Title: Bowles v. Sunrise Home Center, Inc.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Bowles v. Sunrise Home Center, Inc.1993 WY 27847 P.2d 1002Case Number: 92-124Decided: 03/01/1993Supreme Court of Wyoming

 

James E. BOWLES, Jr., 
individually, and, James E. Bowles, Jr., and Company, a 
Partnership,

Appellants 
(Defendants),

v.

SUNRISE HOME CENTER, 
INC., a Wyoming 
corporation,

Appellee 
(Plaintiff).

Appeal from District 
Court, Teton 
County, D. Terry Rogers, 
J.

Curt A. Haws of 
Mullikin, Larson & Swift, Jackson, for appellants.

C. David Clauss, 
Jackson, for appellee.

Before MACY, C.J., and 
THOMAS, CARDINE, URBIGKIT* and GOLDEN, 
JJ.

* Retired January 1, 
1993.

GOLDEN, Justice.

[¶1]      The owner of a 
newly constructed office building, Dr. James Bowles (Bowles), appeals a judgment 
in favor of a materials supplier, Sunrise Hardware Inc. 
(Sunrise), based on unjust 
enrichment. We affirm in part and reverse in part.

[¶2]      Bowles presents 
two issues:

I. Whether the District 
Court erred in finding that Appellants have been unjustly enriched where the 
undisputed testimony and the District Court's findings establish that Appellants 
have already paid more than the amount they had contracted to pay for 
construction of an office building?

II. Whether the District 
Court erred in assessing prejudgment interest at the annual rate of twenty-one 
percent (21%) where that percentage rate is based on a contract to which the 
appellants were not a party?

BACKGROUND

[¶3]      Bowles entered 
into a written contract for the construction of a pre-fabricated office building 
with a general contractor, Homestead Properties 
(Homestead), on June 19, 
1990. Bowles signed the 
contract on behalf of a partnership, Bowles and Co., consisting of Bowles and 
his wife as partners. At the time, Bowles and Co. had title to the property 
where the building was to be constructed (hereinafter "Bowles" includes both 
Bowles and Bowles and Co.).

[¶4]      The total 
purchase price agreed to was $228,577.48, which was to be paid in increments. 
Bowles made an initial down payment of $22,000 to Homestead when the contract 
was signed and a second payment of $164,896.48 to the pre-fabrication company in 
late November, 1990, after delivery of the pre-fabricated building.

[¶5]      In November, 
1990, Homestead opened a standard "job 
account" with Sunrise, a supplier of 
construction materials.1 Homestead opened this job account 
specifically to supply the Bowles office building project. During the period of 
construction of the building, a total of $9,262.15 was charged by 
Homestead, Bowles and a second 
contractor, Matt Thompson Construction (Thompson).

[¶6]      Bowles made a 
third payment on December 13, 1990, for $16,250 directly to Homestead, which 
like the previous payments was made with checks issued by the banking 
institution where Bowles had obtained financing. Sometime in January of 1991, 
Bowles became concerned about the pace of Homestead's progress. Due to his 
concern, Bowles enlisted a second contractor, Thompson, in order to expedite the 
project. For a brief period, Homestead and Thompson worked 
together without serious conflict; however, this amicable relationship rapidly 
deteriorated. Finally, Homestead simply quit working on 
the project, sometime in the spring of 1991, before completion. In addition to 
the amounts paid to Homestead, Bowles paid $23,000 to 
Thompson to complete projects required by the contract but which were not 
finished by Homestead.

[¶7]      In May, 1991, 
Homestead submitted a final bill 
to Bowles, which would have completed the contract payments. Bowles did not pay 
Homestead the final amount and 
subsequently Homestead failed to pay 
Sunrise the outstanding balance 
on the Bowles job account. The office building was completed by Thompson. 

[¶8]      In the summer of 
1991, Sunrise filed suit against 
Homestead, Bowles, and Thompson 
under two separate theories. First, Sunrise sought to foreclose on a 
mechanic's lien filed against the property where Bowles' building was situated. 
Second, Sunrise sought recovery of the 
outstanding balance on the job account based on unjust enrichment. Bowles and 
Thompson answered and filed cross-claims against 
Homestead.

[¶9]      The district 
court granted Bowles' and Thompson's motion for partial summary judgment 
dismissing the mechanic's lien action because Sunrise failed to follow the 
strict statutory requirements of Wyoming's mechanic's lien laws. 
The day before trial, Homestead filed for bankruptcy, 
therefore requiring a stay of all actions against 
Homestead. On May 1, 
1992, a trial was conducted 
on the issue of unjust enrichment between Sunrise and Bowles and Thompson. 
On May 12, 
1992, the district court 
entered judgment in favor of Sunrise based upon unjust 
enrichment in the sum of $9,262.15 plus twenty-one percent interest per annum 
beginning April of 1991. This judgment was entered solely against Bowles because 
the court found that Thompson had been acting as Bowles' agent. It is from this 
judgment which Bowles now appeals.

