The opinion
SUPERIOR COURT
PENOBSCOT, SS. CIVIL ACTION
Docket No. CV-02-74 ae
GlLhe Po
Larkin Enterprises, Inc.,
Plaintiff
Vv. Order on Motion to Dismiss
FILED & ENTERED GARBRECHT
ND AA QONALDL.
Manafort Brothers, Inc. et al., SUPERIOR COURT 0 LAW LIBRARY
Defendants SEP 13 2002 -
gep 17 2002
PENOBSCOT COUNTY
Pending before the court is the motion to dismiss filed by defendant Maine
Yankee Atomic Power Company. The court has considered the written arguments
submitted by Maine Yankee and the plaintiff.
Maine Yankee argues that the allegations asserted against it in the complaint fail
to state a claim upon which relief could be granted against it. “A motion to dismiss tests
the legal sufficiency of the complaint.” McAfee v. Cole, 637 A.2d 463, 465 (Me. 1994).
On a motion to dismiss, the complaint must be examined "in the light most favorable to
the plaintiff to determine whether it sets forth elements of a cause of action or alleges
facts that would entitle the plaintiff to relief pursuant to some legal theory.” Id. A
dismissal is proper “only when it appears beyond doubt that a plaintiff is entitled to no
relief under any set of facts that he might prove in support of his claim.” Hall v. Board of
Environmental Protection, 498 A.2d 260, 266 (Me. 1985). See also Heber v. Lucerne-in
Maine Village Co., 2000 ME 137, {7,755 A.2d 1064, 1066.
In its complaint, Larkin alleges that as Maine Yankee decommissioned its nuclear
power plant in Wiscasset, it hired defendant Manafort Brothers, Inc. to conduct part of
that project. Complaint at [| 5-6 and 8. Maine Yankee prepared technical specifications,
design criteria, drawings and listed suppliers, which Manafort used in securing bids from
potential subcontractors. Jd. at J 10-11 and 13. Manafort provided this information to
Larkin. Id. at{ 10. In response to further inquiries from Larkin, Manafort advised
Larkin that the subcontractors’ work was to be performed as “occurring in a standard
commercial setting.” Jd. at [§[ 14-15. In formulating its fixed bid prices, Larkin relied on
this information, and Manafort accepted Larkin’s bids. Id. at [{] 16-18. Larkin mobilized
to the project and began its work, which included the submission of drawings and
material submittals required by the specifications that previously were provided to it. Id.
at [J 20-21. However, Larkin’s submittals and drawings were rejected, and, as Manafort
acknowledged, the project work environment was not a “standard commercial setting.”
Id. at Jf 22-24. Further, after Larkin mobilized to the site, it discovered that the
specifications and drawings provided by the defendants were seriously flawed. Id. at J
26. As aresult of the flawed drawings and specifications, Larkin incurred significant
expense exceeding that contemplated on the basis of the original proposals identified by
the defendants, and the length of time required for performance was dramatically
increased. Id. at J§[ 27-28. Nonetheless, Larkin and Manafort proceeded with the project
in a commercially reasonable manner, and Larkin has completed its performance. Jd. at
{1 29-30. Maine Yankee has made “progress payments” to Manafort. Id. at J 47}
Larkin alleges that Manafort has failed to pay it in full. Jd. at 31. Larkin now seeks
damages from both defendants.
In addition to claims it has asserted against Manafort, Larkin alleges that Maine
Yankee is liable under theories of unjust enrichment (count 1), quantum meruit (count 2),
negligent representation (count 3), wrongful refusal to approve submittals (count 5) and
breach of warranty (count 6). In the motion at bar, Maine Yankee seeks dismissal of each
of these counts as stated against it.
Unjust enrichment (count 1)
After years of confusion by the bar, see Bowden v. Grindle, 651 A.2d 347, 350
(Me. 1994), and the Law Court’s acknowledgement that it had not been precise in its
nomenclature, see Paffhausen v. Balano, 1998 ME 47, J 6, 708 A.2d 269, 271 n. 3 (Me.
1998), Danforth v. Ruotolo, 650 A.2d 1334, 1335 n. 2 (Me. 1994), recent caselaw has
carefully identified the elements of an unjust enrichment claim and distinguishes such a
claim from one for quantum meruit, discussed below. A claim for unjust enrichment is
predicated on evidence that the plaintiff conferred a benefit on the defendant, that the
‘Maine Yankee argues that, based on the complaint, it has fully paid Manafort. This
construction is not supported by the allegations in the complaint.
defendant had an appreciation or knowledge of that benefit, and that the defendant’s
acceptance or retention of that benefit makes it inequitable for the defendant to retain that
benefit without payment for its value. Forrest Associates v. Passamaquoddy Tribe, 2000
ME 195, { 14, 760 A.2d 1041, 1045-46. Maine Yankee argues here that as a matter of
law, it is not liable to Larkin because the two did not stand in a relationship of contractual
privity.
