Constructive Trust

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.”

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