DISCUSSION

Unjust 
Enrichment

[¶10]   In reviewing the district court's 
decision finding unjust enrichment and awarding damages thereon, we "accept the 
evidence of the prevailing party as true and disregard the evidence of the 
unsuccessful party." Zitterkopf v. Bradbury, 783 P.2d 1142, 1144 
(Wyo. 1989); see also, 
Pancratz Company, Inc. v. Kloefkorn-Ballard Constr./Dev., 720 P.2d 906, 908-09 
(Wyo. 1986). We presume the 
district court's findings to be correct and uphold those findings unless they 
are, "inconsistent with the evidence, clearly erroneous or contrary to the great 
weight of the evidence." Pancratz, 720 P.2d  at 909.

[¶11]   Unjust enrichment (or quantum 
meruit) is an equitable remedy which implies a contract so that one party may 
recover damages from another. Zitterkopf, 783 P.2d  at 1144; see also Landeis v. 
Nelson, 808 P.2d 216, 218 (Wyo. 1991). One seeking 
damages based on unjust enrichment must prove four elements:

(1) Valuable services 
were rendered, or materials furnished,

(2) to the party to be 
charged,

(3) which services or 
materials were accepted, used and enjoyed by the party, and,

(4) under such 
circumstances which reasonably notified the party to be charged that the 
plaintiff, in rendering such services or furnishing such materials, expected to 
be paid by the party to be charged. Without such payment, the party would be 
unjustly enriched.

Zitterkopf, 783 P.2d  at 1144 (quoting Johnson v. Anderson, 768 P.2d 18, 25 
(Wyo. 1989)). In addition, we 
recognize that an action for unjust enrichment will not lie where it would 
frustrate law or public policy, either directly or indirectly. R.O. Corp. v. 
John H. Bell Iron Mountain Ranch Co., 781 P.2d 910, 913 
(Wyo. 1989).

[¶12]   Bowles asserts that permitting 
Sunrise to recover based on a 
theory of unjust enrichment would violate the public policy behind our 
mechanic's lien statutes. Thus, we must determine the availability of an unjust 
enrichment remedy to suppliers of building materials in light of our mechanic's 
lien scheme. Wyo. Stat. § 29-1-308 (1981) (Remedies not Exclusive) expressly 
provides that the lien remedies created within Title 29 are not exclusive; 
therefore, a materialman is free to pursue an action under unjust enrichment. 
However, those seeking recovery based on unjust enrichment must prove each 
required element of the theory.

[¶13]   The facts of this case clearly 
establish that valuable materials were furnished to and accepted by Bowles for 
use in the construction of Bowles' new office building. The more difficult 
question is, whether the evidence demonstrates that 
Sunrise furnished these 
materials under such circumstances as to reasonably notify Bowles that 
Sunrise expected to be paid by 
them. 

[¶14]   Before we can answer this question 
it is necessary to explain, more explicitly, the circumstances involving the 
disputed job account with Sunrise. The Bowles job account 
was opened solely by Homestead and the account 
application was signed only by Peter Edington, Homestead's job foreman. Bowles' 
name was included on the account to identify the job but was placed there by 
Homestead. According to the 
president of Homestead, the only persons 
authorized to use the job account were several of his employees, but not Bowles 
or Thompson. The terms of the job account included a twenty-one percent finance 
charge on late payments. The total charges made on the job account were 
$9,262.15.

[¶15]   After Thompson was hired by Bowles, 
Thompson made numerous purchases from Sunrise, using the job account 
opened by Homestead, for material for the 
office building. Thompson's charges totaled $3,629.05. In addition, Bowles 
himself charged $62.25 for materials on the job account at 
Sunrise.

[¶16]   Because Homestead: (1) alone opened 
the account, (2) was the sole signatory on the account application, (3) was the 
only entity billed by Sunrise on the account, and (4) was bound contractually to 
supply material and construct Bowles' office building, we find that Bowles and 
Thompson were not reasonably notified that Sunrise expected to be paid by them 
on this account. However, we limit this finding to the amounts specifically 
charged by Homestead and its employees 
because when Bowles and Thompson charged supplies themselves they had reasonable 
notice that Sunrise expected to be paid for 
those charges.

[¶17]   In other words, we hold that no 
action for unjust enrichment lies against Bowles for the $5,570.85 of materials 
charged solely by Homestead. However, we also hold 
that Bowles was unjustly enriched by the amount which he and Thompson charged on 
the job account because their actions created reasonable notice that they were 
expected to pay. Therefore, the district court's judgment based upon unjust 
enrichment is reduced to $3,691.30.

