Green Quarries, Inc. v. Raasch

676 S.W.2d 261, 1984 Mo. App. LEXIS 3960

• Court: Missouri Court of Appeals
• Decided: July 31, 1984
• Docket: WD 33356
• Status: Published

Opinions

NUGENT, Judge.

Plaintiff Green Quarries, Inc., a subcontractor, filed its third amended petition, a petition in quantum meruit, attempting to enforce a mechanic’s lien on real property owned by defendants Ernie and Emelia Raasch under a theory of unjust enrichment. The trial court granted the defendant owners’ motion to dismiss for failure to state a claim upon which relief could be granted, and the plaintiff subcontractor appeals this dismissal. We affirm.

The scope of review for a motion to dismiss requires an examination of the pleadings, allowing them their broadest in-tendment, treating all facts alleged as true, construing the allegations favorably to plaintiff, and determining whether upon that basis the petition invokes principles of substantive law. Shapiro v. Columbia Union National Bank and Trust Co., 576 S.W.2d 310, 312 (Mo.1978) (en banc). Thus, a pleading will not be adjudged insufficient if the allegations of the petition, accorded a reasonable and fair intendment, state a claim which can call for the invocation of principles of substantive law which may entitle the plaintiff to relief. Porter v. Crawford & Co., 611 S.W.2d 265, 266 (Mo.App.1980). But a motion to dismiss on the ground that the petition fails to state a cause of action is well taken where the petition wholly fails to state a cause of action, that is, where the facts essential to a recovery are not pleaded. See Smith v. St. Louis County Softball Assoc., 623 S.W.2d 38 (Mo.App.1981); Fischer v. Vonck, 614 S.W.2d 26 (Mo.App.1981); J. Louis Crum Corp. v. Alfred Lindgren, Inc., 564 S.W.2d 544 (Mo.App.1978).

In substance, plaintiffs petition appears to allege the following:

Defendants, owners of certain real estate in Carrol County, entered into an agreement with the general contractor, Anchor Company, for improving the real estate. Plaintiff Green Quarries, as Anchor’s subcontractor, sold rock and concrete to the general contractor on defendants’ project and delivered those materials to the project for use in improvement of defendants’ property. After delivery in January, 1980, Green Quarries unsuccessfully sought payment from Anchor. On May 13, 1980, Anchor filed for bankruptcy and Green Quarries filed a proof of claim against the general contractor in the bankruptcy action. On May 20, Green Quarries filed a lien in the circuit court of Carrol County on the real estate and improvements on defendants’ property. Anchor was adjudged bankrupt, and its account due Green Quarries remains owing and unpaid. Green Quarries then demanded payment of the defendants on the account owed Green Quarries by the general contractor. The defendants did not pay Green Quarries.

Plaintiff Green Quarries informs us in its brief that its original petition and its first amended petition attempted to enforce the mechanic’s lien which had been filed by plaintiff. The trial court dismissed the petition, but granted plaintiff an opportunity to amend. (We have no record, however, as to why those petitions did not state a claim.) Plaintiff then filed a second amended petition attempting to enforce the mechanic’s lien. Defendants moved to dismiss the second amended petition for failure to state a claim, alleging that plaintiff’s original mechanic’s lien was improperly filed. The trial court heard and overruled plaintiff’s motion to establish a lost document, and by agreement of the parties allowed plaintiff to file a third amended petition.

The theory of plaintiff's third amended petition was that the owners had been unjustly enriched. Paragraph eleven of the petition reads as follows:

That as a result of the failure of Anchor Company and Respondents to pay said account, Respondents have been unjustly enriched in that as a result of Petitioner’s delivery of rock and concrete to Respondents heretofore described real estate for use in and which was used in the improvements of the heretofore described land, Respondents have enriched and improved the heretofore described land to the detriment of Petitioner.

The landowner defendants moved to dismiss the third amended petition for failure to state a claim or cause of action. Rule 55.27(a)(6), Missouri Rules of Civil Procedure. The trial court sustained the motion.

The defendant owners contend that the petition does not state facts sufficient to state a claim. Plaintiff subcontractor does not contend that the petition states facts sufficient to state a claim based either on an express or implied-in-fact contract between it and the defendant owners. Rather, the thrust of plaintiffs argument on appeal is that its petition pleaded facts essential to a recovery in quantum meruit under the doctrine of quasi-contract.

