Universal v. CSI-Concrete Sys.

2012 DNH 115

• Court: District Court, D. New Hampshire
• Decided: July 5, 2012
• Docket: CV-11-030-LM
• Status: Published

Opinion

Universal v . CSI-Concrete Sys. CV-11-030-LM 7/5/12 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Universal Am-Can, Ltd.

v. Civil N o . 11-cv-030-LM Opinion N o . 2012 DNH 115 CSI-Concrete Systems, Inc.

O R D E R

After a two-day trial, the jury in this civil action

rendered a verdict in favor of CSI-Concrete Systems, Inc.

(“CSI”) on the breach-of-contract claim asserted against it by

Universal Am-Can, Ltd. (“Universal”). The jury also rendered an

advisory verdict in favor of Universal on its equitable claim

for quantum meruit and found damages of $13,475. Before the

court for final resolution are Universal’s quantum-meruit claim

and its claim under New Hampshire’s Consumer Protection Act

(“CPA”), N.H. Rev. Stat. Ann. (“RSA”) ch. 358-A. For the

reasons that follow, the court finds and rules that Universal is

entitled to $13,475 in damages on its claim for quantum meruit,

and that CSI is entitled to judgment on Universal’s CPA claim.

Quantum Meruit

“A valid claim in quantum meruit requires [that]: . . . (1)

services were rendered to the defendant by the plaintiff; (2)

with the knowledge and consent of the defendant; and (3) under circumstances that make it reasonable for the plaintiff to

expect payment.” Gen. Insul. C o . v . Eckman Constr., 159 N.H.

601, 612 (2010) (quoting Paffhausen v . Balano, 708 A.2d 269, 271

(Me. 1998)).

CSI first argues that Universal has not even met the

necessary prerequisite for making a quantum-meruit claim, i.e.,

the lack of a valid contract covering the subject matter of the

parties’ dispute. That argument is not persuasive. The Supreme

Judicial Court of Massachusetts has explained that “[r]ecovery

in quantum meruit presupposes that no valid contract covers the

subject matter of a dispute.” MCI WorldCom Commc’ns, Inc. v .

Dep’t of Telecoms. & Energy, 802 N.E. 2d 8 0 2 , 812 (Mass. 2004)

(quoting Boswell v . Zephyr Lines, Inc., 606 N.E.2d 1336, 1342

(Mass. 1993)). In CSI’s view, Universal’s agreement to haul its

goods for $1,360 per load “so long as the fuel stays at a level

under $2.22 per gallon,” Pl.’s Ex. 1 , was a valid contract that

covered the subject matter of the dispute. CSI is mistaken.

The subject matter of the dispute is the amount CSI was

obligated to pay Universal for hauling the last 275 loads of the

job. Those loads were all hauled at times when the cost of fuel

was more than $2.22 per gallon. The contract between Universal

and CSI only obligated Universal to haul CSI’s goods for $1,360

per load when fuel cost less than $2.22 per gallon. As much as

2 CSI might wish it had entered into a fixed-price contract, it

did not do s o . For reasons best understood by the parties

themselves, they entered into an agreement that did not

establish a rate for loads hauled when fuel cost $2.22 per

gallon or more. Because there was no valid contract that

covered the subject matter of the dispute, i.e., the rate for

hauling CSI’s goods when fuel cost $2.22 per gallon or more,

Universal has established the prerequisite for a quantum-meruit

claim described in MCI WorldCom. Accordingly, the court turns

to the elements of Universal’s claim.

Universal hauled 275 loads of CSI’s concrete forms after

February 9, 2010, and CSI concedes that Universal has

established the first element of a claim for quantum meruit.

There is no dispute that those loads were hauled with the

knowledge and consent of C S I , which satisfies the second

element. CSI argues that Universal has not established that

element because i t , C S I , did not consent to payment of the fuel

surcharge. But that is not the question. The question is

whether Universal rendered services to CSI with CSI’s knowledge

and consent, and there is no reasonable argument to be made that

CSI did not know about or consent to Universal hauling the last

275 loads of its job. Without CSI’s knowledge and consent,

Universal’s drivers would not have been able to pick up the

3 concrete forms they hauled to Milwaukee. That leaves the third

element of Universal’s quantum-meruit claim.

