14TH v. TERHAAR

• Decision Date: 07 September 2010
• Docket Number: No. 1D09-0169.,1D09-0169.
• Citation: 43 So.3d 877
• Parties: 14TH & HEINBERG, LLC, Appellant/Cross-Appellee, v. TERHAAR AND CRONLEY GENERAL CONTRACTORS, INC., a Florida Corporation, Appellee/Cross-Appellant.
• Court: Florida District Court of Appeals

43 So.3d 877

14TH & HEINBERG, LLC, Appellant/Cross-Appellee, v. TERHAAR AND CRONLEY GENERAL CONTRACTORS, INC., a Florida Corporation, Appellee/Cross-Appellant.

No. 1D09-0169.

District Court of Appeal of Florida, First District.

September 7, 2010.

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William H. Stafford, III of Young, Bill, Fugett & Roumbos, P.A., Pensacola, for Appellant/Cross-Appellee.

J. Nixon Daniel, III and William H. Mitchem of Beggs & Lane, RLLP, Pensacola, for Appellee/Cross-Appellant.

VAN NORTWICK, J.

14th & Heinberg, LLC (Heinberg), owner of a retail shopping mall in Pensacola, appeals a final judgment entered against it on a claim for unjust enrichment. Terhaar & Cronley General Contractors, Inc. (Terhaar), appellee, had filed suit against Heinberg asserting that Heinberg had been unjustly enriched by leasehold improvements made by Terhaar to a retail space leased by Montgomery Ward Corporation from Heinberg. We affirm as to the issues raised on appeal without further comment. Terhaar cross-appeals arguing that the trial court utilized an incorrect standard in assessing damages on the unjust enrichment claim. Terhaar contends that the proper measure of damages was the increase in the value of the property as improved rather than the amount owed Terhaar under the construction contract. We affirm as to the issue raised on cross-appeal and write only to explain the proper measurement of damages.

Terhaar is a building contractor which performed significant leasehold improvements to a building leased by Montgomery Ward in a Pensacola shopping mall owned by Heinberg. Pursuant to its lease with Heinberg, Montgomery Ward was not permitted to subject the landlord's interest to any liens for labor or materials furnished to Montgomery Ward. In December 2000, after Terhaar had completed the improvements, Montgomery Ward sought protection under chapter 11 of the federal bankruptcy code. Heinberg terminated its lease with Montgomery Ward in June 2001, and the retail space, as improved by Terhaar, was leased to another entity at a rental rate substantially greater than the rent paid by Montgomery Ward. At the time the lease was terminated, Terhaar had not been fully paid for the improvements; a balance of $183,749.38 remained under the construction contract with Montgomery Ward, of which $84,657.99 was owed to subcontractors. Terhaar ultimately was paid approximately $67,000 in the bankruptcy proceeding.

Terhaar filed suit against Heinberg seeking to foreclose its mechanic's liens and seeking damages on a claim for unjust enrichment. The trial court entered final summary judgment in Terhaar's favor on the mechanic's lien claims. The unjust enrichment claim was not the subject of this final summary judgment. On appeal, this court reversed, holding that Heinberg's property could not be subject to Terhaar's mechanic's liens for the Montgomery Ward improvements because the lease between Heinberg and Montgomery Ward did not require Montgomery Ward "to make the improvements and because the improvements did not constitute the pith of the lease." 14th & Heinberg, L.L.C. v. Henricksen, 877 So.2d 34, 41 (Fla. 1st DCA 2004).

On remand, a bench trial was conducted on the pending unjust enrichment claim. The trial court entered judgment in favor of Terhaar and awarded damages in the amount of $116,680.86, plus prejudgment interest in the amount of $98,846.30. This damage award represented the outstanding balance under the construction contract between Montgomery Ward and Terhaar.

Terhaar argues on appeal that the trial court erred in awarding monetary damages equal to the remaining balance under the contract for improvement of the property. Instead, asserts Terhaar, the award of damages should have been premised on the increase in the lease value of the subject property as improved by Terhaar. By this measure, Terhaar contends that it should receive over two million dollars in damages.

Below and on appeal, Terhaar relies on Levine v. Fieni McFarlane, Inc., 690 So.2d 712 (Fla. 4th DCA 1997). In Levine, a party believing that it would be entering into a lease of real property contracted for improvements to be made to the real property. 690 So.2d at 713. No lease was ultimately executed. The party who made the improvements was not paid and filed an unjust enrichment action against the land owner, and the trial court awarded damages based on the costs of the improvements. Id. The Levine court, relying on Arey v. Williams, 81 So.2d 525 (Fla.1955), held that when improvements have been made to real property, the measure of damages in an unjust enrichment case is the enhanced value of the property from the perspective of the owner, and not the cost of the improvements. Id.

The trial court, in denying the damages sought by Terhaar, distinguished Levine and expressly found that it would be inequitable for Terhaar to recover such a windfall when it had no expectation of such a recovery when it entered into its contract with Montgomery Ward. In pertinent part, the trial court explained:

[T]he parties in Levine did not have the same relationship as those in this matter. Levine and the cases cited in it for the proposition that unjust enrichment value is measured by the enhancement of property value involve improvements made by one party with an interest in real property under color of title, or a good faith but mistaken belief in that party's right of possession. Arey v. Williams, 81 So.2d 525 (Fla.1955); Miceli v. Gilmac Dev. Inc., 467 So.2d 404 (Fla. 2d DCA 1985). Under such circumstances, a party with a possessory interest would have an expectation of reaping the benefit of the enhancement in property value, whereas a contractor, such as [Terhaar], has no intention of possessing the property it has improved. Its expectation is in the payment of the contract price. Finally, [Terhaar] provided no case law in which an award in excess of a contract amount has specifically been approved.

In Florida, a claim for unjust enrichment is an equitable claim based on a legal fiction which implies a contract as a matter of law even though the parties to such an implied contract never indicated by deed or word that an agreement existed between them. Tooltrend, Inc. v. CMT Utensili, SRL, 198 F.3d 802, 805 (11th. Cir.1999). Such a contract implied in law, also known as a quasi contract, is established "where it is deemed unjust for one party to have received a benefit without having to pay compensation for it." Id.; see Commerce Partnership 8098 Ltd. Partnership v. Equity Contracting Co., 695 So.2d 383 (Fla. 4th DCA 1997)(en banc). As the court explained in Commerce,

[a] contract implied in law, or quasi contract, is...