_ Inacase that predated the Law Court’s efforts to eliminate the intermingled
analysis of unjust enrichment and quantum meruit claims, it held that “[l]ack of privity of
contract .. . do[es] not bar an action for unjust enrichment.” A.F.A.B., Inc. v. Town of
Old Orchard Beach, 610 A.2d 747, 749 (Me. 1992). For several reasons, it is apparent
that, in that passage, the Court in fact was examining the law of unjust enrichment and
was not using that term in discussing the substance of quantum meruit claims. First, that
holding falls squarely within the context of the analysis of a claim that is defined by the
elements of unjust enrichment and not the different elements of a claim for quantum
meruit. See id. Second, the following sentence, which is a quotation from Pendleton v.
Sard, 297 A.2d 889 (Me. 1972), refers to the claim of a party whose labor or materials
result in a benefit to another party. The receipt or acceptance of a benefit is at the heart
of a claim for unjust enrichment and in fact serves to distinguish it from a claim for
quantum meruit: in the former, the measure of damages is based “on the value of what
was inequitably retained”; and in the latter, the measure of damages is the value of the
services rendered. Paffhausen, 1998 ME 47, ] 7, 708 A.2d at 271.
In A.F.A.B., the Law Court went on to hold that a plaintiff/subcontractor may
properly pursue an action for unjust enrichment against the defendant/property owner,
even in the absence of privity of contract with the defendant, when the defendant has not
paid the general contractor in full. 610 A.2d at 749. Here, the allegations in the
complaint do not establish that Maine Yankee has paid Manafort in full. Rather, the
plaintiff alleges only that Maine Yankee has made progress payments. Consequently, for
this reason alone, the plaintiff’s allegations set out a legally viable claim for unjust
enrichment.
Quantum meruit (count 2)
A claim for quantum meruit requires proof that the plaintiff rendered services to
the defendant, that the defendant knew of and consented to those services, and that under
the circumstances it is reasonable for the plaintiff to expect payment for those services.
Paffhausen, 708 A.2d at 271. The jist of a quantum mertuit claim is the existence of an
implied promise where the formal elements of an express contract do not exist. Id. at
272. A promise to pay or perform may be found “when the surrounding circumstances
make it reasonable for him [the performing party] to believe that he will receive payment
from the other.” Jd. (citation and punctuation omitted). The reasonableness of that belief
flows from the performance of services “under circumstances consistent with contractual
relations.” Jd. (citation and punctuation omitted). See also Danforth, 650 A.2d at 1335.
Here, Larkin alleges that it was in a direct and express contractual relationship
with Manafort, the general contractor. The allegations do not support a claim that Maine
Yankee was subject to an express or implied contractually based obligation to pay Larkin
for its performance rendered as a result of Larkin’s relationship with Manafort.
Larkin argues that language in several Law Court opinions supports its position
that it may pursue a quantum meruit claim here. The first passage, from A.F.A.B., 610
A.2d at 749, and discussed above, appears to be an instance where the Court made
reference to “quantum meruit” but was actually examining a claim for unjust enrichment.
See Danforth, 650 A.2d at 1335 n. 2 (noting that the A.F.A.B. Court used “unjust
enrichment” and “quantum meruit” interchangeably). The second passage is from
Pendleton. There, the Law Court referred to a holding from a Tennessee case: “. . .we
[the Tennessee Supreme Court] hold that where a materialman or subcontractor furnishes
labor or material which benefit the property of a person with whom there is no privity of ©
contract, an action on quantum meruit may lie against the landowner to recover the
reasonable value of said labor and materials so furnished.” 297 A.2d at 894, quoting
Paschal’s Inc. v. Dozier, 407 S.W.2d 150, 155 (Tenn. 1966). However, the Tennessee
court went on to lay out the elements of the claim that it called “quantum meruit,” id., and
those elements are the same as the elements for an unjust enrichment claim under Maine
law. The Law Court went on to discuss some factors that would make a subcontractor’s
claim viable even in the absence of privity, in order “to prevent any ‘enrichment’ from
being ‘unjust’... .” 297 A.2d at 895. This is suggestive of the analysis that supports a
claim for the equitable remedy of unjust enrichment.
The court readily acknowledges that some of the older quantum meruit/unjust
enrichment cases such as A.F.A.B. and Pendleton do not make it easy to distinguish
between the legal analyses that is unique to each legal theory. However, this court’s best
attempts to make that distinction in those cases indicates that the caselaw noted by Larkin
does not support its argument that, in the present circumstances, it may maintain a claim
for quantum meruit. The language that appears facially to lend support to Larkin’s claim
in fact appears to bolster its contention that a claim for unjust enrichment may be proper.