[¶18]   In a fairly recent case with 
remarkably similar facts, the Vermont Supreme Court denied recovery under a 
theory of unjust enrichment. Morrisville Lumber Co. v. Okcuoglu, 148 
Vt. 180, 531 A.2d 887 
(1987). The Okcuoglus had contracted with a builder to construct a vacation 
home. The builder opened two accounts, a general account and a job account, with 
a materials supplier (Morrisville) and then purchased supplies for the Okcuoglu 
project. Problems arose between the Okcuoglus and the builder which resulted in 
termination of the builder before the home was complete. Okcuoglu paid the 
builder only two-thirds of the contract price but was forced to expend 
additional funds, beyond the contract price, to have the home completed. Unable 
to collect on the accounts from the builder, Morrisville sued the Okcuoglus 
based on unjust enrichment. Morrisville, 531 A.2d  at 888. The Vermont Supreme 
Court declined to permit damages based upon unjust enrichment because the 
Okcuoglus paid for all the benefits it received; therefore, they were not 
unjustly enriched. Morrisville, 531 A.2d  at 889.

Prejudgment 
Interest

[¶19]   As we noted previously, the 
district court ordered Bowles to pay prejudgment interest at a rate of 
twenty-one percent per year on the full amount of judgment, beginning in April, 
1991. The district court based this assessment, presumably, on the rate agreed 
to when Homestead opened the Bowles job 
account at Sunrise, although it is not 
clear how the court settled upon the April date.

[¶20]   This court has applied a two-part 
test to be used in determining whether prejudgment interest is recoverable under 
the doctrine of unjust enrichment. State v. BHP Petroleum Co., 804 P.2d 671, 673 
(Wyo. 1991). That test is 
described as follows:

First, * * * "interest is 
recoverable on a liquidated but not on unliquidated claims and that a claim is 
considered liquidated when it is readily computable by simple mathematical 
computations." * * * Second, * * * the "debtor must receive notice of the amount 
due before interest starts to run."

BHP Petroleum, 
804 P.2d  at 673. It is undisputed that Sunrise's claim against Bowles 
is liquidated because the amount is readily computable from the invoices. When 
Bowles received notice of the amount due, however, is unclear and in 
dispute.

[¶21]   In Horseshoe Estates v. 2M Co., 713 P.2d 776 (Wyo. 1986), this court 
affirmed an order for prejudgment interest on damages awarded under a theory of 
unjust enrichment. The prejudgment interest was affirmed based on the knowledge 
which the appellant, Horseshoe Estates (Horseshoe), had concerning the claim. 2M 
Co. (2M) had contracted with Richard Shanor (Shanor) and Big Horn Country Club 
(Big Horn) to supply sprinkler materials for a golf course. 713 P.2d  at 778. 
Although Shanor and Big Horn claimed to own the golf course, Horseshoe - a 
partnership which included Shanor as a partner - was the actual owner of the 
golf course. Id.

[¶22]   Shanor inspected and supervised 
progress at the golf course by 2M. Apparently after being refused payment for 
its contracted services, 2M successfully foreclosed a mechanic's lien against 
Big Horn, Shanor, and Horseshoe. Horseshoe appealed, challenging the order 
against it, which was based on unjust enrichment. Based on Shanor's relationship 
to 2M through the contract and to Horseshoe as a partner, Shanor's 
misrepresentation as the golf course owner, and because Shanor oversaw the 
sprinkler development on the golf course, this court found that Horseshoe had 
sufficient notice to grant prejudgment interest on the unjust enrichment 
judgment awarded to 2M. Horseshoe Estates, 730 P.2d  at 782.

[¶23]   We cannot say that Bowles was 
informed of what to pay, and, therefore, had notice of the amount due on 
Sunrise's claim in April, 1991. 
Since the account was opened by Homestead and the purchases were 
then billed to Homestead, Bowles had no notice of 
the amount of debt in the account. Bowles did receive notice of 
Sunrise's claim when 
Sunrise sent notice of its 
intent to file a lien on May 22, 
1991. However, that notice 
simply informed Bowles that the amount claimed was due from 
Homestead on an account opened by 
Homestead to supply the Bowles 
office project. Unlike in Horseshoe Estates, Bowles was not a party to the 
supply contract and did not closely oversee the project's process and, thus, had 
little reason to suspect he might be responsible for the interest on that debt. 
Therefore, we strike that part of the district court's order which granted 
Sunrise prejudgment 
interest.

[¶24]   Affirmed in part and reversed in 
part.

Footnotes

1 Apparently, 
Homestead also had a "general 
account" with Sunrise.