The doctrine of quasi-contract, also known as a contract implied in law, is based primarily on the principle of unjust enrichment. Donovan v. Kansas City, 352 Mo. 430, 175 S.W.2d 874, 884 (Mo.1943) (en banc); Dewey v. American Stair Glide Corp., 557 S.W.2d 643, 649 (Mo.App.1977); Rackers and Baclesse, Inc. v. Kinstler, 497 S.W.2d 549, 554 (Mo.App.1973); Rolla Lumber Co. v. Evans, 482 S.W.2d 519, 522 (Mo.App.1972); Annot, 62 A.L.R.3d 288, 292 (1975). Unlike a contract implied in fact, a contract implied in law is imposed, or created, without regard to the promise of the party to be bound. Dewey v. American Stair Glide, Corp., supra, at 649; Rackers and Baclesse, Inc. v. Kinstler, supra, at 554; Bennett v. Adams, 362 S.W.2d 277, 280-81 (Mo.App.1962); Annot., suyra, at 293. The duty which engenders a quasi-contractual obligation is most often based upon the principle of unjust enrichment. Rackers and Baclesse, Inc. v. Kinstler, suyra, at 554; Annot., supra, at 293. Unjust enrichment occurs where a benefit is conferred upon a person in circumstances in which retention by him of that benefit without paying its reasonable value would be unjust. Annot., supra, at 293; see also Dewey v. American Stair Glide Corp., supra, at 649; Rolla Lumber Co. v. Evans, supra, at 522. Thus, quantum meruit is a remedy for the enforcement of a quasi-contractual obligation. Laughlin v. Boatmen’s Nat. Bank of St. Louis, 354 Mo. 467, 189 S.W.2d 974, 979 (1945); Rolla Lumber Co. v. Evans, suyra, at 522.

Courts generally recognize that the essential elements of quasi-contract or contract implied in law are: (1) a benefit conferred upon the defendant by the plaintiff; (2) appreciation by the defendant of the fact of such benefit; and (3) acceptance and retention by the defendant of that benefit under circumstances in which retention without payment would be inequitable. Annot, supra, at 288. The most significant requirement is that the enrichment to the defendant be unjust, Paschall’s, Inc. v. Dozier, 219 Tenn. 45, 407 S.W.2d 150, 154; Rolla Lumber Co. v. Evans, suyra, at 522, that retention of the benefit be inequitable, Donovan v. Kansas City, supra, at 884; Rackers and Baclesse, Inc. v. Kinstler, supra, at 554.

In resolving the issue whether a landowner has been unjustly enriched by a subcontractor’s improvements on the owner’s real estate, the courts have repeatedly looked to whether the landowner has already paid the general contractor the amount due the general contractor under their express contract. Seegers v. Sprague, 70 Wis.2d 997, 236 N.W.2d 227, 231 (1975); Guldberg v. Greenfield, 259 Iowa 873, 146 N.W.2d 298, 305 (1966); Superior Plumbing Co., Inc. v. Tefs, 27 Wis.2d 434, 134 N.W.2d 430 (1965); Cohen v. Delmar Drive-In Theatre, Inc., 46 Del. 427, 84 A.2d 597, 598 (1951); Rackers and Baclesse, Inc. v. Kinstler, supra, at 554; Costanzo v. Stewart, 9 Ariz.App. 430, 453 P.2d 526, 527 (1969); Rogers v. Whitson, 228 Cal.App.2d 662, 39 Cal.Rptr. 849, 857 (1964). If the owner has indeed paid the general contractor for the materials, the owner’s retention of them without further payment has been found not to constitute unjust enrichment. Seegers v. Sprague, supra; Guldberg v. Greenfield, supra; Superior Plumbing Co., Inc. v. Tefs, supra; Cohen v. Delmar Drive-In Theatre, Inc., supra; Rackers and Baclesse, Inc. v. Kinstler, supra; and Rogers v. Whitson, supra. Although the subcontractor may remain unpaid and thus suffer detriment, equity will not require the owner to pay twice. Superior Plumbing Co., Inc. v. Tefs, supra, at 433; see also Rackers & Baclesse, Inc. v. Kinstler, supra, at 554.

In Suyerior Plumbing Co. v. Tefs, supra, plaintiff subcontractor furnished materials and services on realty owned by the defendant. The plaintiff subcontractor brought suit against the defendant owner on an implied contract theory. As in this case, the plaintiff alleged that he had not been paid. The appellate court, however, reversed the trial court’s order denying defendant’s motion to dismiss. The complaint did not contain an affirmative averment that the defendant owner had not paid the general contractor. Therefore, the court found that the complaint allowed for the inference that the owner had indeed paid the general contractor for the benefit conferred. Thus, the court concluded that the complaint did not set forth facts sufficient to constitute a cause of action for unjust enrichment. Id. at 432.

Green Quarries contends on appeal that it was not required to plead or prove that the defendant owners never paid the general contractor. Plaintiff argues that payment is an affirmative defense to be pleaded and proved by the defendant owners. In a claim based on unjust enrichment, plaintiff’s contention cannot be correct. Payment or non-payment by the owner is a factor which determines whether the petition alleges the most important element for a recovery based on quasi-contract — unjust enrichment. Superior Plumbing Co., Inc. v. Tefs, supra; see Rackers and Baclesse, Inc. v. Kinstler, supra, at 554.

