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SUB MAY RECOVER $40K FROM OWNER FOR CONTRACTOR'S FAILURE TO PAY

Thursday, February 28, 2019 02:00 pm

 

Unjust Enrichment — Quantum Meruit

Alpha Contr. Servs. v. Prof'l Retail Servs., 2019 Del. Super. Lexis 14 (January 9, 2019)

An unpaid sub may recover payment from the project owner instead of the general contractor because the owner may have been the reason the contractor couldn’t pay.

On April 4, 2018, general contractor Professional Retail Services (PRS) entered into a subcontract with Alpha Contracting Services, LLC (Alpha) for renovations to the Ann Taylor Loft store in Rehoboth Beach, Delaware. The subcontract work, valued at $84,070, involved furnishing drywall, ceiling tiles, trim, paint, and equipment. The subcontract also provided for scheduled progress payments upon completion of certain work.

Alpha claimed that it completed all of the contract work in a timely manner but was paid just $40,000. PRS submitted an invoice for the remaining $44,070, but PRS never paid. Alpha sued PRS and the project owner, Ann, Inc. (Ann), filing claims under unjust enrichment and quantum meruit theories, as well as under a Delaware law that governs payment on construction projects (6 Del. C. §3501).

Ann moved to dismiss all three claims and was partially successful. The court granted the motion to dismiss Alpha’s Delaware-statute claim, but it ruled that Alpha may pursue its unjust enrichment claim against Ann.

Owner paid contractor ‘in full,’ but may still be liable Alpha claimed that Ann was unjustly enriched under the subcontract because it benefited from Alpha’s work but didn’t pay. But Alpha, as the entity “who has conferred a benefit upon another [i.e. Ann] as the performance of a contract with a third person [i.e. PRS]” was not necessarily entitled to restitution from Ann merely because of PRS’s failure, the court noted, citing J.O.B. Const. Co. v. Jennings & Churella [...]

 
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