However, a close examination of the Law Court’s analysis does not allow the concept of
quantum meruit to be stretched to the degree necessary to survive Maine Yankee’s
motion to dismiss that claim.
Negligent misrepresentation (count 3)
Maine Yankee next argues that the absence of contractual privity with Larkin bars
Larkin from suing in tort. Specifically, Maine Yankee contends that it owes no duty that
could have been breached as Larkin alleges. ‘The absence of an express contract between
the parties, and the absence of a claim based on an implied contract eliminates a
contractual relationship as the source of any duty owed by Maine Yankee to Larkin.
Because Larkin does not argue the existence of a statutory duty, the question becomes
whether a common law duty of care exists between the parties.
The existence of a duty is a question of law. Mastriano v. Blyer, 2001 ME 134, J
11, 779 A.2d 951, 954. The Law Court has identified several principles that are useful in
determining whether a duty exists. A duty is "an obligation, to which the law will give
recognition and effect, to conform to a particular manner of conduct toward another." See
Quadrino v. Bar Harbor Banking & Trust Co., 588 A.2d 303, 304 (Me. 1991) (citation
omitted). More specifically, the court must consider the foreseeability of harm resulting
from the defendant's conduct. See Cameron v. Pepin, 610 A.2d 279, 282 (Me. 1992); see
also Trusiani v. Cumberland & York Distributors, Inc., 538 A.2d 258, 263 (Me. 1988)
(Scolnik, J., dissenting) (where a plaintiff is foreseeable, "a duty will exist if reasonable
persons would recognize that it exists."). The relationship of the parties is also germane.
See Hughes v. Beta Upsilon Building Association, 619 A.2d 525, 527 (Me. 1993).
Additionally, fundamental policy implications must be weighed:
In the decision of whether or not there is a duty, many factors interplay:
the hand of history, our ideals of morals and justice, the convenience of
administration of the rule, and our social ideas as to where the loss should fall. In
the end the court will decide whether there is a duty on the basis of mores of the
community ‘always keeping in mind the fact that we endeavor to make a rule in
each case that will be practical and in keeping with the general understanding of
mankind.’
Id. (citations omitted). The creation and scope of such a duty, however, is circumscribed
by the need to avoid "both unlimited liability and liability out of all proportion to
culpability." Cameron, 610 A.2d at 283.
The Restatement of Torts imposes a duty of reasonable care on parties who obtain
or provide false information to others in business transactions, when the injured party
sustains pecuniary loss as a result of placing reasonable reliance on that information.
RESTATEMENT (SECOND) OF TorTS § 552(1) (1977). Liability for such negligent
misrepresentations in this context extends to losses suffered by those parties for whose
benefit and guidance the respondent supplies the information, even in the absence of
privity. Id., comment h; see also id., ill. 9. The court finds this analysis persuasive for
two reasons. .
First, Maine courts historically rely on the formulations of law found in the
Restatement.
Second, exposure to liability for circumstances identified in section 552 is
consistent with the basic principles used in Maine to determine when a common law duty
exists. The existence of a duty places the burdens of loss on the party whose fault caused
that loss. Although Maine Yankee argues that this allocation exposes it to risks that it
otherwise avoided when it declined to enter into a contractual relationship with Larkin, in
fact Maine Yankee is in the best position to eliminate the risks and resulting harm that its
conduct allegedly caused here. In this way, a party in Maine Yankee’s shoes continues to
avoid liability simply by acting with due care. This leads to a separate justification for
this duty, which is to provide an incentive to a supplier of information to take those
reasonable steps that will reduce the risk of the pecuniary loss that would foreseeably be
sustained by consumers of that information. Finally, the limitations on liability embodied
in section 552 ameliorate the concerns of unlimited liability. The universe of claimants is
limited to those parties “for whose benefit and guidance he [the defendant] intends to
supply the information or knows that the recipient intends to supply it... .” Jd. at §
552(2)(a). Any liability is limited to damages arising from those transactions in which
the liable party intends the defective information to be used. Jd. at 552(2)(b). Finally,
any recoverable damages are limited to pecuniary losses. Id. at 552(1).
Maine Yankee argues alternatively that even if a cause of action exists for
negligent misrepresentation in the circumstances of this case, Larkin cannot recover
because it knew that any representations made by Maine Yankee were false and did not
rely on any such representations. The pleadings do not establish this factual contention,
and it cannot bar Larkin’s claim at this early stage of the proceedings.
