Opinion ID: 1933287
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Heading Rank: 1

Heading: Whether an Express Contract Bars a Claim for Unjust Enrichment

Text: In reviewing a grant of a summary judgment, we are concerned with (1) whether a dispute of material fact exists and (2) if not, whether the movant is entitled to judgment as a matter of law. Hartford Ins. Co. v. Manor Inn of Bethesda, Inc., 335 Md. 135, 144, 642 A.2d 219, 224 (1994); Gross v. Sussex, Inc., 332 Md. 247, 255, 630 A.2d 1156, 1160 (1993); Beatty v. Trailmaster Prods., Inc., 330 Md. 726, 737, 625 A.2d 1005, 1011 (1993); Arnold Developer, Inc. v. Collins, 318 Md. 259, 262, 567 A.2d 949, 951 (1990); Bachmann v. Glazer & Glazer, Inc., 316 Md. 405, 408, 559 A.2d 365, 366 (1989); King v. Bankerd, 303 Md. 98, 110-11, 492 A.2d 608, 614 (1985). A material fact is a fact the resolution of which will somehow affect the outcome of the case. King, 303 Md. at 111, 492 A.2d at 614 (citing Lynx, Inc. v. Ordnance Prods., Inc., 273 Md. 1, 7-8, 327 A.2d 502, 509 (1974)). [A] dispute as to facts relating to grounds upon which the decision is not rested is not a dispute with respect to a material fact and such dispute does not prevent the entry of summary judgment. Salisbury Beauty Schs. v. State Bd. of Cosmetologists, 268 Md. 32, 40, 300 A.2d 367, 374 (1973). This Court also has stated that [t]he standard of review for a grant of summary judgment is whether the trial court was legally correct. Goodwich v. Sinai Hosp. of Baltimore, Inc., 343 Md. 185, 204, 680 A.2d 1067, 1076 (1996); see also Murphy v. Merzbacher, 346 Md. 525, 530-31, 697 A.2d 861, 864 (1997); Hartford Ins. Co., 335 Md. at 144, 642 A.2d at 224; Gross, 332 Md. at 255, 630 A.2d at 1160; Heat & Power Corp., Inc. v. Air Prods. & Chems., Inc., 320 Md. 584, 592, 578 A.2d 1202, 1206 (1990). The trial court, in accordance with Maryland Rule 2-501(e), shall grant a motion for summary judgment if the motion and response show that there is no genuine dispute as to any material fact and that [the moving party] is entitled to judgment as a matter of law. The purpose of the summary judgment procedure is not to try the case or to decide the factual disputes, but to decide whether there is an issue of fact, which is sufficiently material to be tried. See Goodwich, 343 Md. at 205-06, 680 A.2d at 1077; Coffey v. Derby Steel Co., 291 Md. 241, 247, 434 A.2d 564, 567-68 (1981); Berkey v. Delia, 287 Md. 302, 304, 413 A.2d 170, 171 (1980). Thus, once the moving party has provided the court with sufficient grounds for summary judgment, the non-moving party must produce sufficient evidence to the trial court that a genuine dispute to a material fact exists. See, e.g., Hoffman Chevrolet, Inc. v. Washington County Nat'l Sav. Bank, 297 Md. 691, 712, 467 A.2d 758, 769 (1983). This requires produc[ing] facts under oath, based on the personal knowledge of the affiant to defeat the motion. Bald, unsupported statements or conclusions of law are insufficient. Id. With these considerations in mind, we turn to the instant case. In the case sub judice there is no genuine dispute of material fact. [5] The issue before us is whether summary judgment should be granted as a matter of law. In reviewing the propriety of a summary judgment, it is our responsibility to determine whether there was any issue of fact pertinent to the ruling and, if not, whether the substantive law was correctly applied.... Thus, to be upheld, the summary judgment under review must withstand scrutiny on both its factual and legal foundations. Bloomgarden v. Coyer, 479 F.2d 201, 206, 207 (D.C.Cir.1973) (footnotes omitted). Because, in the context of this review, there are no genuine disputes as to the material facts of the instant case, we are left to determine whether the principles of substantive law governing express contracts, implied contracts, and quasi-contracts were correctly applied. Before we begin our analysis of the law of contracts, a review of the basic definitions of different contract forms is helpful. An express contract has been defined as an actual agreement of the parties, the terms of which are openly uttered or declared at the time of making it, being stated in distinct and explicit language, either orally or in writing. Black's Law Dictionary 323 (6th ed.1990). An implied contract is an agreement which legitimately can be inferred from intention of the parties as evidenced by the circumstances and `the ordinary course of dealing and the common understanding of men.' Martin v. Little, Brown & Co., 304 Pa.Super. 