Based on the evidence presented at trial, the court

concludes that Universal hauled CSI’s goods under circumstances

that made it reasonable for Universal to expect payment of more

than $1,360 per load. Those circumstances include the

following: (1) the agreement between Universal and CSI specified

that the rate per load would be $1,360 only if the cost of fuel

remained below $2.22 per gallon; (2) in mid February of 2010,

the cost of fuel was approximately $2.76 per gallon; (3) when

Steven Coughlin of Universal spoke with CSI’s Louis Falco on

February 9, to inform CSI of his decision to impose a fuel

surcharge of $204 per load, Falco did not assert that the

parties had a fixed-price contract or deny that the rate per

load was subject to a fuel-cost ceiling;1 and (4) after Coughlin

broached the issue of a fuel surcharge with Falco, Coughlin was

not informed by C S I , until after the last load had been

delivered, that CSI was not going to pay the fuel surcharge

Universal had been including on its invoices. Under those

circumstances, it was reasonable for Universal, at the time it

1 Rather, he attempted to convince Coughlin that the parties had agreed to a fuel-cost ceiling of $3.22 per gallon rather than the $2.22 per gallon stated in Coughlin’s e-mail of May 2009.

4 hauled the final 275 loads of CSI’s job, to expect payment by

CSI of some amount in excess of $1,360 for each of those loads.

CSI responds by arguing that “[t]he evidence submitted at

trial demonstrates that it was unreasonable for Universal to

expect payment of the disputed fuel surcharge.” Def.’s O b j .

(doc. n o . 6 7 ) , at 5 . In support of that argument, CSI notes

evidence that: (1) Falco did not agree to the surcharge; (2)

Coughlin waited until after the job was finished to raise the

issue with CSI’s Len Worden; and (3) CSI’s John Perry was not

authorized to agree to the surcharge. Whether it was reasonable

for Universal to expect payment of the $204-per-load fuel

surcharge is beside the point. The question is whether it was

reasonable for Universal to expect to be paid some amount in

excess of $1,360 for hauling each of the last 275 loads of the

job. And, for the reasons the court has already given, that was

a reasonable expectation.

Because CSI is liable to Universal in quantum meruit, the

only issue that remains is the amount of Universal’s damages.

“In quantum meruit . . . the damages are not measured by the

benefit realized and retained by the defendant, but rather are

based on the value of the services provided by the plaintiff.”

Paffhausen, 708 A.2d at 271 (citing William Mushero, Inc. v .

Hull, 667 A.2d 853, 855 (Me. 1995) (“The measure of recovery is

5 equal to the reasonable value of the services.”); Siciliani v .

Connolly, 651 A.2d 386, 387 (Me. 1994)).

In the opinion of the jury, Universal is entitled to

$13,475. Universal moves for an award in one of three amounts:

(1) $56,100, which equals the $204-per-load surcharge Universal

attempted to impose, multiplied by 275 loads; (2) $89,158.98,

the amount of the expenses Universal says Falco determined it

incurred as a result of increased fuel costs; or (3)

$113,401.50, the total amount of the fuel surcharge Louisiana

Pacific would have imposed on the last 275 loads of CSI’s job.

CSI, in turn, argues that because none of Universal’s theories

has adequate evidentiary support, any award of quantum-meruit

damages should be limited to the $13,475 suggested by the jury.

Based on its own independent review of the evidence

presented at trial, the court adopts the damages calculation

performed by the jury. With regard to the jury’s calculation,

Universal argues that “it appears that the jury took the

$89,158.89 figure that CSI determined was the increased cost to

Universal and multiplied it by 15% to get to $13,475.” Pl.’s

Mot. for Damages (doc. n o . 63) ¶ 5 . To support that argument,

Universal “further assume[s] that the jury, not having

calculators in the deliberation room, rounded up to $90,000.00

and then took off $25.00 [from $13,500] to come to a round

6 number of $13,475.00.”2 Id. n.1 Rather than speculating about

what the jury might have done, it seems more sensible to focus

on what the jury actually did d o , which was to award Universal

an additional $49 per load for the last 275 loads it hauled for

CSI.

An extra $49 per load falls comfortably within the range of

what is reasonable. Awarding Universal the full surcharge it

sought to impose, $204 per load, would result in CSI paying

$1,564 per load for loads delivered at a time when the cost of

fuel was approximately $2.90 per gallon. Yet, in its first

offer to C S I , Universal was willing to do the job for $1,475 per

load, so long as fuel cost less than $4.35 per gallon.3 And in

its second offer, Universal was willing to do the job for $1,430

per load, so long as fuel cost less than $3.80 per gallon. If

Universal was willing to do the job for $1,430 per load with

fuel at $3.80 per gallon, the court has little trouble

concluding that with the cost of fuel running approximately

ninety cents per gallon below $3.80, a rate of $1,409 per load

2 Going from $13,475 to $13,500 would be rounding; going from $13,500 to $13,475 seems more like sharpening. 3 Universal’s own offers, in turn, are compelling evidence of the value Universal placed on the services it proposed to render and did render to CSI.

