Court Opinion

ID: 8246510
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:35:49.751699+00
Date Added: 2024-06-11T16:42:45.559419
License: Public Domain

DISSENT
PAGE, Justice,
(dissenting).
I respectfully dissent. I agree with the court that to recover under the Payment of Wages Act, Minn.Stat. § 181.01-171 (2010), appellants must establish a claim for wages based on contract or on a statute that is separate and distinct from the Act. Because there can be no dispute that Affordable Granite & Stone, Inc., was required by its contract with the City of Minneapolis (City) to pay its employees the prevailing wage, I conclude, based on that contract, that appellants are intended third-party beneficiaries of that contractual requirement. On that basis, I also conclude that appellants are entitled to have their claims go forward. I further conclude, however, that there are genuine issues of material fact as to the prevailing wage for the work appellants performed at the Minneapolis Convention Center. In addition, I conclude that there are genuine issues of material fact as to whether Affordable Granite & Stone was unjustly enriched by its undisputed promise (and alleged failure) to pay appellants the prevailing wage. I therefore would reverse the court of appeals and remand the matter for trial.
I.
Under the plain language of the prevailing wage certificate executed by Dean Sol-tis on behalf of Affordable Granite & Stone and specifically incorporated into the contract between Affordable Granite & Stone and the City, “it is agreed that payment of wages to employees or agents of the Contractor or any Subcontractor shall be no less than the amounts set forth in the current U.S. Department of Labor, General Wage Decision for the State of Minnesota-Hennepin County.” The court concludes that appellants are merely incidental, not intended, third-party beneficiaries of this promise. I disagree.
Although one who is not a party to a contract generally has no rights under that contract, a third party to a contract “may enforce a promise made for his benefit.” N. Nat’l Bank of Bemidji v. N. Minn. Nat’l Bank of Duluth, 244 Minn. 202, 208, 70 N.W.2d 118, 123 (1955). In determining whether a promise was made for the benefit of a third party, we have adopted the approach of the Restatement (Second) of Contracts § 302 (1981):
Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either
(a) the performance of the promise will satisfy an obligation of the prom-isee to pay money to the beneficiary; or
*840(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.
Restatement (Second) of Contracts § 302(1).
The promise at issue here is Affordable Granite & Stone’s promise to pay the prevailing wage to its employees. To determine whether these appellants were intended beneficiaries of that promise, we must determine whether recognition of appellants’ right to the prevailing wage “is appropriate to effectuate the intention of the parties” and whether “the circumstances indicate that [the City] intends to give [appellants] the benefit of the promised performance.”
Both requirements of section 302 are satisfied. It is undisputed that the City intended that Affordable Granite & Stone’s employees be paid the prevailing wage for their work. The prevailing wage certificate, which is incorporated by reference into the contract between Affordable Granite & Stone and the City, specifically provides: “it is agreed that payment of wages to employees or agents of the Contractor or any Subcontractor shall be no less than” the prevailing wage. Nor is there any dispute that by executing the prevailing wage certificate, Affordable Granite & Stone agreed to pay its employees the prevailing wage. Again, the prevailing wage certificate provides: “By submitting this bid, it is understood and agreed that if it is accepted, in whole or in part, by the City of Minneapolis ... that any work done by the Contractor ... shall be done in conformity with [the prevailing wage ordinance.]”
Given that the City intended that Affordable Granite & Stone’s employees be paid the prevailing wage for their work, and given that Affordable Granite & Stone agreed to pay its employees the prevailing wage for their work, the question becomes whether recognition of appellants’ right to enforce Affordable Granite & Stone’s promise to pay the prevailing wage is “appropriate to effectuate the intention of the parties.” To ask the question is to answer it. If, as appellants contend (a contention I address below), appellants were not paid the prevailing wage for the work they performed, neither Affordable Granite & Stone nor the court itself has indicated any other way in which appellants can recover.
As to the second part of the test— whether the circumstances indicate that the promisee (the City) intended to give the beneficiary (these appellants) the benefit of the promised performance (payment of the prevailing wage) — to ask the question is also to answer it. Again, under the plain language of the prevailing wage certificate, incorporated by reference into the contract between Affordable Granite & Stone and the City, “payment of wages to employees or agents of [Affordable Granite & Stone] ... shall be no less than” the prevailing wage. It is undisputed that these appellants were employees of Affordable Granite & Stone. If Affordable Granite & Stone’s promise to pay its employees the prevailing wage for their work on the Convention Center was not meant to benefit these appellants, for whose benefit was it intended?
