Opinion ID: 498428
Heading Depth: 1
Heading Rank: 5

Heading: The Western Appeal

Text: 63
64 Western launches a broad attack on the trial court's decision to award CJC quantum meruit damages and the factual findings underlying that award. Western argues (1) that the trial court misinterpreted the CJC subcontract; (2) that Western did not breach the contract; and (3) that CJC's abandonment of the project site was unjustified and in breach of the subcontract. 65 Our Miller Act decisions suggest that a subcontractor may recover in quantum meruit from the prime contractor and surety in at least two instances. First, where there is a substantial breach of the subcontract, the subcontractor may forego any suit on the contract and sue for the reasonable value of his performance. St. Paul-Mercury Indem. Co. v. United States ex rel H.C. Jones, 238 F.2d 917, 922 (10th Cir.1957) (also held that nonpayment was a substantial breach. Id. at 923.); Southern Painting Co. v. United States ex rel E.M. Silver, 222 F.2d 431, 433-34 (10th Cir.1955) (quoting United States ex rel Susi Contracting Co. v. Zara Contracting Co., 146 F.2d 606, 610 (2d Cir.1944)); see also W.F. Magann Corp. v. Diamond Mfg. Co., 775 F.2d 1202, 1205-07 (4th Cir.1985); United States ex rel Sunworks Div. of Sun Collector Corp. v. Ins. Co. of N. Am., 695 F.2d 455, 458 (10th Cir.1982) (New Mexico recognizes quantum meruit claim for breach of subcontract); Coastal Steel, 479 F.2d at 640; United States ex rel. Pickard v. Southern Constr. Co., 293 F.2d 493, 498 (6th Cir.1961). Alternatively, the subcontractor may recover in quantum meruit where it has performed work outside the terms of the contract that benefits the prime contractor. Hensel Phelps Constr. Co. v. United States ex rel Reynolds Elec. and Engineering Co., 413 F.2d 701, 704 (10th Cir.1969); Fanderlik-Locke, 285 F.2d at 946; Wunderlich, 240 F.2d at 204-05; see also Gruschus v. C.R. Davis Contracting Co., 75 N.M. 649, 409 P.2d 500, 502 (1965) (New Mexico recognizes quantum meruit recovery for extra work). 19 66 The district court found both of these conditions met for CJC's claim against Western. First, Western breached the contract by failing to pay the invoices due CJC by September 15, 1982 and by improperly supervising the construction project. Second, the contract understated the amount of corrective work necessary and CJC performed substantial additional work beyond the terms of the written subcontract. Western challenges these findings, but we find no error by the district court. First, the evidence supports the finding that Western breached the CJC subcontract. On September 15, 1982 substantial sums were due to CJC under the terms of the subcontract, but Western made no payment. 20 Failure to make such a payment when due is a substantial breach of the contract entitling the subcontractor to recover in quantum meruit for the reasonable value of the work performed. St. Paul Mercury, 238 F.2d at 922. 21 Western argues, however, that nonpayment was justified by CJC's poor performance, pointing to a provision in the subcontract which states that no payments are to be made unless the Subcontractor's rate of progress, work done and material and/or services furnished are satisfactory to the Contractor and supervising engineer. R.Vol. I at 27. However, there is no evidence in the record to indicate that Western or Sandia ever expressed displeasure with the quality of CJC's performance and there is evidence to support the trial court's finding that the delays were caused by Western. Furthermore, Western raised this provision as an excuse for nonpayment only after CJC left the project site. 67 Western also argues that the court's finding that CJC performed extra work was based on an erroneous interpretation of the written subcontract. The trial court found that [e]xcept for ... correction of ... two berm areas, the subcontract did not call for other corrective work, for building of berms, or for corrections of deficiencies in any work performed by the prior earthwork subcontractor, Sanchez. Memorandum Opinion at 9. In contrast, Western believes that, under the terms of the contract, CJC agreed to bring the project from the condition in which it found ... it, to a state of completion for an agreed maximum price [$150,000.00] within sixty days. Brief for Western at 24. Generally, the question concerning the interpretation of a written agreement is one of fact. 22 Gomez v. American Elec. Power Serv. Corp., 726 F.2d 649, 651 (10th Cir.1984) (emphasis in original). Thus, we affirm the trial court's interpretation of the contract unless clearly erroneous, and there is evidence, both in the language of the contract and the conduct of the parties, to support the trial court's finding. 