stating that generally, "nonparties to a contract acquire no rights or obligations under it”
How later courts described this case
- stating that generally, "nonparties to a contract acquire no rights or obligations under it”
- subcontractors were not entitled, under unjust enrichment theory, to recover from project developer the funds that were forfeited by bankrupt general contractor
- “[B]ecause the subcontractors failed to pursue their available legal remedy, we conclude they cannot now claim that they are entitled to equitable relief .... ” (emphasis added)
- “[B]ecause the subcontractors failed to pursue their available legal remedy, we conclude that they cannot now claim that they are entitled to equitable relief.”
Written by the judges who cited it.
The opinion
ROBERT H. SCHUMACHER, Judge
(concurring in part, dissenting in part).
While I concur with the majority’s analysis regarding the subcontractors’ equita *443 ble claims, I respectfully dissent with regard to the analysis of the forfeiture clause. I believe that MAC is not entitled to the $44,000 because the forfeiture provision in its contract with JayLark does not apply to the surety and the subcontractors. Where a contract clearly and expressly provides for forfeiture, the provision will be strictly construed. Naftalin v. John Wood Co., 263 Minn. 135, 147-48 , 116 N.W.2d 91, 100 (1962).
Here, the forfeiture provision clearly provides that “the Contractor” is the only party subject to its terms. Because it is undisputed that JayLark is “the Contractor,” I conclude that this court should not allow MAC to extend the reach of its forfeiture provision to include the subcontractors and the surety, which are nonparties to the contract between MAC and JayLark. As nonparties to the contract, the forfeiture provision is not a clear expression or manifestation of their intent and, thus, is unenforceable as applied to them. See id. (holding that forfeiture is enforceable if it is clear expression of parties’ intent).
Further, forfeitures are not favored and will not be enforced when great injustice would be done. Hideaway, Inc. v. Gambit Invs., Inc., 386 N.W.2d 822, 824 (Minn.App.1986). Here, I believe that it is unjust that MAC, which has the benefit of a fully completed project, retains a windfall profit of $44,000. While I agree that Mon-Ray and Erickson are not entitled to the $44,000 because both failed to timely pursue their statutory remedy, I conclude that Granite should be entitled to the money in mitigation of the great economic loss that it has suffered in discharge of its payment and performance bond obligations.