Thursday, March 12, 2015

Elite Construction Team, Inc. v. Wal-Mart Stores, Inc. (Maryland U.S.D.C.)

Filed:  March 2, 2015

Opinion by: James K. Bredar

Holding:  An unpaid subcontractor that has no privity with an owner may not prevail against such owner in a claim that the owner is unjustly enriched. 

Facts:  Defendant entered into contracts with a contractor to construct three stores.  Contractor entered into a subcontract with Plaintiff to perform certain site development services.  Plaintiff furnished labor, materials and extra work at the direction of Contractor.  Contractor failed to pay Plaintiff.  Plaintiff alleged Defendant withheld monies from Contractor in an amount equal to the amount Plaintiff claims it is owed.  Plaintiff asserted claims under a theory of breach of implied contract or quantum meruit. 

Analysis:  The Court relied on the Court of Appeals decision of Bennett Heating & Air Conditioning, Inc. v. NationsBank of Maryland, which recognized that claims in quantum meruit and implied contract are all aimed at achieving restitution.  Restitution is a restoration required to prevent unjust enrichment.  The Bennett court provided that an owner’s enrichment is not unjust when the owner gets no more than what was contracted for.  Instead, a subcontractor not in privity with the owner may obtain a judgment against the general contractor and seek through garnishment or subrogation the monies owed by the owner to the general contractor.  Because Plaintiff was not in privity of contract with Defendant, its claims failed.

The Court disagreed with Plaintiff’s argument that it was an intended beneficiary of the contracts between Defendant and the general contractor and, therefore, a constructive trust was created in Plaintiff’s favor.  The Court noted precedent that a constructive trust is a remedy for unjust enrichment, but found Bennett to “unequivocally establish” that Defendant is not unjustly enriched. The Court also noted that the contracts between the Defendant and the general contractor expressly disavow any interpretation that would “confer any rights upon any person who is not a party to the” contracts. 

The full opinion is available in PDF.

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