Source: http://masscases.com/cases/app/75/75massappct322.html
Timestamp: 2019-04-25 22:29:26+00:00

Document:
Contract, Performance and breach, Subcontract. Damages, Quantum meruit, Breach of contract, Restitution. Frauds, Statute of. Restitution.
In a jury-waived civil action in which the plaintiff subcontractor sought damages from a corporate restaurant owner and its president for services the plaintiff provided after the general contractor committed a breach of the subcontract, the evidence was sufficient to support the judge's findings that the defendants benefited from the plaintiff's work sufficiently to hold them jointly and severally liable on the basis of quantum meruit, and that the defendants failed in their burden of showing that they had paid the general contractor for the plaintiff's services [325-328]; further, the evidence warranted the judge's finding that the corporation's president could be held individually liable [328-329]; however, this court reduced the award by the amount of unpaid invoices incurred before the defendants induced the plaintiff to stay on the job after the general contractor's breach .
Brian M. McMahon for the defendants.
John P. Connelly for the plaintiff.
severally liable on the basis of quantum meruit [Note 2] to pay the plaintiff-subcontractor for its services. We affirm with a slight modification.
work on the restaurant, Glynn expected compensation in return for his services. Whether he expected to be paid specifically by Hy-Brasil and Tiernan remains an open question. This Court has concluded that there was no written or oral contract between the plaintiff and defendants in this case, and must use additional evidence to decide this issue. While it is disputed whether any express agreement was made, it is uncontested that the defendant accepted the services of the plaintiff with knowledge that the plaintiff expected to be paid by someone.
"accepted the fruits of Glynn's labor without any showing that they made payments to anyone for these services. All of these inferences surrounding the actions of the parties after Howell stopped paying Glynn favor the plaintiff."
claim is barred by the Statute of Frauds, that, in substance, Tiernan acted as surety for Howell's performance of its obligations to Glynn. As the trial judge pointed out, even on the alleged oral contract claim, the argument is without merit as the "main purpose" exception to the Statute of Frauds would apply here. The "consideration for the promise [was] in fact . . . mainly for [the defendants'] own economic advantage, rather than in order to benefit [Howell]." Barboza v. Liberty Contractors Co., 18 Mass. App. Ct. 971 , 972 (1984), quoting from Restatement (Second) of Contracts § 116 (1979). Moreover, a claim for quantum meruit is not barred by the Statute of Frauds; indeed, often the reason recovery in quantum meruit is allowed is because an oral contract is unenforceable by reason of the Statute of Frauds. [Note 7] See Hastoupis v. Gargas, 9 Mass. App. Ct. 27 , 35 (1980); 10 Williston, Contracts § 27.23, at 228 (Lord 4th ed. 1999).
witnesses." Although the record contains some evidence favoring the defendants, e.g., that Glynn kept sending its invoices to Howell even after Howell ceased to pay, our review of the entire record does not lead us to conclude that the judge's findings are clearly erroneous. [Note 9] To the contrary, they are supported by the evidence and do not leave us "with the definite and firm conviction that a mistake has been committed." J.A. Sullivan Corp. v. Commonwealth, 397 Mass. 789 , 792 (1986), quoting from United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948).
"A quasi contract or a contract implied in law is an obligation created by law 'for reasons of justice, without any expression of assent and sometimes even against a clear expression of dissent . . . . [C]onsiderations of equity and morality play a large part . . . in constructing a quasi-contract . . . .' 1 A. Corbin, Contracts § 19 (1963).[ [Note 10]] It 'is not really a contract, but a legal obligation closely akin to a duty to make restitution.' Bloomgarden v. Coyer, 479 F.2d 201, 210 (D.C. Cir. 1973). 'A person who has been unjustly enriched at the expense of another is required to make restitution to the other.' Restatement of Restitution, § 1 (1937). The underlying basis for awarding quantum meruit damages in a quasi-contract case is unjust enrichment of one party and unjust detriment to the other party."
