Recent Eighth Circuit Decision: Equitable Claims are Generally not Permitted When the Parties have a Valid Contract

November 18, 2013. A recent Eighth Circuit Court of Appeals decision provides a good reminder that equitable claims, such as causes of action for unjust enrichment and promissory estoppel, are generally not permitted when the parties had entered into a valid contractual relationship. In the case, Watkins Inc. v. Chilkoot Distributing, Inc., 719 F.3d 987 (applying Minnesota law), a product manufacturer filed a lawsuit seeking a declaratory judgment that it did not breach its contract with the defendant, Chilkoot Distributing. The lower federal court dismissed Chilkoot’s equitable counterclaims for promissory estoppel, unjust enrichment, and quantum meruit since the parties had a valid contract. On appeal, the Eighth Circuit affirmed. In doing so, the Court of Appeals found that, regardless of which of the two potential contracts was actually implicated by the lawsuit, the parties had a valid contract which governed their dispute. As a result, the equitable counterclaims were properly dismissed. A copy of the decision, which is consistent with several decisions issued by Iowa federal courts, can be found here.

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