7 ($1,360 plus $49) is a reasonable value for Universal’s

services, based on Universal’s previous bids.

To be sure, there is a reasonable basis for awarding more

in quantum-meruit damages. But, at the same time, there is

evidence in the record from which a reasonable factfinder could

make a smaller award. Under Universal’s first offer, which was

$1,475 per load so long as the cost of fuel remained less than

$4.35 per gallon, Universal was willing to do the job for $396

per load over fuel costs. 4 Under Universal’s second offer, which

was $1,430 per load so long as the cost of fuel remained less

than $3.80 per gallon, Universal was willing to do the job for

$488 over fuel costs. 5 Assuming an average fuel cost of

approximately $2.90 per gallon during the time when Universal

hauled the 275 loads at issue, its drivers’ fuel costs were $719

per load. At a rate of $1,360 per load, Universal was paid $641

per load over the cost of fuel. That is less than the $809 over

fuel costs Universal would have realized if the cost of fuel had

remained at $2.22 per gallon, but it is $245 per load more than

4 If each trip was 1116 miles, and a truck gets 4.5 miles per gallon, then each trip required 248 gallons of fuel. With fuel costing $4.35 per gallon, the ceiling stated in Universal’s first offer, the fuel for each load would have cost $1,079, leaving a margin of $396 over fuel costs. 5 With fuel costing $3.80 per gallon, the ceiling stated in Universal’s second offer, the fuel for each load would have cost $942, leaving a margin of $488 over fuel costs.

8 Universal was willing to accept under its first offer and $153

per load more than it was willing to accept under its second

offer. Given the amount Universal was able to make while

charging $1,360 per load, there is a good argument to be made

that an award of less than $49 per load would have been

reasonable.

The jury’s award of $49 per load leaves Universal in a

better position than it would have been in under either of its

first two offers. Thus, the jury’s award of $13,475 falls

within the range of what is reasonable, given the facts of this

case. Accordingly, the court adopts the jury’s advisory verdict

and awards Universal $13,475 in damages on its claim for quantum

meruit.

Consumer Protection Act

Both parties have submitted requests for findings of fact

and rulings of law regarding Universal’s Consumer Protection Act

claim, which was tried to the court. Rather than dealing with

those requests individually, the court will render its decision

in narrative form, with the understanding that the parties’

requests for findings of fact and rulings of law are granted or

denied, as is consistent with the following discussion of

Universal’s claim.

9 Under New Hampshire’s CPA, “[i]t shall be unlawful for any

person to use any unfair method of competition or any unfair or

deceptive act or practice in the conduct of any trade or

commerce within this state.” RSA 358-A:2. The balance of RSA

358-A:2 consists of a non-exclusive list of fourteen unlawful

acts.

Universal describes the conduct underlying its CPA claim in

the following way:

a. Keeping silent after receiving and reviewing 275 invoices with a fuel surcharge[.]

b. Having an employee pay the fuel surcharge on 2 of the invoices to lead Universal to believe that it would be paid on others[.]

c. Having a low level employee say that the fuel surcharge would be paid so that Universal would think that it would be paid but CSI could later disclaim this low level employee’s statements as unauthorized[.]

d. Paying all of the invoices up to February 8th so as to hide the fact that the fuel surcharge on post-February 9, 2010 invoices would not be paid[.] 6

e. Waiting until the last load of the job to tell Universal it did not intend to pay the fuel surcharge[.]

6 The court has some difficulty understanding the factual basis for this point; the March 1 7 , 2010, e-mail exchange between Melissa Boussie and John Perry occurred precisely because CSI paid a batch of invoices that included at least two for loads delivered on or after February 9, which is why Boussie and Perry concluded that Universal was owed the fuel surcharge for those loads.

10 Pl.’s Req. for Findings & Rulings (doc. n o . 6 5 ) , at 9. None of

the conduct on which Universal bases its CPA claim falls into

any of the categories listed in the statute.

