Triple B Corp. v. Brown & Root, Inc.

Citations: 739 P.2d 968; 106 N.M. 99Docket: 15843

Court: New Mexico Supreme Court; July 13, 1987; New Mexico; State Supreme Court

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Triple B Corporation (Triple B) appeals a district court decision favoring Brown Root, Inc. (Brown Root), which granted a directed verdict and dismissed Triple B's claims related to construction contracts for insulation work at the Phelps-Dodge Hidalgo smelter facility. The dispute centers on whether Triple B had agreed to limit its compensation to $6.5 million. After initially receiving payments exceeding this amount, Brown Root ceased payment in January 1977, prompting Triple B to sue.

The district court ruled that Triple B was an independent contractor and, under NMSA 1978, Section 60-13-30, was barred from suing for compensation without demonstrating it was a duly licensed contractor. Although Triple B believed it was licensed in New Mexico, it lacked the necessary contractor's license. During litigation, Triple B claimed it was an employee of Brown Root, not an independent contractor, which conflicted with its previous assertions. 

The district court dismissed the complaint for lack of subject matter jurisdiction, but the appellate court reversed this dismissal. Upon remand, Brown Root moved for a directed verdict after the plaintiff's case, which the district court granted. 

In its appeal, Triple B raises several points: it argues that Section 60-13-30 should not bar its action given its complete performance; contends it provided evidence of unjust enrichment and estoppel against Brown Root's statutory defense; claims there was sufficient evidence for the jury to consider its employment status; contests the exclusion of a Brown Root internal memorandum on privilege grounds; and argues against the district court's ruling on attorneys' fees in a summary judgment motion.

Triple B seeks to overturn the district court's conclusion that its quantum meruit or quasi-contract claim is indistinguishable from its contract claim. Additionally, Triple B challenges several evidentiary rulings made by the district court, including the exclusion of evidence regarding damage to its insulation materials, the admission of a letter limiting its recovery to $6.5 million under two contracts, and the exclusion of evidence related to industry pricing customs. The court's findings on points one, two, three, and six are pivotal to the appeal, leading to the conclusion that Section 60-13-30 bars Triple B from recovery. The court dismisses Triple B's argument that the bar could be overridden by the equitable principle of unjust enrichment and finds that Brown Root cannot be estopped from asserting the statutory bar. The district court's determination that Triple B acted as an independent contractor, thus subject to the statutory bar, is upheld. The district court’s dismissal of Triple B's quantum meruit claim is affirmed, and any alleged errors in the remaining points by Triple B are deemed harmless. Section 60-13-30 prohibits unlicensed contractors from pursuing compensation for licensed-required activities, maintaining a precedent that unlicensed contractors are barred from contract-related claims, including quantum meruit, even when services have been fully performed.

Triple B contends that equitable defenses should be recognized against the statutory bar of Section 60-13-30, particularly in cases where a contractor's lack of proper licensing was induced by fraudulent actions of the work recipients. Specifically, Triple B argues for the defenses of estoppel and unjust enrichment. However, the court finds that Triple B did not meet the criteria for equitable estoppel, as Brown Root did not make false representations or possess superior knowledge of relevant facts, and Triple B could have ascertained its licensing status independently. The court also declines to recognize unjust enrichment as a defense, emphasizing that the Legislature intended to prevent unlicensed contractors from recovering payments to maintain public safety, thereby prioritizing statutory mandates over equitable principles.

Regarding the independent contractor status, the court reiterates that a contractor must prove it was duly licensed to seek compensation under Section 60-13-30, while employees do not face this requirement. The court previously identified a genuine issue regarding whether Triple B acted as an independent contractor or an employee of Brown Root, leading to remand for evidence gathering. Ultimately, the district court ruled that reasonable minds could not differ, directing a verdict in favor of Brown Root, which Triple B contests by highlighting evidence that could suggest an employee relationship. The court notes that determining the employer-employee relationship hinges on the employer's control over the work's execution and results, and emphasizes that, in reviewing a directed verdict, all evidence must be examined in favor of the party opposing the motion.

In *Skyhook Corp. v. Jasper*, the court examined the relationship between Triple B and Brown & Root concerning the classification of Triple B as an independent contractor. The evidence included Brown & Root's specifications for insulation application, written work authorizations, holiday designations, and authority over "out of scope" work. Despite this evidence potentially suggesting control, the court agreed with the district court's conclusion that reasonable minds could not differ on Triple B's status as an independent contractor, affirming the grant of a directed verdict on this issue.

Regarding Triple B's quantum meruit or quasi-contract claim, the district court found it indistinguishable from its contract claims. The court cited Section 60-13-30, which bars unlicensed contractors from pursuing claims based on breach of contract or quantum meruit. This led to the dismissal of Triple B's claim, which the court upheld.

The court did not address evidentiary issues raised by Triple B, as any alleged errors related to the interpretation of contracts were deemed harmless concerning the independent contractor status and estoppel. Similarly, the court found no need to evaluate the district court's ruling on Triple B's claim for attorneys' fees, concluding that even if Texas law applied, Triple B could not claim fees due to the absence of a valid claim for services. Ultimately, the judgment of the district court was affirmed.