Court Opinion

ID: 9481916
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:35:18.415169+00
Date Added: 2024-06-11T17:48:39.274158
License: Public Domain

REINHARDT, Circuit Judge,
concurring:
I concur in Judge Fernandez’s fine opinion harmonizing various principles of law. However, I do not think the problem is nearly as complicated as it appears. All that is required is a little common sense.
In the rush of dealing with an overwhelming daily calendar, the district judge made a simple error, as we all do from time to time. She could have applied the two formulas that she utilized and reached the right result. The error occurred because she applied them in the wrong order. These things happen.
Conceptually, it is easy to see the error that results when the damages formula is applied first and the quantum meruit formula second. Under that approach, the damages included in the damage formula are not the total damages CSE will incur— they fail to include the quantum meruit payment, which has not yet been calculated, but which it will be required to pay. Thus, if both formulas are to be utilized, CSE’s damages cannot properly be determined until after the quantum meruit calculation is performed. Otherwise, we may end up, as we did here, with the non-breaching party having to pay more than the contract price.
On the other hand, when the quantum meruit theory is applied first, we determine at the outset that Palmer would be entitled to an additional payment of $90,086.28 for the work actually performed. If we then required that the additional amount be paid, Palmer’s total payment would be $204,845.26. Instead, however, we proceed to step 2 — the determination of CSE’s actual damages. We then find that if CSE is required to pay Palmer the unpaid amount of $90,086.28, and thus the total amount of $204,845.26, the total cost to CSE for the job would be $331,521.82 — since CSE was also required to pay a third party the sum *1265of $126,673.56 to finish the job. Because the contract price was only $235,137.00, the damages to CSE would be $96,384.82. However, we next subtract from CSE’s damages the $90,086.28 that it theoretically owes Palmer in quantum meruit (but need not pay because it is less than Palmer owes). As a result, we find that CSE’s actual damages are reduced to the correct amount — $6,295.54. Voila!
All this mathematical exercise proves is that if the district judge had applied the two theories in the proper order, she would have come to the correct result. Thus express contract law and quantum meruit doctrines can be harmonized and live together happily ever after.
Judge Fernandez’s learned approach certainly provides a more intellectual explanation of clashing legal principles. It also provides a simpler and preferable method of calculating damages. The only purpose of this concurrence is to show that from a practical and mathematical standpoint the two legal principles discussed in Judge Fernandez’s opinion are not in conflict.
The elementary rules that emerge from both of our analyses are relatively simple. When the party performing the work breaches the contract, it may nevertheless recover all or a portion of the value of the services it has actually rendered, but only under certain circumstances. The breaching party may not recover any amount which, when added to the amount previously paid it, and the amount paid or owing to any party whose services are used to complete the job, would cause the contract price to be exceeded. As Judge Fernandez’s opinion clearly states, the contract price represents a ceiling on the amount the non-breaching party may be required to pay — in toto. Similarly, regardless of the value of the work performed by the breaching party, if the amount the non-breaching party must pay to a third party to finish the job, when added to the amount it has already paid to the breaching party,' exceeds the contract price, the non-breaching party may recover the excess amount from the breaching party as damages. Thus, depending on the amount already paid the breaching party, the value of the labors it has performed, and the amount required to finish the job, the same breach may result in a recovery by either the breaching or non-breaching party. Who recovers is not a function of who breaches — what matters is who has already paid how much to whom for what.
Finally, I want to emphasize that it is not necessary to utilize the two-step process illustrated at the beginning of this separate opinion. One step will do. However, all the figures must be calculated first. It will then be possible to apply the applicable legal principles to that set of figures and determine who owes how much to whom.