Although plaintiff does not contend that it was required to allege, or that it did allege, non-payment by the owners to the general contractor, we nonetheless examine the petition and construe it most favorably to the plaintiff in order to determine whether it states facts sufficient to constitute a claim based on unjust enrichment. Non-payment by the owner to the general contractor must be pleaded by the subcontractor in order to state a claim based on unjust enrichment. Superior Plumbing Co., Inc. v. Tefs, supra; see also Rogers v. Whitson, supra; Pay-N-Taket, Inc. v. Crooks, 259 Iowa 719, 145 N.W.2d 621 (1966). Thus, plaintiff’s petition must allege that the defendants did not pay Anchor. Because of the facts of the case at bar, however, plaintiff must also plead that the Raaschs have not made payment to the trustee in bankruptcy. Plaintiff alleges in its petition that Anchor filed for bankruptcy in May of 1980 and that in December of 1980, Anchor was adjudicated bankrupt. Thus, in order to constitute a claim for unjust enrichment, plaintiff must here allege that neither the trustee in bankruptcy nor the general contractor has been paid by the defendants.

In order to determine whether plaintiff’s petition contains these required allegations, we examine the following pertinent paragraphs of the petition:

4. That while being the owners of said tract of land, Respondents ... entered into a contract with Anchor Company ... for the improvements of the ... land.

5. That in pursuance of said contract, Petitioner ... sold to ... Anchor Company, and delivered to Respondents heretofore described real estate, rock and concrete ... for use in ... the improvement of the ... land_

6. That ... Petitioner demanded of Anchor Company payment of said account

9. That [thereafter] Anchor Company was adjudged bankrupt ... and the account referred to in Paragraph Numbered Six (6) remains due, owing and unpaid....

10. That as a result ... Petitioner demanded of Respondents payment of said account ... and that said account to date, remained due, owing and unpaid.

11. That as a result of the failure of Anchor Company and Respondents to pay said account, Respondents have been unjustly enriched in that as a result of Petitioner’s delivery of rock and concrete to Respondents ... real estate ... which was used in the improvements of the ... land, Respondents have enriched and improved the land ... to the detriment of Petitioner.

Attached to the petition is the itemized statement and account. “Green Quarries, Inc.” is printed on the top of the exhibit and “Anchor Company” listed as the “account name.” The exhibit indicates that Anchor owes Green Quarries a total of $8,174.10.

Plaintiffs petition fails to state a claim based on unjust enrichment because it fails to allege that the owners have not paid Anchor and the trustee in bankruptcy. The averment in paragraph eleven of the petition “that as a result of the failure of Anchor Company and Respondents to pay said account,” alleges only that Green Quarries’ account due from Anchor has not been paid by either Anchor or the defendants because “said account” refers only to Anchor’s account with Green Quarries. Paragraphs 5, 6 and exhibit A, all indicate that the account which has not been paid is the debt of Anchor to Green Quarries. Thus, paragraph eleven does not allege that defendants have not paid the amount which the defendant owners owed the general contractor. For the same reasons, plaintiff’s averments in paragraph nine cannot be deemed to allege that the defendants have not paid the trustee in bankruptcy.

Such allegations are required because if proof of only the facts alleged in the petition warranted a recovery, the defendant owners could be required to pay twice for the same benefit. Therefore, giving the complaint the liberal construction to which it is entitled, we conclude that it does not set forth facts sufficient to constitute a claim for relief in quantum meruit based on quasi-contract because it omits an essential element of unjust enrichment.

Even if we adopted the more liberal construction and found the petition sufficient, however, we should still be required to hold that the trial court properly dismissed plaintiff’s petition for failure to state a claim.

No Missouri court has yet addressed the issue of whether a subcontractor may obtain restitution in the form of a personal judgment upon a quasi-contract theory against a landowner whose property has been improved by the subcontractor’s performance where the general contractor has failed to pay the sub pursuant to their contract. Cf. Rolla Lumber Company v. Evans, 482 S.W.2d 519 (Mo.App.1972) (recovery denied where plaintiff general contractor had contracted with tenants to make improvements on rental property and later sought payment based on a quasi-contractual theory from defendant landowners). The overwhelming majority of courts which have confronted this issue have denied quasi-contractual relief. 2 G. Palmer, The Law of Restitution § 10.7, at 423 (1978). In fact, we have found only one case where a court allowed a subcontractor to obtain a personal judgment based on a quasi-contractual theory against a landowner whose property the sub had improved. Costanzo v. Stewart, 9 Ariz.App. 430, 453 P.2d 526 (1969). The Arizona court pointed out, however, factors which would be considered in an implied-in-fact rather than implied-in-law contract case. In allowing “quasi-contractual recovery,” the court emphasized that the trial court had found that the defendant knew that the plaintiff was concerned about payment and that the defendant assured the plaintiff that escrow arrangements had been made. Costanzo v. Stewart, supra.

