Markham Contracting Co., Inc. v. Cahava Springs Phase I, Inc. (Unjust Enrichment Claim Against Infrastructure-District Landowners)
The Arizona Supreme Court unanimously held that contractor Markham Contracting Co. may pursue an unjust enrichment claim directly against the landowners of a Cave Creek planned community, even though Markham's actual contract ran only to the public improvement district that hired it to build roads and water lines. The district stopped paying Markham mid-project; Markham won a roughly $6.5 million arbitration award against the district but could not fully collect, and sued the landowners who benefited from the completed infrastructure instead.
Why it matters
The ruling forecloses a 'no privity, no liability' defense that landowners in special-district financing structures — common well beyond Arizona for funding roads, utilities, and other infrastructure on planned developments — have used to avoid direct liability when the financing entity itself cannot pay. Developers and owners relying on improvement districts should treat a contractor's uncollectible award against the district as a live risk of direct unjust enrichment exposure to the landowners themselves.
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