Title: Certified Fire Prot. v. Precision Constr.

State: nevada

Issuer: Nevada Supreme Court

Document:

428Nev, Advance Opinion SS
IN THE SUPREME COURT OF THE STATE OF NEVADA

CERTIFIED FIRE PROTECTION, INC., No. 54603
|A NEVADA CORPORATION,
‘Appellant,

PRECISION CONSTRUCTION, INC., A
NEVADA CORPORATION; ARTHUR.
WIRTZ FAMILY LIMITED.
PARTNERSHIP, A FOREIGN LIMITED
PARTNERSHIP; AND LIBERTY
MUTUAL INSURANCE COMPANY,
Respondents.

 

  

CERTIFIED FIRE PROTECTION, INC.,
A NEVADA CORPORATION,
Appellant/Cross-Respondent,

No, 55514

vs.
PRECISION CONSTRUCTION, INC., A
NEVADA CORPORATION; ARTHUR
WIRTZ FAMILY LIMITED
PARTNERSHIP, A FOREIGN LIMITED
PARTNERSHIP; AND LIBERTY
MUTUAL INSURANCE COMPANY,
Respondents/Cross-Appellants.

 

Consolidated appeal from a distriet court judgment on partial
findings and an appeal and cross-appeal from a post-judgment order
awarding costs and denying a motion for attorney fees. Eighth Judicial
District Court, Clark County; Michael Villani, Judge.

Affirmed.
McDonald Carano Wilson LLP and David J. Stoft, Anthony D. Guenther,

and Patrick J. Murch, Las Vegas,
for Appellant/Cross-Respondent.

1 AE ley

 
ne

 

Prince & Keating and Dennis M. Prince, Bryce B. Buckwalter, and
Douglas J. Duesman, Las Vegas,
for Respondents/Cross-Appellants.

BEFORE CHERRY, C.J, GIBBONS and PICKERING, JJ.

OPINION
By the Court, PICKERING, J.

‘To recover in quantum meruit, a party must establish legal
liability on either an implied-in-fact contract or unjust enrichment basis,
Because we agree with the district court that appellant/cross-respondent
Certified Fire Protection, Inc, did not provide sufficient evidence to
establish either an implied-in-fact contract or unjust enrichment, we
affirm, Additionally, we affirm on cross-appeal the district court's order
denying attorney fees,

L

Respondent/cross-appellant Precision Construction, Inc., a
general contractor pursuing a contract for a warehouse construction
project in 2005, solicited bids from subcontractors for the design and
installation of an early suppression, fast response sprinkler system.
Certified picked up a set of plans detailing the sprinkler system's
requirements and, in mid-November, submitted a bid of $480,000.

’Respondents/cross-appellants include Arthur Wirtz Family Limited
Partnership (owner of the property) and Liberty Mutual Insurance
Company (surety on mechanic's lien release bond). We will refer to
respondents/cross-appellants, collectively, as Precision

 
Precision notified Certified that it had won the bid, and Precision entered
into a contract with the owner to complete the project.

On December 5, Certified obtained a copy of the subcontract
along with a set of construction plans and sprinkler system specifications.
‘The subcontract's provisions required Certified to complete the
preliminary design drawings of the sprinkler system within two weeks
and to obtain a certificate naming Precision as an additional insured.
Over the next few weeks, Precision asked Certified several times to sign
the subcontract and provide the additional-insured certificate,

Certified objected to the subcontract as imposing terms that
differed from the bid specifications. It complained that the unanticipated
terms changed the scope of work—including the size of pipes to be used,
the placement of the fire riser, and the two-week time frame for producing
drawings—and that it would have to amend its bid accordingly. Certified
also took exception to some of the generic contractual provisions, including
the additional-insured requirement.

On December 20, Precision notified all subcontractors,
including Certified, that construction was under way. Certified hired Ron
Dusky to draft the sprinkler system designs and, sometime in mid-
January 2006, Dusky began drafting the designs. On January 19, with
the subcontract still unsigned, Certified submitted a $33,575 progress bill
to Precision, representing that it had completed seven percent of its work.
But the design drawings apparently were still unfinished (or at least
undelivered) because six days later, Precision wrote Doug Sartain,
Certified’s owner, requesting the sprinkler plans “ASAP” and advising
that Precision would not process the progress payment without a signed
subcontract. The next day, January 26, Precision again contacted Sartain,

 
os

 

asking whether Certified planned to continue with the project and
notifying him that its delay in submitting the plans was delaying the
whole project.