See Cantell v. Hill Holliday Connors Cosmopulos, Inc., 55 Mass. App. Ct. 550 , 554 n.6 (2002). See also 1 Farnsworth, Contracts § 2.20 (3d ed. 2004), discussing the historical roots of the various terms.
We turn next to one of the leading cases discussing the requirements of a quantum meruit claim. In LaChance v. Rigoli, 325 Mass. 425 (1950) (LaChance), the tenants of a gasoline filling station owned by the defendant Cyr Oil Co. contracted in writing with the plaintiffs, who were builders, for the construction of an addition to the filling station. Id. at 425. The builders sought to recover from the owner as well as from the tenants. Ibid. Although the owner was aware of the negotiations, had provided plans and a hoist, and had agreed to furnish heating equipment in the building, the owner was held not liable because the builders were never given to understand from the owner that it was to be held liable. Id. at 426. The plaintiffs never expected payments from the owner, but relied on the tenants' promise of payment upon obtaining a mortgage loan. Id. at 427. Citing Farquhar v. Brown, 132 Mass. 340 (1882), a case holding a landowner who contracted to have a building erected on his land not liable when the contractor failed to pay the subcontractor, the court in LaChance held that the "contracting party must look for payment to the one to whom credit was extended when the work was done, that is, the one who was expected to pay and who in fact expected to pay or as a reasonable man should have expected to pay. See Restatement: Restitution, § 110." LaChance, supra. See W.W. Britton, Inc. v. S.M. Hill Co., 327 Mass. 335 , 337 (1951); LiDonni, Inc. v. Hart, 355 Mass. 580 , 583 (1969), both indicating that liability rests on the person to whom credit was extended when the work was done.
833-834 (1980) (bank that was both project owner and creditor and had lulled subcontractors into assumption that their creditor positions were protected was required to disgorge payment it had unjustly received as creditor).
The general rule stated in our cases is that "[i]n the absence of a lien perfected under G. L. c. 254, an owner [including a tenant] who enters into a general contract for improvements on real property is not ordinarily liable to subcontractors whose sole contractual arrangements are with the general contractor." Evans v. Multicon Constr. Corp., 30 Mass. App. Ct. 728 , 740 (1991). Brick Constr. Corp. v. CEI Dev. Corp., 46 Mass. App. Ct. 837 , 840 (1999). As previously indicated, see note 8, supra, the defendants, not having brought up the issue of the mechanics' lien at trial, may not now raise it on appeal. Moreover, the judge found, and his finding was supported by the evidence, that the defendants exerted sufficient "motivation" to the plaintiff to hold them liable. The general rule is, therefore, not applicable.
The judge was also warranted in finding that the defendants failed in their burden of showing that they had paid Howell for Glynn's services. See Merrill v. Kirkland Constr. Co., 365 Mass. 110 , 114 (1974) (in action by carrier against contractor, if overpayment by contractor to bankrupt subcontractor was material to carrier's rights, contractor failed to make such showing). See also Restatement (Third) of Restitution & Unjust Enrichment § 29 comment b (Tentative Draft No. 3, 2004) (Tentative Draft), indicating that payment by the owner to the contractor is a defense to the subcontractor's action against the owner.
3. Tiernan claims he cannot be held individually liable. The evidence, however, including the relationship of the parties, [Note 11] warranted the judge's finding of liability on the part of Tiernan as well as the corporation.
was expected to pay and who in fact expected to pay or as a reasonable man should have expected to pay.' LaChance v. Rigoli, 325 Mass. 425 , 427. Although the bills had not been sent to the individual defendants . . . the payments by the corporations did not necessarily isolate the individual defendant from liability. . . . The findings concerning the individual defendant['s] conduct toward the plaintiff tend to show that [he was] not acting as mere agent of the corporation."
LiDonni, Inc. v. Hart, 355 Mass. at 583. In sum, we consider the judge correct in concluding that the plaintiff expected the defendants to pay and that the defendants reasonably should have expected to pay for the plaintiff's work. However, our cases only permit recovery from those to whom credit was extended when the work was done. Since the trial judge found that Glynn had already incurred $5,000 of unpaid invoices before being induced to stay on the job by the defendants, the award of damages must be reduced by that figure. As so reduced, the judgment is affirmed.
