Opinion ID: 793749
Heading Depth: 2
Heading Rank: 2

Heading: The Town's Challenges to the Award of Contract Damages

Text: 76 With respect to the Corps's claim for unjust enrichment, the district court found that the Corps was entitled to its pro rata share of the contract payment for 2004, i.e., the 41 days in 2004 preceding and including February 10, the date of the Town's Termination Letter. District Court April 20 Opinion at 13. In addition, the court found that although the Town had an absolute right to terminate its relationship with the Corps at any time, with or without cause (a finding not challenged on appeal by the Corps), the Corps at the very least was entitled to the customary two weeks' notice of termination of the relationship. Id. For the total 55 days, equaling 15 percent of a year, the court awarded the Corps 15 percent of the $221,000 contract price for 2004, or $33,150.00, see id., as liquidated contract damages, Judgment at 2. 77 The Town contends that the district court erred in holding it liable for breach of contract without any findings of whether the alleged breaches of contract by the Ambulance Corps as set forth in Mr. Meyers' letter of February 10, 2004 were valid. (Town brief on appeal at 19.) The Town also argues that the district court improperly ruled that a two-weeks reasonable-notice term was included in the unwritten contract. ( Id. ) We agree that the present record does not support these rulings. 78 Several principles of New York law may have applicability here. When a party has breached a contract, that breach may excuse the nonbreaching party from further performance if the breach is material. See generally Callanan v. Powers, 199 N.Y. 268, 284, 92 N.E. 747, 752 (1910) ([Rescission] is not permitted for a slight, casual, or technical breach, but, as a general rule, only for such as are material and willful, or, if not willful, so substantial and fundamental as to strongly tend to defeat the object of the parties in making the contract.); Frank Felix Associates, Ltd. v. Austin Drugs, Inc., 111 F.3d 284, 289 (2d Cir.1997). For a breach to be material, it must go to the root of the agreement between the parties. Septembertide Publishing, B.V. v. Stein & Day, Inc., 884 F.2d 675, 678 (2d Cir.1989); see, e.g., 23 Williston on Contracts § 63:3, at 438-39 (4th ed. 2002) ([F]or a breach of contract to be material, it must go to the root or essence of the agreement between the parties, or be one which touches the fundamental purpose of the contract and defeats the object of the parties in entering into the contract. (internal quotation marks and footnotes omitted)). 79 If a breach is only partial, it may entitle the non-breaching party to damages for the breach, but it does not entitle him simply to treat the contract as at an end. See, e.g., Lovink v. Guilford Mills, Inc., 878 F.2d 584, 586 (2d Cir.1989). The distinction between partial and total breach is particularly important in executory contracts, where the parties are only part-way through a contracted-for period of time. Id. A partial breach by one party ... does not justify the other party's subsequent failure to perform; both parties may be guilty of breaches, each having a right to damages. 4 Corbin on Contracts § 946, at 811 (1951); see, e.g., 23 Williston on Contracts § 63:4, at 444 ([A] slight breach will not end the other party's further duty to perform the contract.). 80 Finally, where a valid agreement exists between the parties, an action in quantum meruit to prevent unjust enrichment ordinarily is not available. See, e.g., Clark-Fitzpatrick, Inc. v. Long Island Rail Road Co., 70 N.Y.2d 382, 388, 521 N.Y.S.2d 653, 656, 516 N.E.2d 190 (1987) (The existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter.). However, a plaintiff whose breach was not willful and deliberate may, in some instances, recover so much as his efforts have actually benefited the non-breaching party. Amtorg Trading Corp. v. Miehle Printing Press & Manufacturing Co., 206 F.2d 103, 105-07 (2d Cir.1953) (citing 5A Corbin on Contracts § 1122); see also Restatement (Second) of Contracts § 374(1) (1981) ([T]he party in breach is entitled to restitution for any benefit that he has conferred by way of part performance or reliance in excess of the loss that he has caused by his own breach.). In the event that the breaching party is entitled to recover on such an unjust enrichment theory, the amount to which he is entitled is measured not by the contract price but rather by the reasonable value of services rendered. Longo v. Shore & Reich, Ltd., 25 F.3d 94, 97 (2d Cir.1994) (internal quotation marks omitted). 81 In the present case, the Town stated that it was terminating the relationship because 82 [t]he safety and health of this municipality are jeopardized by certain aspects of NWVAC's inability or failure to perform requisite emergency services. 83 .... 