Numerous reasons have been given by the courts for refusing to allow a subcontractor to recover from a homeowner in quasi-contract. Insufficiency of the evidence to establish any unjust enrichment of the landowner at the subcontractor’s expense and failure of the subcontractor to have availed himself of his other remedies are two of the more frequently given reasons for denying such recovery. See 62 A.L.R.3d 288, 295 (1975). Thus, courts have not allowed a subcontractor to recover in quasi-contract from a landowner where the landowner has already paid the general contractor, Rogers v. Whitson, 228 Cal.App.2d 662, 39 Cal.Rptr. 849 (1964); Cohen v. Delmar Drive-In Theatre, Inc., 46 Del. 427, 84 A.2d 597 (1951); Guldberg v. Greenfield, 259 Iowa 873, 146 N.W.2d 298 (1966); Seegers v. Sprague, 70 Wis.2d 997, 236 N.W.2d 227 (Wis.1975); or where the landowner has an obligation to do so. Gebhardt Bros., Inc. v. Brimmel, 31 Wis.2d 581, 585, 143 N.W.2d 479 (1966). Nor have courts allowed quasi-contractual recovery where the subcontractor has a statutory remedy available, that is, a mechanic’s lien, but has cut himself off from said remedy due to his own delay or omission. Rogers v. Whitson, supra; Vanderlaan v. Berry Construction Co., 119 Ill.App.2d 142, 255 N.E.2d 615 (1970); Guldberg v. Greenfield, supra; Pay-N-Taket, Inc. v. Crooks, 259 Iowa 719, 145 N.W.2d 621 (1966); Johnson & Peterson, Inc. v. Toohey, 285 Minn. 181, 172 N.W.2d 326 (1969); George M. Morris Construction Co. v. Four Seasons Motor Inn, Inc., 90 N.M. 654, 567 P.2d 965 (1977); Berger Engineering Co. v. Village Casuals, Inc., 576 S.W.2d 649 (Tex.Civ.App.1978); Gebhardt Bros., Inc. v. Brimmel, supra; Utschig v. McClone, 16 Wis.2d 506, 114 N.W.2d 854 (1962). We agree with those courts that have held that quasi-contractual recovery should not be available where the homeowner has already paid the general contractor. In such a case, no basis appears for a quasi-contractual recovery because the owner has not been unjustly enriched. We also agree with those courts which have denied recovery because the subcontractor failed to perfect his mechanic’s lien. The statutory remedy available to a sub provides for the imposition of a lien on the asset improved. Restitution ordinarily leads to a money judgment imposing a personal liability on the owner instead of a mechanic’s lien on the asset improved. Therefore, we will not allow quasi-contractual recovery where the subcontractor could have availed himself of the statutory remedy but did not.

Moreover, where, as here, the general contractor is threatening bankruptcy or has been adjudicated bankrupt, we find particular merit to the objection based on the likelihood of disadvantage to the general contractor’s other creditors. To allow a subcontractor who has failed to perfect his lien to achieve preference through the indirect route of recovery from the homeowner is simply inequitable and would provide for another kind of unjust enrichment, in that case the enrichment of the subcontractor at the expense of other creditors. Although we have found no judicial opinion citing preference by an indirect route as a reason for not permitting a subcontractor’s recovery in quasi-contract, one commentator finds this to be one of the few valid reasons for rejecting such claims. See Dawson, The Self-Serving Intermeddler, 87 A Harv.L.Rev. 1409, 1444-58. There at 1447 the author summarizes this argument as follows:

One could imagine an objection of ... substance to the shortcut sought by the sub — the likelihood of disadvantage to the general’s other creditors. For the motive in seeking recourse against the owner will usually be the general’s actual or threatened default. If he does default and his financial state is precarious, as it is likely to be, any sum still due from the owner will be an asset subject to the claims of his creditors, one of whom is this particular sub. If the interests were previously close to equipoise, with no sufficient reason to disturb them, the scales tip against the sub’s surrogate claim where it appears that the effect would be to achieve a preference by this indirect route. Id. at 1447.

For the foregoing reasons, we hold that Missouri does not allow a subcontractor to obtain restitution in the form of a personal judgment upon a quasi-contractual theory against a landowner whose property has been improved by the sub’s performance where the general contractor has failed to pay the subcontractor. For this additional reason, plaintiff’s cause of action was properly dismissed.

Accordingly, we affirm the judgment of the trial court.

SOMERVILLE and TURNAGE, JJ., concur with majority opinion.

CLARK, J., concur with majority opinion in separate opinion filed.

LOWENSTEIN, J., dissents.

KENNEDY and MANFORD, JJ., concur with dissenting opinion filed.