Bernstein v. Nemeyer

Mr. Nemeyer & Cheshire Management Company & others formed the CMC Southwest Limited Partnership to buy 2 apartment complexes in Houston, Texas. The apartment complexes were mortgaged & the risk of foreclosure were high.

The general partners of Nemeyer agreed to provide a negative cash-flow guarantee because of the depressed Houston real estate market at the time.

Losses mounted for Memeyer's real estate business. The apartment complexes were foreclosed upon, & the venture, ultimately, failed.

In the Connecticut Superior Court, the class B limited partners of the venture sued the general partners.

• Bernstein (plaintiff) = limited partner who got into a partnership with Nemeyer (defendant).
• Nemeyer = general partner

The general partners won in the trial court. The trial court determine that the losses of the limited partners were due to market forces, not a breach.

To recover restitution, must the non-breaching party show that the breaching party was unjustly enriched due to the breach?

The limited partners hadn't proven their entitlement to restitution.

The general partners hadn't been unjustly enriched. The general partners themselves lost $3 million in this real estate venture.

Yes. Restitution damages require the non-breaching party to show that the breaching party was unjustly enriched due to the breach.

Affirmed.

Expectation damages seek to put the non-breaching party in the same position as if the contract had been performed.