On January 27, Certified reiterated its objections to the
subcontract but assured Precision that it had begun the fire protection
drawings. Certified completed the design work and submitted the
sprinkler system drawings on February 1. Precision and Certified
communicated several more times about getting the subcontract signed,
and, on February 8, Precision learned that the drawings contained errors
that needed correcting. It again asked Certified about the unsigned
subcontract.

On February 16, Precision terminated its relationship with
Certified for refusing to sign the subcontract, for not providing the

ns

 

additional-insured endorsement, and for incorrect designs. At Precis
request, Certified submitted an itemized billing for the work it had
performed; its bill reported costs of $25,185.04, which included design
work and permit fees for the project. Precision deemed the costs too high
and never paid, Certified placed a mechanic's lien on the property and
sued to recover for its design-related work. Certified’s complaint sought to
foreclose the mechanic’s lien and damages for unjust enrichment,
quantum meruit, and breach of contract.

‘The case proceeded to a bench trial, where Certified provided
documentary evidence and the testimony of Certified owner Doug Sartain,
Certified employee Gary Wooldridge, and the deposition testimony of
Dusky, who drew the designs. At the close of Certified’s case-in-chief,
Precision moved for judgment on partial findings pursuant to NRCP 52(0).
The district court granted the motion and expunged the mechanic's lien.

 

 
=

‘The district court found that no contract existed, and that Certified’s claim
for “quantum meruit has not been established based upon the fact that the
design materials could not be utilized by [Precision].” For the same
reason—failure to show that Precision had benofited from the design
drawings—the court concluded that Precision had not been unjustly
enriched. After entry of judgment, Precision moved for attorney feos
under NRS 17.116 and NRS 108,237, which the district court denied,

On appeal, Certified argues that the district court failed to
determine whether a contract for the design-only work existed but

concedes that the parties never reached agreement on the full design and

 

installation contract. Certified also asserts error in the district court's

 

conclusion that Precision was neither unjustly enriched nor liable to
Certified in quantum meruit because Precision did not benefit from the
work performed. On cross-appeal, Precision argues that the distriet court,
abused its discretion in denying Precision’s motion for attorney fees.
TL

NRCP 52(¢) allows the district court in a bench trial to enter
judgment on partial findings against a party when the party has been
fully heard on an issue and judgment cannot be maintained without a
favorable finding on that issue. Although Certified argues otherwise, in
entering a Rule 52(c) judgment, [t]he trial judge is not to draw any special
inferences in the nonmovant's favor"; “since it is a nonjury trial, the court's
task is to weigh the evidence.” 9C Charles Alan Wright & Arthur R
Miller, Federal Practice and Procedure § 2573.1, at 256-60 (3d ed. 2008)
(addressing NRCP 52(0)'s federal cognate, Fed. R. Civ. P. 52(c)); see Robert
E, Jones et al., Rutter Group Practice Guide: Civil Trials and
Evidence § 17:92 (2011) (‘Because the court acts as the factfinder when
ruling on a {motion} for judgment on partial findings, it need not consider

5

 
ne

the evidence in a light favorable to the nonmoving party ...."). “Where a
question of fact has been determined by the trial court, this court will not
reverse unle:
substantial evidence.” Kockos v. Bank of Nevada, 90 Nev. 140, 143, 520
P.2d 1959, 1361 (1974).

 

the judgment is clearly erroneous and not based on

In granting Precision’s motion for judgment on partial

findings, the district court found that “there was no meeting of the minds

 

on the material contractual terms . .. sufficient to form .... [a] contract,”
and that the work Certified did could not be used by Precision and thus
“conveyed no value” to Precision, It concluded “(1) that Certified Fire's
claim of unjust enrichment has not been established based upon the fact
that [Precision] did not unjustly retain any money or property because no
work performed could be utilized by the replacement fire sprinkler
subcontractor; and (2) that Certified Fire's claim for quantum meruit has
not been established based upon the fact that the design materials could
not be utilized by [Precision].”