68 Once it was determined that the CJC subcontract was limited in scope, it is apparent that some of the work done by CJC was outside the terms of that contract, and CJC may recover for that work. Where, at the request of the prime contractor, labor and material is furnished by a subcontractor which is in addition to that required in the subcontract, there is an implied promise to pay the reasonable value therefor. Fanderlik-Locke, 285 F.2d at 946. See also Wunderlich, 240 F.2d at 205 (Burdens other than those contemplated by the contract, may not be placed upon the contractor without additional compensation.). In short, the district court's decision to base CJC's recovery on a quantum meruit theory is correct. 23 69 Western further argues that the district court improperly calculated the quantum meruit award, but Western relies on a breach of contract theory, not a quantum meruit recovery, to suggest an alternative method of computing the award. See Autrey v. Williams and Dunlap, 343 F.2d 730, 740 (5th Cir.1965) (cited in Brief for Western at 37). As we have noted, the trial court relied on the invoices submitted by CJC and the hourly equipment rates in the subcontract to determine the value of the services rendered. There is ample support for the principle that the contract price may provide probative evidence of the reasonable value of services rendered, but that the contract price does not impose a limit on quantum meruit recovery. See Constantino v. American S/T Achilles, 580 F.2d 121, 122-23 (4th Cir.1978); United States ex rel Bldg. Rentals Corp. v. Western Casualty and Surety Co., 498 F.2d 335, 338 (9th Cir.1974); Coastal Steel, 479 F.2d at 641; Wynne v. United States ex rel Mid-States Waterproofing Co., Inc., 382 F.2d 699, 701 (10th Cir.1967); see also United States ex rel Robinson v. Alpha-Continental, 273 F.Supp. 758, 777-78 (E.D.N.C.1967) (quantum meruit recovery based on subcontractor's invoices), aff'd, 404 F.2d 343 (4th Cir.1968), cert. denied, 395 U.S. 922, 89 S.Ct. 1774, 23 L.Ed.2d 239 (1969); 12 Williston on Contracts Secs. 1480, 1482 (3d ed. 1970) (contract price is important evidence of the value of the performance to the defendant). We also reject Western's assertion that the trial court should have relied on the bid by Sanchez and the price paid to Metcalf to complete the project as evidence of the reasonable value of CJC's work. Sanchez grossly underbid the project, and that bid means nothing to CJC's claim. Moreover, the price paid to Metcalf does not reflect the corrective work done by CJC. Simply put, the bids are not comparable and do not offer probative evidence of the amount for which CJC's services could have been obtained. See Wunderlich, 240 F.2d at 205. Thus, [t]he amount awarded is within the range of the evidence and is not clearly erroneous. Hensel Phelps, 413 F.2d at 704.
70 Western argues that CJC breached the contract by walking off the job without sufficient cause, and claims damages for the expenses incurred in completing the project. Because we agree with the trial court's conclusion that Western breached the contract, justifying CJC's action, we affirm the court's decision to dismiss Western's counterclaim.
71 The trial court found that Western and Hugg entered into a written subcontract to survey the dirt work performed by Sanchez and to set construction stakes for the next earthmoving subcontractor, CJC, as required, Memorandum Opinion at 14, and awarded Hugg contract damages based on that provision. Western disputes the trial court's finding, but this is a straightforward factual dispute and there is evidence to support the court's decision; we will not disturb it. 24 72 Western also argues that the trial court erred in dismissing Western's claim against Hugg for negligent work done in setting stakes for the concrete subcontractor. Once again, this is a factual question, and the record includes evidence on both sides. The trial court's resolution of this conflicting testimony is not clearly erroneous.