for that wrongfully taken.” (Id.)

“A constructive trust is an equitable remedy, not a cause of action in and of itself, which can be imposed against one who wrongfully detains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act.” (See Civ. Code, Secs. 2223 and 2224; see also Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1332; PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 398; Meister v. Mensinger (2014) 230 Cal.App.4th 381, 399.)

Requirements for the Imposition of a Constructive Trust

“A cause of action seeking to impose a constructive trust will generally be allowed so long as it is predicated upon an underlying claim of fraud, breach of fiduciary duty, or other wrongful act entitling the plaintiff to some relief.” (See Ehret v. Ichioka (1967) 247 Cal.App.2d 637, 642; see also Michaelian v. State Comp. Ins. Fund (1996) 50 Cal.App.4th 1093, 1114 stating “[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.) (Id.)

Pleading Requirements:

The required elements are:

1. facts constituting the underlying cause of action, and
2. specific identifiable property to which defendant has title.”.

(Id.)

Constructive Fraud as Underlying Cause Supporting Constructive Trust Remedy

Where Plaintiff asserts that the underlying wrongful act is Defendant’s alleged constructive fraud, however, Plaintiff does not allege sufficient facts to state a claim for constructive fraud: “[c]onstructive fraud is a unique species of fraud applicable only to a fiduciary or confidential relationship... [c]onstructive fraud arises on a breach of duty by one in a confidential or fiduciary relationship to another which induces justifiable reliance by the latter to his prejudice.” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1131, internal citation and quotation marks omitted; Feeney v. Howard (1889) 79 Cal. 525, 529; Peterson Dev. Co. v. Torrey Pines Bank (1991) 233 Cal.App.3d 103, 116 stating “[i]t is essential to the operation of the doctrine of constructive fraud there exists a fiduciary or special relationship”.) Thus, [Where] [t]here are no allegations in the FAC establishing that Plaintiff and Defendant had a fiduciary or confidential relationship... [p]laintiff fails to allege sufficient facts to state a claim for constructive trust and/or constructive fraud.) (Id.)