Commerce v. Equity

Citations: 695 So. 2d 383; 1997 WL 133828Docket: 95-2619

Court: District Court of Appeal of Florida; June 4, 1997; Florida; State Appellate Court

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Commerce Partnership 8098 Limited Partnership and its general partner, Forest-English, Inc., were involved in a legal dispute with Equity Contracting Company, Inc. Equity filed a complaint seeking recovery under quantum meruit, alleging that it performed stucco work worth $17,100 on Commerce's property but was not paid due to Commerce's failure to fully pay the general contractor, World Properties, Inc. Although Commerce claimed to have paid the general contractor in full, Equity's president testified that he only expected payment from the general contractor and not directly from Commerce. After completing the work, Equity received a punch list for remedial tasks from Commerce but did not finish them due to non-payment.

At trial, Equity presented its case quickly, but it did not provide evidence of the payments made by Commerce to the general contractor or others for the work. Commerce subsequently moved for involuntary dismissal, arguing the absence of an implied contract, but the trial court denied this. During closing arguments, Equity equated quantum meruit with unjust enrichment, leading to confusion about the cause of action. Commerce attempted to present evidence of payments made to subcontractors, but the trial court excluded this as irrelevant. Ultimately, the court ruled in favor of Equity, awarding it $17,100 based on precedents related to unjust enrichment.

A contract implied in fact is an enforceable agreement inferred from the conduct of the parties rather than explicit words. Unlike express contracts, which are clearly articulated, contracts implied in fact rely on the tacit understanding between the parties, requiring a fact finder to interpret their actions to discern the implied agreement. Florida courts emphasize that such contracts are based on mutual assent, as illustrated in various case law examples. Common scenarios include services rendered at another's request or knowledge, establishing an implied promise for reasonable compensation.

In contrast, a contract implied in law, or quasi contract, is a legal construct that does not depend on the parties' intentions but aims to prevent unjust enrichment when one party benefits at another's expense. The essential elements for a quasi contract include the conferment of a benefit, the defendant's knowledge and acceptance of the benefit, and the inequity of retaining that benefit without compensation. Recovery under a quasi contract can occur even without prior dealings between parties, distinguishing it from contracts implied in fact, which require some form of interaction. Various terms, such as 'unjust enrichment' and 'quantum meruit,' are used interchangeably in Florida courts to describe the legal basis for these claims.

Legal scholars have proposed replacing the term "contract implied in law" with "quasi contract" to reduce confusion, yet both terms persist in legal usage, complicating understanding for students and practitioners. Corbin outlines that while the term "quasi contract" gained some acceptance, "quantum meruit," originating from common law, remains prevalent. The action of assumpsit allowed recovery for breaches of simple contracts or contracts implied by law based on parties' conduct. Assumpsit is divided into general and special types, with general assumpsit relying solely on implied contracts. The common counts in general assumpsit, which include claims like quantum meruit for work done and quantum valebant for goods sold, were historically used for enforcing both implied contracts in law and fact. This overlap has led to the interchangeable use of "quantum meruit" and "quasi contract." 

At trial, the attorney for Commerce interpreted "quantum meruit" as a contract implied in fact, while the court operated under a quasi contract theory. The ambiguity is highlighted by case law where "quantum meruit" is linked to both implied contracts in fact and law. For instance, some cases assert that "quantum meruit" requires mutual consent, while others define it in terms of liability for unjust enrichment. The distinction between contracts implied in fact and quasi contracts has become blurred, especially when both theories might apply to the same factual scenarios. In instances where services are provided without a prior agreement on compensation, an implied promise to pay may arise, allowing enforcement of a contract implied in fact. Conversely, if no enforceable contract exists but the defendant benefits from the service, recovery may be pursued under quasi contractual principles.