Certified argues that the district court “erred by focusing on a
contract that Certified Fire is not seeking to enforce.” It asserts that the
court evaluated whether the full contract—for design and installation
work comprising the $480,000 bid—was enforceable, But Certified
conceded in the district court that no such contract existed. Instead,
Certified maintains it had either an express or implied contract for the
design work only, entitling it to damages or recovery in quantum meruit
for the design work alone.

A
We first address Certified’s express contract claim.
“Basic contract principles require, for an enforceable contract,

an offer and acceptance, meeting of the minds, and consideration.” May v.

 
Anderson, 121 Nev. 668, 672, 119 P.3d 1254, 1257 (2005). A meeting of
the minds exists when the parties have agreed upon the contract's
essential terms. Roth v. Scott, 112 Nev. 1078, 1083, 921 P.2d 1262, 1265
(1996). Which terms are essential “depends on the agreement and its

 

context, and_also on the subsequent conduct of the parties, including the
dispute which arises and the remedy sought.” Restatement (Second) of
Contracts § 131 emt. g (1981). “(Whether a contract exists is {a question]
of fact, requiring this court to defer to the district court's findings unless
they are clearly erroneous or not based on substantial evidence.” May, 121
Nev. at 672-73, 119 P.3d at 1257.

Certified argues that the progress bill it sent to Procision
Jestablished the price term and Precision’s urging that Certified get started
Jon the designs established the scope of work for the express design-work-
Jonly contract it claims. But the record does not establish that Precision
fagreed to pay a sum certain for the design-related work. Certified’s
'$33,575 progress bill—which represented seven percent of the whole
/subcontract—went unpaid, and Precision told Certified it would not make
Ja progress payment until the whole subcontract had been executed.
[Beyond this, witness testimony established that a party in Precisio

 

position would not execute a contract for only design drawings; such

°To support its theory that the parties entered into an expre:

 

‘contract, Certified cites to Gulf Oil Corp. v. Clark County, 94 Nev. 116,
575 P.2d 1332 (1978). In that case, we noted that a subcontractor’s
‘written bid is an offer, and accepting that bid constitutes acceptance. Id.
fat 118, 575 P.2d at 1333. ‘This line of reasoning might support
enforcement of the whole subcontract, but Certified concedes that this
‘contract was never formed,

 

 
oo

 

drawings are specifically tailored for the company rendering them and not,
useful to another installer. Thus, Certified’s argument that Precision was
parceling out the work—with Certified doing the designs only—makes no

Not only were price and scope of work terms missing from the
claimed design-work contract, the parties never agreed to a time for
performance, Certified objected to Precision’s proposed two-week timeline

for producing the design drawing

 

“not realistic,” and the parties never
agreed to another time frame. ‘That the time-for-performance term
mattered is demonstrated by Precision’s repeated prompting of Certified to
jigns and Certified’s refusal to bind itself to Preci

 

i's

 

complete the d
desired two-week turnaround. “When essential terms such as these have
yet to be agreed upon by the parties, a contract cannot be formed.” See
Nevada Power Co. v, Public Util. Comm'n, 122 Nev. 821, 839-40, 138 P.3d
486, 498-99 (2006).

And while the district court's judgment on partial findings
does not reference a design-only contract, the record substantially
supports its conclusion that no enforceable contract existed. Luciano v.
Diercks, 97 Nev. 637, 639, 637 P.2d 1219, 1220 (1981) ([T]his court will
imply findings of fact and conclusions of law so long as the record is clear
and will support the judgment.”)

B

Next, Certified argues that absent an express contract, it
should be able to recover under a theory of implied contract, either by
‘quantum meruit or unjust enrichment.

