Court Opinion

ID: 9382209
Source: CourtListenerOpinion
Date Created: 2023-03-25 00:00:24.162934+00
Date Added: 2024-06-11T17:17:37.788381
License: Public Domain

Case: 22-20480    Document: 00516688627       Page: 1    Date Filed: 03/24/2023

           United States Court of Appeals
                for the Fifth Circuit                           United States Court of Appeals
                                                                         Fifth Circuit

                                                                       FILED
                                                                 March 24, 2023
                               No. 22-20480                       Lyle W. Cayce
                             Summary Calendar                          Clerk

   In the Matter of KP Engineering, L.P.,

                                                                      Debtor,

   Credos Industrial Supplies & Rentals, L.L.C., doing business
   as Credos Fabrications,

                                                                 Appellant,

                                    versus

   Targa Pipeline Mid-Continent WestTex, L.L.C.,

                                                                    Appellee.

                 Appeal from the United States District Court
                     for the Southern District of Texas
                           USDC No. 4:22-CV-664

   Before Smith, Elrod, and Douglas, Circuit Judges.
   Dana M. Douglas, Circuit Judge:
         Appellant, Credos Industrial Supplies & Rentals, LLC (“Credos”),
   appealed the bankruptcy court’s order granting Appellee, Targa Pipeline
   Mid-Continent WestTex LLC’s (“Targa”), motion to dismiss Credos’
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                                     No. 22-20480

   counterclaim. The district court affirmed and dismissed the appeal. For the
   reasons stated herein, we AFFIRM.
                                          I.
          In August 2017, KP Engineering entered into a contract with Targa to
   engineer and build a natural gas processing plant (the “Johnson Plant.”) KP
   Engineering hired Credos as a subcontractor. Midway through the project,
   KP Engineering stopped paying its subcontractors, including Credos,
   resulting in $2,329,830.86 in outstanding invoices. Targa then ended its
   contract with KP Engineering but asked Credos to stay on and complete the
   project. In exchange, Targa promised that it would pay Credos any unpaid
   KP Engineering invoices. Targa paid nine of eleven outstanding invoices.
   Several weeks later, and after Credos had substantially completed work on
   the project, Targa informed Credos that it would not pay the final two
   invoices, totaling $930,507.76.
          In August 2019, KP Engineering filed for bankruptcy in the Southern
   District of Texas. Credos initiated an adversary proceeding against Targa in
   KP Engineering’s bankruptcy proceeding, seeking to recover the
   $930,507.76 in unpaid invoices based on claims of unjust enrichment and
   quantum meruit. Targa moved to dismiss Credos’ complaint, which Credos
   amended, and Targa again asserted its motion to dismiss. The bankruptcy
   court dismissed the amended complaint with prejudice and the district court
   affirmed. Credos now appeals.
                                          II.
          A district court’s grant of a Rule 12(b)(6) motion to dismiss is
   reviewed de novo. White v. U.S. Corr., LLC, 996 F.3d 302, 306 (5th Cir.
   2021). Rule 12(b)(6) allows dismissal if a plaintiff fails “to state a claim upon
   which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A complaint
   must contain “enough facts to state a claim to relief that is plausible on its

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   face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has
   facial plausibility when the plaintiff pleads factual content that allows the
   court to draw the reasonable inference that the defendant is liable for the
   misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
   Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a
   ‘probability requirement,’ but it asks for more than a sheer possibility that a
   defendant has acted lawfully.” Id. (quoting Twombly, 550 U.S. at 556).
                                        III.
                            A. Quantum Meruit
          Credos argues that it plead a valid quantum meruit claim. To recover
   under quantum meruit, the plaintiff must prove that: “(1) valuable services
   were rendered or materials furnished; (2) for the party sought to be charged;
   (3) which services and materials were accepted by the party sought to be
   charged, used and enjoyed by him; (4) under such circumstances as
   reasonably notified the person sought to be charged that the plaintiff, in
   performing such services, was expecting to be paid by the person sought to
   be charged.” Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942,
   944 (Tex. 1990).
          “Generally, a party may recover under quantum meruit only when
   there is no express contract covering the services or materials furnished.” Id.
   “This rule not only applies when a plaintiff is seeking to recover in quantum
   meruit from the party with whom he expressly contracted, but also when a
   plaintiff is seeking to recover ‘from a third party foreign to the original
   [contract] but who benefitted from its performance.’” Pepi Corp. v. Galliford,
   254 S.W.3d 457, 462 (Tex. App.—Houston [1st Dist.] 2007, pet. denied.)
   (citation omitted) (holding that subcontractor was precluded from
   recovering against property owner in quantum meruit, even though property
   owner promised to pay when the general contractor failed to pay, because

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   subject matter was covered by an express contract between subcontractor
   and general contractor). 1
           The district court held that Credos’ factual allegations establish that
   it had a contractual relationship with KP Engineering that covered the
   services at issue. The district court found that Credos had a contractual
   relationship with KP Engineering by reviewing Credos’ allegations that: (1)
   it was “hired by KP [Engineering] to supply mechanical fabrication labor and
   welding services” for work on the Johnson Plant “on a time and materials
   basis”; (2) KP engineering issued two purchased orders “to Credos for work
   at the Johnson Plant” for $2,500,000; (3) Credos “submitted invoices for its
   work to KP [Engineering] on a weekly basis”; and (4) KP Engineering paid
   some of those invoices. We agree. While there are three exceptions to the
   general rule that an express contract bars recovery under quantum meruit, no
   exception applies here. 2 Galliford, 254 S.W.3d at 462-63. Thus, Credos’