84 In that regard the Town has become aware of the NWVAC failure to meet Advanced Life Support certification and Vehicle and Traffic licensing requirements; failure to control use of emergency vehicles; and failure to field a crew or crews at all times. 85 (Town Termination Letter.) If the Town's criticisms were valid, it may well be that the Corps was in material breach of its contract with the Town. There were, however, no findings by the district court as to whether in fact the Corps had failed to perform as alleged in the Town Termination Letter. As described in greater detail in Part II.C. below, although the court consolidated the March 4 and 18 hearings to deal with both the Corps's motion for a preliminary injunction and its claims on their merits, the ultimate question that was litigated was only whether this Court should order the Town to deliver all or some of these things to the plaintiff. (Hearing Transcript, March 4, 2004 (March 4 Tr.), at 28.) And although an award such as this in a judgment might ordinarily give rise to an inference that the court had at least implicitly found that the plaintiff was not in breach, the record precludes such an inference here. At the first of the hearings, the court stated: 86 I understand the issue to be that there are important items, including vehicles, which are locked up, which the Town asserts that it has the right to control, and which the plaintiff asserts that it owns and has the right to use, and wishes to use, as I understand it, to render similar services from a different location. 87 .... 88 Now, unless I misunderstand the case, I'm not concerned with whether that decision is a wise one or a justified one. 89 ( Id. (emphases added).) Nothing in the record suggests that the court deviated from that view. Indeed, the court reaffirmed that view in its postjudgment order, stating that although Meyers had characterized the Corps's services as inadequate or unsatisfactory, it [had] not [been] necessary for the court to ascertain whether [Meyers'] judgment in the matter, or that of the Town board, was valid or invalid. The only issue was the improper sequestration and deprivation of the machinery and equipment .... June 8 Order at 2. Consistent with the court's view, the parties had presented evidence at the hearings only with respect to the ownership of the vehicles claimed by the Corps and withheld by the Town. No evidence whatever was presented by either side as to the adequacy or quality of the Corps's performance. And in its April 20 findings of fact, the district court made no finding as to whether the Town's criticisms of the Corps's performance were justified. 90 Nor did the court make any finding that the parties had agreed that the Town must give two weeks' notice of any termination of the relationship. And although it referred to a customary two weeks' notice provision, the court neither made any finding —nor received any evidence—that a requirement for such notice is the prevailing custom in the context of contracts for emergency medical services where a municipality contends, as the Town did in its termination letter here, that a provider's inadequate performance of the requisite emergency services jeopardizes the public's safety and health. 91 In light of the Town's accusations and the above legal principles, any appropriate resolution of the Corps's contract or unjust enrichment claim required findings as to several facts, including whether the Corps breached its contract with the Town; whether the Town had a contractual or customary obligation to give the Corps notice before terminating its relationship with the Corps; if both of those questions are answered in the affirmative, whether the breach by the Corps was material, thereby excusing the Town from giving notice before termination; if the Corps breached, whether its breach was willful and deliberate; if its breach was not willful and deliberate, whether, as a matter of equity, the Corps should receive compensation for the benefit that its services conferred on the Town prior to termination; and if there should be such a quantum meruit award, what is the reasonable value of the services rendered. 92 Without findings on these material factual issues, any award to the Corps on its contract or unjust enrichment claim was at best premature. Accordingly, we vacate so much of the Judgment as awarded the Corps a percentage of the agreed contract price for its past services and awarded it compensation in lieu of notice, and we remand for appropriate proceedings leading to a resolution of these issues. In so doing, we note that the Corps in its complaint demanded a jury trial, and that the district court, in consolidating the preliminary injunction hearing with a hearing on the merits, stated that the consolidation was without prejudice to anybody's right to a jury trial as to money issues, money damage issues. (March 18 Tr. at 80.)