The court reaches the opposite conclusion on the second part of the test — whether the contract indicates an intent to benefit appellants. The court compares the contract at issue here unfavorably with the insurance policy at issue in Hickman v. SAFECO Insurance Co. of America, 695 N.W.2d 365, 369 (Minn.2005). We said in Hickman that under section 302 of the Restatement, “the circumstances must indicate that the promisee ... intends to give the beneficiary ... the benefit of the promise.” 695 N.W.2d at 370. In consid*841ering the circumstances in Hickman, we looked to the language of the contract at issue — an insurance policy force-placed by the bank holding the mortgage on Hickman’s home after Hickman himself failed to insure the property against loss — to see if Hickman was entitled to any portion of the policy proceeds. Id. at 370-71.
We noted several policy provisions that supported Hickman’s status as an intended third-party beneficiary of the policy. Id. Although Hickman was not identified by name in the policy, “as the mortgagor of an insured location” he was within the policy’s definition of a “borrower.” Id. at 370. The policy provided that amounts payable in excess of the bank’s interest in the property would be paid to the “borrower.” Id. at 370. The policy included coverage for personal property, even though the mortgagee had no insurable interest in that personal property, and provided that the insurer would pay the “borrower” for losses to it. Id. at 370. Finally, the borrower had the right “to seek arbitration of the appraisal of a loss covered by the policy” if the borrower disagreed with the amount of loss determined by the insurer. Id. at 370-71. We concluded “that these provisions of the insurance contract establish that [the mortgagee] intended to give Hickman the benefit of some of the promised insurance proceeds,” making Hickman a third-party beneficiary to the insurance policy. Id. at 371.
The court here cites three aspects of the insurance policy at issue in Hickman— “that the insurance policy recognized, among other things, the class of persons of borrowers, provided for coverage in excess of the mortgage company’s interest and for loss of personal property, and provided for payment directly to the borrower” — as indicative of the mortgagee’s intent to give Hickman the benefit of the policy. The court apparently sees these provisions as determinative differences between the insurance policy at issue in Hickman and the contract at issue here, but I see similarities. The insurance policy at issue in Hickman specifically recognized “borrowers.” See 695 N.W.2d at 370. The contract at issue here specifically recognizes Affordable Granite & Stone’s “employees or agents.” The insurance policy in Hickman provided for coverage in excess of the lender’s interest in the property and for the loss of personal property in which the lender had no interest, see id. — monies that could not be paid to the lender. Here, the contract specifically provides for payment of prevailing wages — monies that could not be paid to the City and could only be paid to these appellants. Finally the insurance policy at issue in Hickman provided for payment directly to the “borrower,” namely, Hickman. See id. Here, the contract specifically provides that prevailing wages will be paid to Affordable Granite & Stone’s employees, and specifically requires Affordable Granite & Stone to pay them.
To be sure, the contract between Affordable Granite & Stone and the City is silent as to employees’ rights to enforce the prevailing wage provision. That omission is unremarkable given that, as the court itself acknowledges, the very thing that intended third-party beneficiaries acquire by virtue of their status is the right “to enforce a promise made for their benefit which they otherwise would not be able to enforce.” N. Nat’l Bank of Bemidji, 244 Minn, at 209, 70 N.W.2d at 123 (emphasis added). Put more succinctly, if the contract specifically gave these appellants the right to enforce Affordable Granite & Stone’s obligation to pay its employees the prevailing wage, they would not need the third-party beneficiary doctrine.
The court also appears to require much more specificity in the contractual lan*842guage to confer third-party beneficiary status than we have required in the past. For example, the promise we held enforceable by the third-party beneficiary in La Mourea v. Rhude made the defendants “ ‘liable for any damages done to the work or other structure or public or private property and injuries sustained by persons.’ ” 209 Minn. 58, 54, 295 N.W. 304, 305 (1940). The promise we held enforceable by the third-party beneficiary in Duluth Lumber & Plywood Co. v. Delta Development, Inc., was even less specific, requiring the local housing authority to “ ‘retain at least 10% of the amount of each periodic estimate until final completion and acceptance of all work covered by the particular contract.’ ” 281 N.W.2d 377, 379 (Minn.1979). The promise we held enforceable by the third-party beneficiary in Hickman was simply to pay the borrower, without specifying either the identity of the borrower or the particular amount to be paid. 695 N.W.2d at 370. I question whether any of the parties we held to be third-party beneficiaries in Hickman, Duluth Lumber, or La Mourea would qualify under the standards the court applies to appellants in this case.