           1
              See also W & W Oil Co. v. Capps, 784 S.W.2d 536, 537–38 (Tex. App.—Tyler
   1990, no writ) (holding that construction company, who was unaware of agreement and
   who furnished goods and services to farmee, was precluded from recovering value of goods
   and services against farmor in quantum meruit, even though farmor made verbal promises
   to pay for completed work, because subject matter was covered by valid express contract
   (farm-out agreement)); Morales v. Dalworth Oil Co., Inc., 698 S.W.2d 772, 774–76 (Tex.
   App.—Fort Worth 1985, writ ref’d n.r.e.) (holding same and explaining that implied
   contract cannot exist where subject matter is covered by valid express contract and holding
   that valid express contract between gasoline equipment installer and land lessees precluded
   installer's recovery against lessor in quantum meruit because the subject matter of claim,
   the equipment, was covered by installer's contract with lessees)).
           2
            “First, recovery in quantum meruit is allowed when a plaintiff has partially
   performed an express contract but, because of the defendant’s breach, the plaintiff is
   prevented from completing the contract.” Galliford, 254 S.W.3d at 462 (citation omitted).
   This exception does not apply because Credos has fully performed under the contract and
   because Targa was not the breaching party under the contract with KP Engineering.
   Second, “[r]ecovery in quantum meruit is sometimes permitted when a plaintiff partially
   performs an express contract that is unilateral in nature.” Id. at 462-63 (citation omitted).
   This exception does not apply because Credos fully performed under the contract and

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   quantum meruit claim is barred by the existence of an express contract that
   covers the services at issue. 3
                              B. Unjust Enrichment
           Credos argues that it plead a valid unjust enrichment claim. “Texas
   law . . . recognizes two theories or species of unjust enrichment: one for
   passive receipt of a benefit that would be unconscionable to retain, and
   another for wrongfully securing a benefit.” Digital Drilling Data Sys., LLC
   v. Petrolink Servs., Inc., 965 F.3d 365, 379 (5th Cir. 2020). The theory
   available is the one “actually alleged.” Id. at 380 (emphasis in original). If a
   plaintiff’s unjust enrichment claim is based on a defendant’s wrongful
   securing of a benefit, then a plaintiff must plead facts showing fraud, duress,
   or the taking of undue advantage. See id. If a plaintiff’s unjust enrichment
   claim is based on passive receipt of a benefit that would be unconscionable to
   retain, then the plaintiff does not need to plead or prove that the defendant
   acted wrongfully. See id.
           The district court found that Credos’ claim is not based on fraud,
   duress, or undue advantage. However, Credos now alleges that it is. Credos
   has forfeited this argument because it was alleged for the first time on appeal.
   See Rollins v. Home Depot USA, Inc., 8 F.4th 393, 397 (5th Cir. 2021).

   entered into a bilateral contract. Third, “a breaching plaintiff in a construction contract
   can recover the reasonable value of services less any damages suffered by the defendant if
   the defendant accepts and retains ‘the benefits arising as a direct result of the plaintiff’s
   partial performance.’” Id. at 463 (citation omitted). This exception does not apply because
   Credos fully performed under the contract and did not breach its contract with KP
   Engineering.
           3
             Credos argues that Targa is “arguing the wrong contract” (i.e., the contract
   between Credos and KP Engineering) and that there was a “new contract” between Credos
   and Targa. However, any express contract precludes recovery under quantum meruit, so
   this claim is without merit.

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          In focusing on this new theory of fraud, duress, or undue advantage,
   Credos fails to brief the second theory, passive receipt of a benefit, and it is
   also forfeited. Id.
          However, even if both theories were not forfeited, the unjust
   enrichment claim would nevertheless fail for the same reasons the quantum
   meruit claim fails.    Under Texas law, an unjust enrichment claim is
   “unavailable when a valid, express contract governing the subject matter of
   the dispute exists,” as it does here. Coghlan v. Wellcraft Marine Corp., 240
   F.3d 449, 454 (5th Cir. 2001).
                          C. Breach of Contract
          The district court held sua sponte that Credos’ allegations suggest
   that it may have a breach of contract claim against Targa. However, Credos
   never amended its complaint to assert such a claim, even after the bankruptcy
   court gave Credos leave to amend. Credos did not ask the district court for
   another opportunity to amend. But even if it did, “[a]n attempt to amend
   one’s pleadings in an appellate brief comes too late.” Hanson v. Town of
   Flower Mound, 679 F.2d 497, 504 (5th Cir. 1982) (per curium) (citation
   omitted). Credos now argues that its breach of contract claim was “perhaps
   lost in the shuffle” and can be inferred throughout its complaint. This
   argument is without merit. Credos was required to raise the issue “to such a
   degree that the trial court [could] rule on it.” NCDR, LLC v. Mauze & Bagby,
   PLLC, 745 F.3d 742, 752 (5th Cir. 2014). Moreover, our court has rejected
   similar arguments. See Crosby v. Hariel, 673 F. App’x 397, 400 (5th Cir. 2016)
   (per curiam) (rejecting argument that because the facts as alleged in
   complaint could support certain claims, those claims are not waived).
          Credos failed to assert a breach of contract claim in the bankruptcy
   court and the district court and briefs the issue for the first time on appeal.
   Thus, the breach of contract claim is waived. Rollins, 8 F.4th at 397.

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         Accordingly, the district court’s order is AFFIRMED.

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