Wrongful refusal to approve submittals (count 5)
In support of its claim in count 5, Larkin alleges as part of the bid process, Maine
Yankee prepared construction drawings and technical specifications that would govern
Larkin’s prospective work as a subcontractor. Complaint at { 11. Larkin further alleges
that on the basis of those drawings and specifications, it submitted its own shop drawings
and equipment and material submissions. Jd. at { 21. Later in the complaint, Larkin
alleges that those submissions were filed with Maine Yankee and that Maine Yankee
negligently refused to approve them. Jd. at [{[/ 51-52. Here, Larkin’s contractual
relationship was with Manafort, and Larkin does not pursue its claim against Maine
Yankee in count 5 on any theory that is contractually based. Consequently, Maine
Yankee argues that there is no remaining basis on which to impose a duty that would
support this claim of actionable conduct. The analysis used to determine the existence of
a common law duty of reasonable care is noted above.
Although the submittal process is not made entirely clear from the complaint, the
pleading may be read to allege that Larkin was required to present certain submissions for
Maine Yankee’s approval and that this requirement originated with Manafort’s
relationship with Maine Yankee. In this way, the complaint may be read to contend that
Maine Yankee inserted itself directly into Larkin’s performance of its obligations under
the Larkin-Manafort contract. Those circumstances justify an expectation in the law that
Maine Yankee will exercise reasonable care in its conduct that has a direct bearing on
Larkin’s ability to discharge its own obligations. As the court construes the allegations
against Maine Yankee in count 5, this is far from a situation where the landowner is on
the sidelines and plays little or no role in the performance of the subcontractor. Even
though Maine Yankee’s only contractual relationship is with Manafort, Maine Yankee
elected to retain a substantial measure of control over the work required of Larkin. In
assessing a claim brought by a contractor against an architect between whom there was
not contract, one court has noted:
Altogether too much control over the contractor necessarily rests in the hands of
the supervising architect for him not to be placed under a duty imposed by law to
perform without negligence his functions as they affect the contractor. The power
of the architect to stop the work alone is tantamount to a power of economic life
or death over the contractor. It is only just that such authority, exercised in such a
relationship, carry commensurate legal responsibility.
United States v. Rogers & Rogers, 161 F.Supp. 132, 136 (S.D.Cal. 1058). See also Forte
Bros. v. National Amusements, Inc., 525 A.2d 1301, 1303 (R.I. 1987) (noting an
“emerging majority” of jurisdictions allowing tort actions against supervising architects
even in the absence of privity, and further holding, "A supervising architect, in the
performance of its contract with the owner, is required to exercise the ability, skill and
care customarily exercised by architects in similar circumstances. . . .This duty of care
extends to contractors who share an economic relationship and community of interest
with the architect on a construction project.").
Here, the allocation of power retained by Maine Yankee should not be
accompanied by immunity from liability based on harm sustained by others who are
required to have direct dealings with it, when Maine Yankee fails to exercise reasonable
care in exercising that power.
Breach of warranty (count 6)
In the final count of its complaint, Larkin seeks recovery based on a claim that
Maine Yankee breached express and implied warranties embodied in the specifications
and drawings that it formulated and on which Larkin relied in submitting its bid to
Manafort. Larkin also alleges that Maine Yankee breached a warranty that the latter
would accept performance that satisfied those specifications.
As Judge Hand defined it.
A warranty is an assurance by one party to a contract of the existence of a fact
upon which the other party may rely. It is intended precisely to relieve the
promisee of any duty to ascertain the fact . . .; it amounts to a promise to
indemnify the promisee for any loss if the fact warranted proves untrue, for
obviously the promisor cannot control what is already in the past.
Metropolitan Coal Co. v. Howard, 155 F.2d 780, 784 (2d. Cir. 1946). The contractual
foundation of a warranty formed the basis for dismissal of warranty claims made by a
party who was not in privity with the alleged wrongdoer. In re: All Maine Asbestos
Litigation, 581 F.Supp. 963, 973 (D.Me. 1984). Indeed, one of the cases cited by Larkin
appears to equate contract and warranty claims. Performance Abatement Services Inc. v.
Lansing Board of Water and Light, 168 F.Supp.2d 720, 734 (W.D.Mich. 2001).
Here, Larkin has not alleged the existence of an express contractual relationship
with Maine Yankee, and for the reasons noted above, such a relationship cannot be
implied in fact. Consequently, claims that are a function of the privity of parties
necessarily are barred. This includes claims for breach of warranty, which arise out of a
relationship that is not alleged to exist here.
The entry shall be:
For the foregoing reasons, defendant Maine Yankee’s motion to dismiss is
granted in part and denied in part. The plaintiff's claims against Maine Yankee for
quantum meruit in count 2 and for breach of warranty in count 6 are dismissed for failure
to state a claim upon which relief can be granted. Beyond this, the motion is denied.
A
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Dated: September 12, 2002 [[ (|
Justicd, Maing Superior Court