For conduct not particularized by the CPA to qualify as unfair or deceptive, it must be of the same type as that proscribed in the enumerated categories. State v . Moran, 151 N.H. 4 5 0 , 452 (2004). Although the general provision of the CPA is broadly worded, not all conduct in the course of trade or commerce falls within its scope. ACAS Acquisitions v . Hobert, 155 N.H. 3 8 1 , 402 (2007).

State v . Sideris, 157 N.H. 2 5 8 , 262 (2008) (parallel citations

omitted). Moreover:

In determining which commercial actions not specifically delineated are covered by the act, [the New Hampshire Supreme Court has] employed the “rascality” test. [Sideris, 157 N.H.] at 263. Under the rascality test, the objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce. Hobert, 155 N.H. at 402.

George v . Al Hoyt & Sons, Inc., 162 N.H. 123, 129 (2011)

(parallel citations omitted).

Here, if CSI violated the CPA at all, it did so under

principles enunciated by the New Hampshire Supreme Court in its

opinion in Milford Lumber C o . v . RCB Realty, Inc., 147 N.H. 15

(2001). In Milford Lumber, “the plaintiff agreed to supply

building materials to the defendants.” Id. at 1 6 . It did s o ,

even as its invoices were going unpaid. See id. To resolve the

payment problem, the plaintiff contacted one of the defendants,

11 who initially gave assurances that the invoices would be paid,

but later asserted that he was not responsible for payment, and

directed the plaintiff to seek payment from his business

partner, one John Howe. See id.

After pointing out that “[a]n ordinary breach of contract

claim does not present an occasion for remedies under the

Consumer Protection Act,” Milford Lumber, 147 N.H. at 19

(quoting Barrows v . Boles, 141 N.H. 382 (1996)), the court held

that in the case before i t ,

[t]he defendants . . . did not simply fail to pay invoices. Rather, they made intentionally vague representations regarding their relationship with Howe to facilitate the use of Howe’s account with the plaintiff to procure lumber for the Windsor Heights project. Then, the defendants used those same misrepresentations as a basis for completely disclaiming liability for the goods. It would be harmful for commerce in New Hampshire to allow such unethical and unscrupulous activity to occur.

Id. at 19-20. In affirming the trial court’s decision that the

defendants violated the CPA by giving the plaintiff the run-

around when it attempted to collect what it was owed, the New

Hampshire Supreme Court endorsed the trial court’s use of the

following standard for determining whether a defendant’s conduct

violates the CPA:

(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise – whether, in other words, it is within at least the penumbra of some common-law

12 statutory or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).

Id. at 19 (quoting FTC v . Sperry & Hutchinson Co., 405 U.S. 233,

244-45 n.5 (1972)).

Based on the foregoing authority, and the evidence adduced

at trial, the court concludes that CSI did not violate the CPA.

Both the CPA itself and Milford Lumber make clear that the

purpose of the CPA is to prevent unfairness and deception in

commercial transactions. To bring this case within the ambit of

Milford Lumber, Universal would have to prove deliberate actions

or statements by CSI that were designed to mislead Universal

into believing that CSI was going to pay the disputed surcharge

when, in fact, it had no intention of doing s o . That i s ,

Universal must prove that CSI tricked it into hauling the

remainder of CSI’s loads. Universal has failed to prove the

requisite level of chicanery on CSI’s part.

To begin, there is no evidence that Perry was directed by

anyone at CSI either to pay any surcharges or to tell Melissa

Boussie that CSI planned to pay the surcharge for all loads

delivered after February 9. Both Falco and Worden testified

that they did not discuss the February 9 telephone call from

Coughlin to Falco with anyone else at CSI. Boussie testified

that it was possible that she was the source of Perry’s

13 knowledge of the surcharge and the date on which Universal

believed it went into effect. Based on the trial testimony, the

court finds that: (1) Coughlin told Falco of his decision to

impose the fuel surcharge on February 9; (2) Coughlin told

Boussie about the February 9 telephone call; (3) Falco told

Worden about the call, but neither of them said anything to

Perry about i t , Falco believing that the fuel-cost ceiling had

not yet been hit, and Worden believing (albeit erroneously) that

CSI had a fixed-price contract with Universal; (4) Boussie,

believing that the fuel surcharge was a done deal, told Perry

that several invoices had been short-paid, because the fuel

surcharge had been left out of CSI’s payment; and (5) Perry,

accepting Boussie’s statements about the fuel surcharge, paid it

for two loads.