424, 429, 450 A.2d 984, 987 (1981) (quoting Hertzog v. Hertzog, 29 Pa. 465, 468 (1857)); see Klebe v. United States, 263 U.S. 188, 192, 44 S.Ct. 58, 59, 68 L.Ed. 244 (1923) (A contract implied in fact is one inferred from the circumstances or acts of the parties; but an express contract speaks for itself and leaves no place for implications.). Finally, significant to our analysis is the definition of a quasi-contract. Black's Law Dictionary, supra, at 324 defines it as a [l]egal fiction invented by common law courts to permit recovery by contractual remedy in cases where, in fact, there is no contract, but where circumstances are such that justice warrants a recovery as though there had been a promise. It is not based on intention or consent of the parties, but is founded on considerations of justice and equity, and on doctrine of unjust enrichment. It is not in fact a contract, but an obligation which the law creates in absence of any agreement, when and because the acts of the parties or others have placed in the possession of one person money, or its equivalent, under such circumstances that in equity and good conscience he ought not to retain it. Similarly, the Restatement (Second) of Contracts § 4 (1981) describes quasi-contracts in the following manner: Quasi-contracts have often been called implied contracts or contracts implied in law; but, unlike true contracts, quasi-contracts are not based on the apparent intention of the parties to undertake the performances in question, nor are they promises. [6] They are obligations created by law for reasons of justice. While the relationship of express contracts with the doctrine of unjust enrichment appears to be an issue of first impression in this Court, the Court of Special Appeals has interpreted these legal concepts on several occasions. [7] As the Court of Special Appeals has noted: The general rule is that no quasi-contractual claim can arise when a contract exists between the parties concerning the same subject matter on which the quasi-contractual claim rests. (Citations omitted.) The reason for this rule is not difficult to discern. When parties enter into a contract they assume certain risks with an expectation of a return. Sometimes, their expectations are not realized, but they discover that under the contract they have assumed the risk of having those expectations defeated. As a result, they have no remedy under the contract for restoring their expectations. In desperation, they turn to quasi-contract for recovery. This the law will not allow. Mass Transit Admin. v. Granite Constr. Co., 57 Md.App. 766, 776, 471 A.2d 1121, 1126 (1984) (quoting Industrial Lift Truck Serv. Corp. v. Mitsubishi Int'l Corp., 104 Ill.App.3d 357, 360-61, 60 Ill.Dec. 100, 432 N.E.2d 999, 1002 (1982)); see also First Nat'l Bank v. Burton, Parsons & Co., 57 Md.App. 437, 451-52, 470 A.2d 822, 830, cert. denied, 300 Md. 88, 475 A.2d 1200 (1984) (quoting the same); Francis O. Day Co. v. Montgomery County, 102 Md.App. 514, 521, 650 A.2d 303, 306 (1994) ([I]f appellant's claim against appellee is based on a written contract, then there can be no unjust enrichment.), overruled on other grounds by Harford County v. Town of Bel Air, 348 Md. 363, 704 A.2d 421 (1998). These Court of Special Appeal opinions have been interpreted by the United States District Court for the District of Maryland: It is settled law in Maryland, and elsewhere, that a claim for unjust enrichment may not be brought where the subject matter of the claim is covered by an express contract between the parties. FLF, Inc. v. World Publications, Inc., 999 F.Supp. 640, 642 (1998). As the federal district court said in Dunnaville v. McCormick & Co., 21 F.Supp.2d 527, 535 (1998), [u]njust enrichment and quantum meruit, both `quasi-contract' causes of action, are remedies to provide relief for a plaintiff when an enforceable contract does not exist but fairness dictates that the plaintiff receive compensation for services provided. This rationale has been followed universally in both federal and state courts. MacDraw, Inc. v. CIT Group Equip. Fin., Inc., 157 F.3d 956, 964 (2d Cir.1998) (`[T]he existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract [i.e., unjust enrichment] for events arising out of the same subject matter.' (second alteration in original) (quoting U.S. East Telecomms., Inc. v. U.S. West Communications Servs., Inc., 38 F.3d 1289, 1296 (2d Cir. 1994))); Camp Creek Hospitality Inns, Inc. v. Sheraton Franchise Corp., 139 F.3d 1396, 1413 (11th Cir.1998) (Recovery on a theory of unjust enrichment... is only available `when as a matter of fact there is no legal contract.' (quoting Regional Pacesetters, Inc. v. Halpern Enter., Inc., 165 Ga.App. 777, 782, 300 S.E.2d 180, 185 (1983))); Member Servs. Life Ins. Co. v. American Nat'l Bank & Trust Co. of Sapulpa, 130 F.3d 950, 957 (10th Cir.1997) ([Q]uasi-contractual remedies... are not to be created when an enforceable express contract regulates the relations of the parties with respect to the disputed issue. Courts have recognized this principle and have stated their unwillingness to resort to the doctrine of unjust enrichment to override a contractual plan provision. Concomitantly, courts have held that enrichment is not unjust when authorized by an express provision of the plan. (citations omitted)), cert. denied, 523 U.S. 1139, 118 S.Ct. 1843, 140 L.Ed.2d 1093 (1998); Paracor Fin., Inc. v. General Elec. Capital Corp., 96 F.3d 1151, 1167 (9th Cir.1996) ([U]njust enrichment is an action in quasi-contract, which does not lie when an enforceable, binding agreement exists defining the rights of the parties.); Klein v. Arkoma Prod. Co., 73 F.3d 779, 786 (8th Cir.) (Normally, when an express contract exists between the parties, unjust enrichment is not available as a means of recovery.), cert. denied, 519 U.S. 815, 117 S.Ct. 65, 136 L.Ed.2d 27 (1996); Gadsby v. Norwalk Furniture Corp., 71 F.3d 1324, 1333 (7th Cir.1995) ([R]estitution is unavailable where an express contract governs the parties' relationship and where there is an adequate remedy at law.). [8] Generally, courts are hesitant to deviate from the principle of the rule and allow unjust enrichment claims only when there is evidence of fraud or bad faith, [9] there has been a breach of contract or a mutual recission of the contract, [10] when recission is warranted, [11] or when the express contract does not fully address a subject matter. [12] None of these exceptions that have been recognized elsewhere apply in the case subjudice. In the case sub judice there was an express contract between the County and respondent for the renovation of the Caroline County Detention Center. There has been no evidence presented that would lead us to believe that an exception to the general rule is warranted. The subject matter of respondent's claimrecovery of money for work performed on the Detention Centeris covered specifically by several valid and enforceable provisions of the written contract between the parties. As well as covering the basic guidelines for construction of the building addition, the contract clearly addressed the process for submitting claims, for liquidated damages, and for the waiver of rights and duties. Respondent's claim that the County has been unjustly enriched because of its use of the detention center is clearly without merit. Even if the County was enriched, such enrichment was not unjust because it was in strict compliance with the terms of their contract. To hold otherwise would turn the basic foundation of contract law on its ear. This rule holds the contract parties to their agreement and prevents a party who made a bad business decision from asking the court to restore his expectations. Prodromos v. Poulos, 202 Ill.App.3d 1024 1032, 148 Ill.Dec. 345, 560 N.E.2d 942, 948 (1990); see also Washa v. Miller, 249 Neb. 941, 950, 546 N.W.2d 813, 819 (1996) (The doctrine does not operate to rescue a party from the consequences of a bad bargain.). Both the County and respondent got what they bargained for by the terms of the contract. The contract defined the entire relationship of the parties with respect to its general subject matter. Respondent is now attempting, via a theory of unjust enrichment, to get over $2,000,000.00 in damages and a return of $326,621.00 that the County withheld as liquidated damages for delay, even though its contract with the County specifically covers this subject matter. Respondent's attempt to recover under a theory of quasi-contract is nothing more than a unilateral attempt to amend the agreement in a manner that the law does not allow. Cf. Industrial Lift Truck Serv. Corp., 104 Ill.App.3d at 362, 60 Ill.Dec. 100, 432 N.E.2d at 1003. Parties entering into a contract assume certain risks with the expectation of a beneficial return; however, when such expectations are not realized, they may not turn to a quasi-contract theory for recovery. Batler, Capitel & Schwartz v. Tapanes, 164 Ill.App.3d 427, 430, 115 Ill.Dec. 530, 517 N.E.2d 1216, 1219 (1987). There was an express contract between the parties that controlled this subject matter; therefore, respondent cannot seek relief through the quasi-contractual remedy of unjust enrichment. We hold that, generally, quasi-contract claims such as quantum meruit and unjust enrichment cannot be asserted when an express contract defining the rights and remedies of the parties exists.