As modified herein, the judgment is affirmed.
[Note 2] In its complaint, the plaintiff also claimed breach of contract, unjust enrichment, and unfair and deceptive trade practices. The judge found for the defendants on those claims.
[Note 3] We use "Glynn" to refer both to the plaintiff and to Michael Glynn individually.
[Note 4] A separate contract was entered into between Howell and the owner of the building for certain renovations. Glynn's contract with Howell covered both the work for the owner and for Hy-Brasil.
[Note 5] A memorandum offered at trial by Hy-Brasil and Tiernan indicates that Howell went into bankruptcy.
[Note 6] The amount of the plaintiff's unpaid invoices submitted to Howell for work it performed on the restaurant portion of the property was $42,350.
[Note 7] Contrast G. L. c. 259, § 7, inserted by St. 1984, c. 321, governing agreements to pay compensation for services of a broker or finder, which explicitly states, "The provisions of this section shall apply to a contract implied in fact or in law to pay reasonable compensation . . . ."
[Note 8] The mechanics' lien argument does not appear to have been raised at trial. We note that Restatement (Third) of Restitution & Unjust Enrichment § 29 comment d (Tentative Draft No. 3, 2004) (Tentative Draft) points out that the potential for unjust enrichment explains, in part at least, the widespread availability of mechanics' liens. According to comment d, a majority of courts do not bar recovery because of a failure to file a lien. Most significant for purposes of this decision is that this was not the ordinary situation, but rather one in which the defendants "motivated" -- that is, induced -- the plaintiff to continue its work.
[Note 9] Submission by the subcontractor of invoices to the general contractor is not dispositive. Maynard v. Fabyan, 267 Mass. 312 , 316 (1929). W.W. Britton Inc. v. S.M. Hill Co., 327 Mass. 335 , 336 (1951).
[Note 10] Section 1.20 of the 1993 edition of Corbin is to the same effect. 1 Corbin, Contracts § 1.20, at 66 (rev. ed. 1993).
[Note 11] The parties knew each other for over thirty years, and Tiernan was instrumental in the hiring of Glynn.
"(c) liability in restitution will not subject the recipient to a forced exchange.
"(2) Restitution as authorized by subsection (1) may be qualified or withheld if recovery would conflict with a system of priorities, established by other law, ordering claims against the third person, the recipient, or the assets of either."
[Note 13] The following cases, among others, allow unpaid furnishers of labor and materials to recover from property owners not in privity of contract with them: Flooring Sys., Inc. v. Radisson Group, Inc., 160 Ariz. 224, 227 (1989); Ayotte Bros. Constr. Co. v. Finney, 42 Conn. App. 578, 581-582 (1996) (subcontractor with invalid lien entitled to quasi contractual recovery); Zalay v. Ace Cabinets of Clearwater, Inc., 700 So. 2d 15, 18 (Fla. Dist. Ct. App. 1997) (subcontractor with invalid lien entitled to quasi contractual recovery); Idaho Lumber, Inc. v. Buck, 109 Idaho 737, 743, 747 (Ct. App. 1985) (contractor with unenforceable lien entitled to quasi contractual recovery); Ontiveros Insulation Co. v. Sanchez, 129 N.M. 200, 202, 206 (Ct. App. 2000) (subcontractors with unenforceable liens entitled to quasi contractual recovery); Paschall's, Inc. v. Dozier, 219 Tenn. 45, 50, 57 (1966) (furnisher of labor and materials with invalid lien entitled to quasi contractual recovery). See Tentative Draft § 29 Reporter's Note at 63. Compare id. at 61, where recovery is denied when owner has already paid price fixed in contract to another party. See generally Annot., Building and Construction Contracts: Rights of Subcontractor Who Has Dealt Only with Primary Contractor to Recover against Property Owner in Quasi Contract, 62 A.L.R.3d 288, 295-297 (1975 & Supp. 2009).

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