In Lamborn v. Slack, the court recognized a contract implied in fact while applying quasi contractual principles, indicating that overlapping theories may necessitate a fact finder to evaluate the facts under both frameworks. Contrary to Commerce's assertion at trial, Equity was claiming a quasi contract, not a contract implied in fact. In Maloney, the court addressed a subcontractor's right to pursue a quasi contract claim against a property owner, despite no direct dealings between them. The subcontractor, who provided materials for a construction project but was unpaid, sought damages from the owner after arbitration with the general contractor. The court determined that a quasi contract claim requires the subcontractor to prove two elements: (1) exhaustion of remedies against the general contractor and (2) that the owner had not compensated anyone for the improvements made by the subcontractor. It reiterated that unjust enrichment must be established, meaning that if the owner compensated someone, retaining the benefit would not be unjust. The court also clarified that recovery against the owner on a quasi contract theory hinges on the subcontractor's prior remedies against the contractor, ruling in Maloney that pursuing the claim was premature due to the unresolved arbitration status. In Gene B. Glick Co., the court upheld a ruling favoring an owner when a subcontractor claimed unjust enrichment, affirming that the owner’s payment to the general contractor negated any unjust enrichment. The court noted that while the subcontractor's non-payment may be unjust, the owner was not liable since they fulfilled their obligation to the general contractor. Lastly, the court retracted a prior assertion from Maloney regarding limitations on a subcontractor's ability to claim quasi contract relief, clarifying that Florida's construction lien statute does not limit a subcontractor's remedies against an owner.

Section 713.30 of the Florida Statutes (1995) states that the construction lien provisions are cumulative and do not replace other available remedies for parties seeking payment. In St. Regis Paper Co. v. Quality Pipeline, Inc., the court affirmed that a materialman's failure to perfect a statutory lien does not eliminate their right to seek recovery for materials provided. The Mechanics' Lien Law aims to prevent owners from being double-billed for improvements, emphasizing that it should not facilitate unjust enrichment.

Florida case law supports that subcontractors who fail to perfect their liens can still pursue quasi-contract actions for unjust enrichment against owners. For instance, in Zaleznik, a roofing subcontractor succeeded in an unjust enrichment claim despite not perfecting its lien. Similarly, the third district in Capital Construction Services, Inc. v. Rubinson allowed a home improvement subcontractor to claim unjust enrichment for not timely serving notice of claim.

The cases referenced, including Paschall's, Inc. and Tum-A-Lum Lumber, establish that a subcontractor must exhaust remedies against the contractor and demonstrate that the owner received a benefit without paying for it to pursue a quasi-contract action. The owner is liable only if they received a windfall benefit without compensation. Florida's approach, as articulated in Maloney, aligns with jurisdictions that permit recovery despite the failure to perfect a construction lien, diverging from states where such claims are precluded.

Overall, Florida courts do not limit quasi-contract claims to equitable remedies, as implied contract actions historically fall under legal remedies. While quasi contracts may be described as equitable for fairness, they do not necessarily invoke the equity court's jurisdiction in the Florida legal context.

Reversal of the trial court's judgment is warranted because Equity failed to demonstrate that Commerce did not make any payments for the benefits provided to the property. This lack of proof is a critical element in a quasi contract claim, which is not merely an affirmative defense. Commerce's evidence of having paid $64,097 directly to subcontractors was relevant, as it pertained to the core issues of this case. When combined with the $256,894 paid to the general contractor, Commerce's total expenditures exceeded the contract price for the improvements. If an owner pays the contract price for a subcontractor's work, a claim of unjust enrichment by an unpaid subcontractor cannot succeed. The trial court misapplied precedents, particularly Zaleznik, where the owner had not compensated anyone despite receiving substantial work. Since the issue of whether Commerce's enrichment was unjust was not fully litigated, the case is remanded for further evidence. Equity bears the burden of proving by a preponderance of evidence that Commerce failed to make payments. If Equity proves this, the court will rule in its favor; otherwise, judgment will favor Commerce.