Certified confessedly is confused by quantum meruit and
unjust enrichment, noting that “the distinction between the two theories

in Nevada is unclear.” “One source of confusion is that quantum meruit is

 
    
  
 
 
 
 
 
    
  
    
  
    
  
 
 
  

a cause of action in two fields: restitution and contract.” Candace Saari
Kovacie-Fleischer, Quantum Meruit_and_the Restat
Restitution and Unjust Enrichment, 27 Rev. Litig. 127, 129 (2007);
Restatement (Third) of Restitution and Unjust Enrichment § 31 emt. ¢
(2011) (A pleading in quantum meruit, “[fJrom its 17th-century origins to
the present day, ... has been used to state two quite different claims.”);
Martin v, Campanaro, 156 F.2d 127, 130 n.5 (2d Cir. 1946) (addressing the
ambiguity of a pleading in quantum meruit),

‘one of the common counts—
able
a remedy at law to enforce implied promises or contracts. 1 Joseph M.
Perillo, Corbin on Contracts § 1.18(b), at 53 (rev. ed. 1993); 7 C.J.8. Action
of Assumpsit § 2 (2004). A party who pleaded quantum meruit sought
recovery of the reasonable value, or “as much as he has deserved,” Black's
Law_Dictionary 1361 (9th ed. 2009) (defining quantum meruit), for

services rendered.

Quantum meruit historically w:

 

  

1a subspecies of the writ of indebitatus or general assumpsit—avs

 

 

‘Thus, quantum meruit's first application is in actions based

   

upon contracts implied-in-fact. A contract implied-in-fact must be
“manifested by conduct,” Smith v. Recrion Corp., 91 Nev. 666, 668, 541
P.2d 663, 664 (1975); Hay v. Hay, 100 Nev. 196, 198, 678 P.2d 672, 674
(1984); it
parties.” Perillo, supra, § 1.20, at 64. To find a contract implied-in-fact,

 

is a true contract that arises from the tacit agreement of the

the fact-finder must conclude that the parties intended to contract and
promises were exchanged, the general obligations for which must be
sufficiently clear. It is at that point that a party may invoke quantum
meruit as a gap-filler to supply the absent term. See Kovacic-Fleischer,
supra, at 129-30; 1 Dan B. Dobbs, Dobbs Law of Remedies § 4.2(3) (2d ed.

 
1993) (quantum meruit fills price term when it is appropriate to imply the
parties agreed to @ reasonable price). Where such a contract exists, then,
quantum meruit ensures the laborer receives the reasonable value,
usually market price, for his services. Restatement (Third) of Restitution
and Unjust Enrichment § 31 emt. e (2011); see Sack v. Tomlin, 110 Nev.
204, 208, 871 P.2d 298, 302 (1994) (“The doctrine of quantum meruit
generally applies to an action... involving work and labor performed
which is founded on afn] oral promise [or other circumstances] on the part

of the defendant to pay the plaintiff as much

 

the plaintiff reasonably
deserves for his labor in the absence of an agreed upon amount.”); see also
Paffhausen v. Balano, 708 A.2d 269, 271 (Me. 1998) (discus

meruit as a contract implied-in-fact).

 

jing quantum

Certified maintains that it had an implied contract with
Precision for the design-related work, As discussed above, however,
substantial evidence supports the district court's finding that there was no
contract, express or implied, for the design work standing alone. There
are simply too many gaps to fill in the asserted contract for quantum
meruit to take hold, Precision never agreed to a contract for only design-
related work, the parties never agreed to a price for that work, and they
disputed the time of performance. When Precision selected Certified, it
did so on the basis that Certified would design and install the fire
suppression system, not that it would draft the designs and leave
installation to someone else. The evidence established that design
drawings are installer-specific and so not useful to a replacement

subcontractor. Accordingly, the district court properly denied recovery in

quantum meruit for an implied-in-fact contract.

 

 
Quantum meruit's other role is in providing restitution for
unjust enrichment: “Liability in restitution for the market value of goods
or services is the remedy traditionally known as quantum meruit.”
Restatement (Third) of Restitution and Unjust Enrichment § 49 emt. £
(2011); id. § 31 emt, e (2011) (quantum meruit’s secondary use is as a
pleading in the common law in cases “regarded in modern law as instances
of unjust enrichment rather than contract”); Ewing v. Sargent, 87 Nev. 74,
79-80, 482 P.2d 819, 822-23 (1971) (discussing recovery in quantum
‘meruit to prevent unjust enrichment). “Where unjust enrichment is
found, the law implies a quasi-contract which requires the defendant to
pay to plaintiff the value of the benefit conferred. In other words, the
defendant makes restitution to the plaintiff in quantum meruit.” Lackner
¥. Glosser, 892 A2d 21, 34 (Pa. Super. Ct. 2006) (quoting AmeriPro
Search, Inc, v, Fleming Steel Co,, 787 A.2d 988, 991 (Pa. Super. Ct. 2001).