Perry may well have given Boussie the impression that CSI

intended to pay the fuel surcharge,7 but he did so mistakenly,

not as part of a grand design to deceive Universal. With regard

to Universal’s alternative scenario, i.e., that Perry’s

superiors told him to pay the surcharge on two loads and to 7 Moreover, there is no evidence that Boussie ever told Coughlin about her March 17 e-mail exchange with Perry; Coughlin testified at trial that the sole basis for his belief that CSI had agreed to pay the fuel surcharge was his telephone conversation with Falco. In other words, there is no evidence that anyone at Universal with decision-making authority ever relied on Perry’s e-mails as a basis for deciding to continue to haul CSI’s goods.

14 represent that it would be paid going forward, the court notes

that Universal’s version of the facts would be substantially

more convincing if Perry had paid the surcharge when it was

initially billed, rather than doing so in response to Boussie’s

inquiry over a short payment.

Without direct evidence that CSI directed Perry to pay the

fuel surcharge or represent that it would be paid going forward

(and in the face of direct evidence that CSI did not do those

things), Universal’s CPA claim rests on little more than a

chronology of events that, in its view, establishes CSI’s intent

to mislead it into believing that CSI planned to pay the fuel

surcharge. While CSI’s silence in the face of 275 invoices that

included the fuel surcharge, and the fact that it did not

expressly state its refusal to pay the fuel surcharge until

after the last load had been hauled, could be considered mildly

suspicious, the court also notes that Universal was similarly

lax in the way it handled its side of things. It did not even

resort to the semi-formality of e-mail to introduce the fuel

surcharge to CSI. Coughlin sought payment of the surcharge from

Falco rather than Worden, to whom he had directed the three bids

that led to the contract between Universal and CSI. And, after

Falco’s somewhat ambiguous response to the February 9 telephone

call, Coughlin did not follow up with Falco or contact Worden

15 until long after the last load had been hauled. Based on the

evidence, the court concludes that what we have here is not some

nefarious plot by CSI to deceive Universal but, rather, the

predictable result of two businesses with different expectations

and understandings, who heard what they wanted to hear when the

other spoke,8 and who dealt perhaps too informally with matters

of substantial financial consequence to both of them. The

reality here is that: (1) Universal erroneously believed it was

entitled to an extra $204 per load after February 9; (2) CSI

erroneously believed it had a fixed-price contract with

Universal; and (3) when the February 9 telephone call resulted

in nothing approaching clarity, finality, or actual agreement,

each party chose, at least implicitly, to whistle past the

graveyard, believing what it wanted to believe, hoping that

things would work out in the end. Now that the day of reckoning

has arrived, one thing is certain: the aftermath of both

8 On this score, Falco and Worden both construed Coughlin’s May 2009 e-mail as proposing a fixed-price contract by reading out the phrase “as long as the fuel stays at a level under $2.22 per gallon national average as posted each Monday by the D.O.E.” Pl.’s Ex. 1 . Meanwhile, Coughlin understood Falco to be agreeing to the fuel surcharge when he said “O.K., I’ll tell Len” or “O.K., I’ll have to tell Len.” Acceptance of the fuel surcharge is one possible interpretation of what Falco said but, if he was accepting the surcharge, one wonders why he felt the need to say anything to Coughlin about the conversation he planned to have with Worden.

16 parties’ casual business practices does not give rise to a CPA

claim.

To prove a CPA claim under Milford Lumber, a supplier of

goods or services must demonstrate that its customer, through

intentional statements or acts, misled it into believing that

payment was forthcoming when, in fact, the customer had no

intention of paying the supplier. While the evidence is clear

that Worden had a low opinion of fuel surcharges, had no

intention of paying the surcharge Universal attempted to impose,

and sincerely held the erroneous belief that CSI had a fixed-

price contract with Universal, Universal has not proven, by a

preponderance of the evidence, that CSI intended to deceive

Universal into thinking that it was going to pay the fuel

surcharge for all loads hauled after February 9, 2010.

Accordingly, CSI is entitled to judgment in its favor on

Universal’s CPA claim.

Conclusion

For the reasons described above, the court finds and rules

that Universal is entitled to damages in the amount of $13,475

on its quantum meruit claim, and that CSI is entitled to

judgment in its favor on Universal’s CPA claim. The clerk of

17 the court shall enter judgment in accordance with this order and

close the case.

SO ORDERED.

Landya McO^^erty United S t ^ e s Magistrate Judge

July 5 , 2012

cc: Matthew R. Johnson, Esq. Brian R. Moushegian, Esq. Marc R. Scheer, Esq. Michael J. Tierney, Esq.