Title: D.J. Painting, Inc. v. Baraw Enterprises, Inc.

State: vermont

Issuer: Vermont Supreme Court

Document:

D.J, Painting, Inc. v. Baraw Enterprises, Inc. (99-401); 172 Vt. 239;
776 A.2d 413

[Filed 11-May-2001]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                No. 1999-401

D.J. Painting, Inc.	                         Supreme Court

                                                 On Appeal from
     v.	                                         Lamoille Superior Court

Baraw Enterprises, Inc. and 	                 November Term, 2000
E.F. Wall and Associates, Inc.

Ben W. Joseph, J.

William L. Durrell of Barr & Associates, Stowe, for Plaintiff-Appellant.

J. Scott Cameron of Zalinger Cameron & Lambek, P.C., Montpelier, for 
  Defendants-Appellees.

PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.

       JOHNSON, J.  Plaintiff DJ Painting, Inc. appeals three orders of the
  superior court in favor  of defendants Baraw Enterprises, Inc. (Baraw) and
  E.F. Wall & Associates, Inc (Wall).  On appeal,  plaintiff argues that the
  trial court erred in (1) dismissing plaintiff's motion for a writ of
  attachment to  perfect a mechanic's lien; (2) granting defendants' motion
  for summary judgment on plaintiff's  contract claims; and (3) awarding
  attorneys' fees to defendants.  We affirm the dismissal of plaintiff's 
  motion for a writ of attachment, the granting of defendants' motion for
  summary judgment and the  award of attorneys' fees to defendant Wall.  We
  reverse the award of attorneys' fees to defendant  Baraw because the court
  erred in awarding fees based on plaintiff's bad faith.

 

       In September 1997, defendant Wall entered into a contract to serve as
  a general contractor for  improvements to defendant Baraw's property, the
  Stoweflake Resort, in Stowe, Vermont.  The total  value of the contract was
  approximately $3.2 million.  Wall then engaged plaintiff DJ Painting in a 
  standard subcontract agreement to provide taping, painting and vinyl wall
  covering services for the  project.  At the time it was executed, the
  subcontract anticipated paying plaintiff approximately  $110,500 for
  plaintiff's materials, labor and equipment.  All of plaintiff's work was
  subject to the  approval of the project architect.  Plaintiff did not enter
  into any contract with Baraw.

       Relevant clauses from the standard subcontract are as follows.  First,
  the subcontractor agrees  that all work is "subject to the final approval
  of the Architect/Engineer or other specified  representative of the Owner." 
  If the subcontractor fails to perform the specified work, then with  notice
  and opportunity to cure, the general contractor may "terminate the
  Subcontractor's  employment."  All claims "arising out of, or relating to,
  this Subcontract or the breach thereof shall  be decided by Arbitration."

       As the project progressed, Wall notified plaintiff that its work did
  not meet the standards set  forth in the subcontract.  For instance, a
  letter dated May 7, 1998, from Joseph Bordas, president of  Wall, to
  plaintiff states "the workmanship fails to meet the specified standards." 
  The record contains  evidence that plaintiff was notified several more
  times of this problem and given an opportunity to  cure.   In June 1998,
  Wall terminated plaintiff and directed plaintiff to "remove your tools, 
  equipment and personnel from the Stoweflake site."  Although plaintiff
  submitted requisitions  totaling $112,925, Wall paid plaintiff $72,925 for
  the work performed that was approved by the  project architect. 
  Subsequently, Wall credited Baraw $40,000 towards the total contract price
  owed  by Baraw to Wall.

 

       Plaintiff filed a lien against Baraw's property in October 1998
  pursuant to 9 V.S.A. § 1921,  and simultaneously filed suit against both
  defendants in superior court.  In its five count complaint,  plaintiff
  sought (1) to perfect the lien by attaching Baraw's property pursuant to 9
  V.S.A. § 1924; (2)  to recover for unjust enrichment against Baraw; (3) to
  recover in quantum meruit against Baraw; (4)  to recover for breach of
  contract against Wall; and (5) to recover for wrongful termination against 
  Wall.  In response, Wall posted a bond of $40,000, which was later
  increased to $50,000 at the  court's suggestion to cover any interest or
  costs should full damages be awarded to plaintiff.  In  December 1998,
  because of the bond posted by Wall, the court dismissed plaintiff's motion
  for a writ  of attachment against Baraw's property.  Wall also filed a
  counterclaim against plaintiff alleging  breach of contract.

       In a subsequent order, the court granted defendants summary judgment
  on plaintiff's  remaining claims.  As to the two claims against Wall, the
  court ruled that the subcontract specifically  provides that all claims
  arising out of the agreement shall be submitted to binding arbitration.  As
  to  the two claims against Baraw, the court ruled that it is not equitable
  for plaintiff to assert these  claims against Baraw when plaintiff had a
  contractually agreed upon recourse against Wall.  Two  weeks later, upon
  defendants' petition, the court awarded attorneys' fees to defendants
  pursuant to  V.R.C.P. 54.

       Following the trial court's disposition, plaintiff filed an
  arbitration claim against Wall for the  remaining $40,000 on the contract
  price.  After a one day hearing, the arbitrator awarded plaintiff  $14,700,
  plus $2,500 interest on its claim. Neither party appealed the arbitration
  decision, and Wall  paid plaintiff the full amount of the award.  That
  finalized plaintiff's actions against Wall.

 

       Plaintiff appeals the court's decision regarding the writ of
  attachment, the claims against  Baraw, and the award of attorneys' fees. 
  Plaintiff raises three issue on appeal.  First, plaintiff argues  that
  Wall's bond does not adequately substitute for a writ of attachment to
  perfect the lien. (FN1)   Second, plaintiff contends that summary judgment
  was inappropriate on its quantum meruit and  unjust enrichment claims. 
  According to plaintiff, whether or not plaintiff performed its work 
  adequately is an issue of fact that should have survived summary judgment. 
  Otherwise, Baraw  received a benefit-the painting-for which it paid no
  compensation.  Furthermore, plaintiff argues, it  ought to be able to
  recover for the fair value of the services rendered, regardless of the
  benefit  conferred on Baraw.  Because this value was not determined,
  plaintiff contends summary judgment  was error.  Finally, plaintiff claims
  that the court improperly awarded attorneys' fees to defendants by  relying
  on a bad faith standard.

                             I. Contract Claims

       Plaintiff acknowledges that it has no written contract with Baraw. 
  Therefore, plaintiff relies  on the equitable doctrines of unjust
  enrichment and quantum meruit for recovery.  Because plaintiff  disputes
  that its work was substandard, it claims that Baraw received the benefit of
  $40,000 worth of  services for which it did not have to pay.  At the very
  least, plaintiff contends that it expended 

 

  money on labor and equipment on the job and it should be compensated. 
  Under either of these  theories, plaintiff seeks to impose a quasi-contract
  obligation on Baraw to make plaintiff  whole. (FN2)

       Claims for quasi-contract are based on an implied promise to pay when
  a party receives a  benefit and the retention of the benefit would be
  inequitable.  In re Estate of Elliott, 149 Vt. 248,  252,