When a plaintiff seeks “as much as he . . . deserve[s!” based on

 

a theory of restitution (as opposed to implied-in-fact contract), he must
establish each element of unjust enrichment. Black’s Law Dictionary 1361
(9th ed. 2009); see Restatement (Third) of Restitution and Unjust
Enrichment § 49(3Xe) & emt. f (2011) (“{T]he market value of... . services
is the remedy traditionally known as quantum meruit.” (emphasis added));
Doug Rendleman, Quantum Meruit for the Subcontractor: Has Restitution
Jumped _Off Dawson's Dock?, 79 Tex. L. Rev. 2055, 2073 (2001) (“A
defendant's unjust enrichment is the major prerequisite for a plaintiff's
quantum meruit.”), Quantum meruit, then, is “the usual measurement of

enrichment in cases where nonreturnable benefits have been furnished at

the defendant’s request, but where the parties made no enforceable

 

 
com

 

‘agreement as to price.”? Restatement (Third) of Restitution and Unjust
Enrichment § 49 emt. (2011),

‘Unjust enrichment exists when the plaintiff confers a benefit
on the defendant, the defendant appreciates such benefit, and there is
“acceptance and retention by the defendant of such benefit under
circumstances such that it would be inequitable for him to retain the
benefit without payment of the value thereof” Unionamerica Mtg. v.
‘McDonald, 97 Nev. 210, 212, 626 P.2d 1272, 1273 (1981) (quoting Dass v.
Epplen, 424 P.2d 779, 780 (Colo. 1967). ‘Thus—contrary to Certified’s
argument—a pleading of quantum meruit for unjust enrichment does not
discharge the plaintiff's obligation to demonstrate that the defendant
received a benefit from services provided. Restatement (Third) of
Restitution and Unjust Enrichment § 31 emt. e (2011); 1 Dan B. Dobbs,
Dobbs Law of Remedies § 4.2(3) (2d ed. 1998) (plaintiff pursuing quantum
meruit under unjust enrichment theory must show benefit to defendant);
26 Richard A. Lord, Williston on Contracts § 68:1, at 24 (4th ed. 2003)
(quantum meruit to avoid unjust enrichment applies “when a party
confers a benefit with a reasonable expectation of payment”); EPIC v, Salt
Lake County, 167 P.3d 1080, 1086 (Utah 2007) (first element of quantum
meruit is showing a benefit has been conferred).

“The actual value of recovery in such cases is “usually the lesser of
() market value and (ii) a price the defendant has expressed a willingness
to pay.” Restatement (Third) of Restitution and Unjust Enrichment § 31
emt. e (2011). Of course, quantum meruit is not the only measure of
damages available in restitution. See id. § 49 (enunciating measures of
enrichment and circumstances when each applies).

12.

 
“{Blenefit” in the unjust enrichment context can include
“services beneficial to or at the request of the other,” “denotes any form of
advantage,” and is not confined to retention of money or property. See
Restatement of Restitution § 1 emt. b (1937); see also Topaz Mutual Co. v.
Marsh, 108 Nev. 845, 856, 839 P.2d 606, 613 (1992) (citing § 1, emt. b and
noting that postponing foreclosure on a property benefits owner by
providing additional time to negotiate a sale and reducing overall debt).
But while “[rJestitution may strip a wrongdoer of all profits gained in a

transaction with [a] claimant .... principles of unjust enrichment will not

 

support the imposition of a liability that leaves an innocent recipient
worse off... than if the transaction with the claimant had never taken
place.’ Restatement (Third) of Restitution and Unjust Enrichment § 1
emt. d (2011); ef, Heartland Health Systems v. Chamberlin, 871 8.W.2d 8,
11 (Mo. Ct. App. 1993) (quantum meruit available for provision of
‘emergency medical services),