I would therefore conclude that these appellants are intended third-party beneficiaries of the contract between Affordable Granite & Stone and the City, and I would reverse the court of appeals on that point. However, I would not direct entry of judgment in appellants’ favor because I conclude there are genuine issues of material fact as to the particular prevailing wage the appellants should have been paid and for what period of time. Significantly (and contrary to the court’s opinion), some employees of Affordable Granite & Stone were in fact paid the prevailing wage for terrazzo mechanics for a portion of the Convention Center project, apparently after demanding such payment. The employer contends that only the employees paid the prevailing wage for terrazzo mechanics actually did the work of a terrazzo mechanic; appellants contend that they all performed the same tasks and should be paid accordingly. Thus, there are genuine issues of material fact as to which employees performed work as terrazzo mechanics and for which portions of the Convention Center project. Therefore, remand to the district court for trial on appellants’ prevailing wage claim is the appropriate remedy.
II.
The court concludes that “because appellants are not intended third-party beneficiaries of the contract, their unjust enrichment claim is not legally supportable.” Again, I disagree.
Unjust enrichment was founded on the principle that no one ought to unjustly enrich himself at the expense of another. Heywood v. N. Assur. Co., 133 Minn. 360, 363, 158 N.W. 632, 633 (1916). Therefore, the gist of an unjust enrichment claim is that the defendant has received money that, in equity and good conscience, should have been paid to the plaintiff. Brand v. Williams, 29 Minn. 238, 239, 13 N.W. 42, 42 (1882). The focus of the claim is on what the person allegedly enriched has received, rather than on what the plaintiff has lost. Georgopolis v. George, 237 Minn. 176, 185, 54 N.W.2d 137, 142 (1952).
The court rejects appellants’ claim of unjust enrichment “because appellants are not intended third-party beneficiaries of the contract” and therefore “[essentially ... are attempting to bring an unjust enrichment claim to avoid the result that they lack third-party beneficiary status to enforce the contract.” But unjust enrichment is an equitable claim that is not available if the plaintiff can recover on the basis of an express contract. See *843ServiceMaster of St. Cloud v. GAB Bus. Serv., Inc., 544 N.W.2d 302, 305 (Minn.1996) (“A party may not have equitable relief where there is an adequate remedy at law available.”). Limiting recovery for unjust enrichment to third-party contract beneficiaries, and barring recovery for unjust enrichment by those who are no more than incidental beneficiaries of a contract, simply negates the claim altogether. Moreover, if Affordable Granite & Stone failed to pay the prevailing wage for terrazzo mechanics to employees who did the work of terrazzo mechanics, it arguably violated the City’s prevailing wage ordinance and therefore acted illegally.
If Affordable Granite & Stone calculated its bid for the Convention Center work on the basis of $44.31 per hour (apparently the prevailing wage for terrazzo mechanics), collected $44.31 per hour from the City for the work, paid its employees on the basis of a substantially lower wage, and simply pocketed the difference, I would conclude that Affordable Granite & Stone has been unjustly enriched in every sense of the term. Under that scenario, not only has Affordable Granite & Stone been “enriched,” it has been unjustly enriched in the sense that it has knowingly violated the prevailing wage ordinance.
I would therefore reverse the court of appeals on this claim. However, here again, I would not direct entry of judgment for the appellants. Because it appears, at least on the record before us, that Affordable Granite & Stone’s bid for the Convention Center work was substantially lower than that of other bidders, there are genuine issues of material fact as to the wage on which Affordable Granite & Stone’s bid was calculated. I would therefore reverse the court of appeals and remand the matter for trial on appellants’ unjust enrichment claim.
III.
Finally, the court concludes that because appellants have no claim for unpaid wages, either in law or in equity, they have no claim under the Payment of Wages Act, Minn.Stat. §§ 181.01-171 (2010). I agree with the court that the Payment of Wages Act provides no independent claim for relief. However, because I conclude there are genuine issues of material fact as to whether appellants have claims for relief, either as third-party beneficiaries of the contract between the City and Affordable Granite & Stone or for unjust enrichment, I would reverse the court of appeals on this point as well.
I therefore respectfully dissent.