‘That is the state of our law, too. In Thompson v, Herrmann,
91 Nov. 63, 68, 530 P.2d 1183, 1186 (1976), this court concluded that “[t]he
basis of recovery on quantum meruit ... is that a party has received from
another a benefit which is unjust for him to retain without paying for it.”
In that case, the defendant was to build a dam for the plaintiffs but the
defendant's preliminary work failed to meet state regulations and thus
was rendered useless. Id, at 64-67, 530 P.2d at 1183-85, Because the
plaintiffs were required to hire a new laborer to completely rebuild the
dam to code, this court held that the defendant could not recover on his
counterclaim under a theory of quantum meruit because he had provided
no benefit to the plaintiffs, ie., while he began the work the plaintiffs

13

 

on
requested, he ultimately provided no advantage to them. Id,
P.2d at 1186,

it 68, 530

 

Here, the district court found that Precision had not “unjustly
retainfed] any money or property because no work performed could be
utilized by the replacement fire sprinkler subcontractor,” and that
included the sprinkler designs. Every one of Certified's witnesses
admitted as much on cros:

Sartain, testified that Certified installed nothing at the job site and its

 

xamination. Thus, Certified’s owner, Doug

preparatory work could not be utilized by the replacement subcontractor.

 

Gary Wooldridge, Certified’s project manager, confirmed Sartai

 

statements that the design work and permitting performed by Certified
could not be used by their replacement subcontractor (though he did say
the water flow test could have been utilized). Finally, Ron Dusky, the man
who drafted the plans, stated in his deposition (which was read into the
record) that the designs Certified submitted contained mistakes that
would have required one to two weeks to remedy. This was never done.
Certified submitted no evidence of an ascertainable advantage Precision
drew from the work it performed. It was incomplete, incorrect, and late.
‘Therefore, we agree with the district court that Certified cannot recover in
quantum meruit or unjust enrichment.
TL.
‘On cross-appeal, Precision argues that the district court

abused its discretion by failing to award attorney fees based on the
$7,501.00 offer of judgment it made shortly after filing its answer.
Specifically, Precision argues that the court did not adequately address
the factors established by Beattie v. Thomas, 99 Nev. 579, 588-89, 668
P.2d 268, 274 (1983), in assessing motions for attorney fees under NRS

 

 
an 08

 

17.118 and NRCP 68. Precision also faults the district court for not
granting fees pursuant to the mechanic's lien statute, NRS 108.237.

‘The district court did not abuse its discretion. It determined
that the offer of judgment was “unreasonable in amount” and made so
early in litigation that Certified had not yet had a fair opportunity to
sess its claim through discovery. Although Precision argues otherwise,

 

there is no bright-line rule that qualifie

 

an offer of judgment

 

per se
reasonable in amount; instead, the district court is vested with discretion
to consider the adequacy of the offer and the propriety of granting
attorney fees. State Drywall v, Rhodes Design & Dev., 122 Nev. 111, 119
2.18, 127 P.3d 1082, 1088 n.18 (2006). Nor are explicit findings on every
Beattie factor required for the district court to adequately exercise its
discretion. See id; Wynn.v. Smith, 117 Nev. 6, 13, 16 P.9d 424, 428 (2001)
(Although explicit findings with respect to these factors are preferred, the
district court's failure to make explicit findings is not a per se abuse of
diseretion.”).

Likewise, the district court did not abuse its discretion by
denying Precision’s request for attorney fees under the mechanic's lien
statute. See NRS 108.237(3) (If the lien claim is not upheld, the court
may award costs and reasonable attorney's fees to the owner or other
person defending against the lien claim if the court finds that the notice of
lien was pursued by the lien claimant without a reasonable basis in law or
fact.” (emphasis added)); Barney v. Mt. Rose Heating & Air, 124 Nev. 821,
827, 192 P.3d 730, 734 (2008) (district court has discretion pursuant to
NRS 108.237). While the district court did not make an express
reasonable-basis finding, the record fills the gaps, Luciano, 97 Nev. at 639,
637 P.2d at 1220 (this court may imply factual findings so long as they are

15

 
 

clear from the record), and Certified had a reasonable basis, Rodriguez v.

Primadonna Company, 125 Nev. 578, 588-89, 216 P.3d 793, 800-01 (2009)

(party's claim may be reasonable despite losing), to pursue the lien.+
Accordingly, we affirm.

fi a.

Pickering
We concur:
CJ.
Co
Jd
Gibbons

“Cortified does not argue the district court’s award of costs was
improper. Therefore, we affirm that order.