Irwin Concrete, Inc. v. Sun Coast Properties, Inc.
| Decision Date | 27 October 1982 |
| Docket Number | No. 5090-1-II,5090-1-II |
| Citation | 33 Wn.App. 190,653 P.2d 1331 |
| Court | Washington Court of Appeals |
| Parties | IRWIN CONCRETE, INC., a Washington corporation; Fox Automatic Sprinkler Systems, Inc., a Washington corporation; David Davis, d/b/a Smokey's Backhoe Service, Appellants and cross-appellants, v. SUN COAST PROPERTIES, INC., a California corporation; Gig Harbor Properties, Ltd., a California limited partnership; Olympic Mall Co., a partnership; S.E. Swinney, Inc., a Washington corporation; Gordon Mauhl Construction; Wayne Wetherbee d/b/a Wayne's Roofing; Lakewood Painting and Decorating, Inc., a Washington corporation; Joe Clesson Roofing, Inc., a Washington corporation; Seattle-First National Bank, and State Mutual Savings Bank, Adelaide & Peter Paskill, Lane Paskill, and The Bank of California; The Traveler's Insurance Co., and Western Diversified Equities, Respondents, and Continental, Inc., a corporation, Appellant, and Hernando Chaves d/b/a Hernando Chaves and Associates, Cross-appellant and respondent. |
David J. Manger, Tacoma, Jerome R. Cronk, Seattle, Ronald Roberts, James E. Ohern, Tacoma, for respondents.
This litigation arose out of an unfortunate but familiar occurrence: a grand plan for real estate development gone awry.
In 1972, Olympic Mall Co. borrowed $350,000 from Continental, Inc., to purchase and develop 179 acres of land near Gig Harbor. A deed of trust secured the note. In April 1973, Olympic conveyed 7 of the 179 acres to Sun Coast Properties, Inc., to build a shopping center. The sale contract required Olympic to install a water system on its remaining 172 acres to provide water for the center. The water system was also intended to service additional development on the remaining property. Sun Coast then borrowed $1.5 million from Continental for completion of the center. In October 1973, Sun Coast sold the center site to Gig Harbor Properties, Inc., but continued active in construction of the center. Two months later, Sun Coast, Continental, and Traveler's Insurance Co. entered into an agreement whereby Traveler's agreed to pay off Continental's construction loan and make a permanent loan to Sun Coast for $1.5 million upon completion of the center and Sun Coast agreed to prosecute completion of the center diligently.
By April 1974, Olympic was in default on its $350,000 loan from Continental and Continental notified the trustee of default. In September 1974, Continental gave notice of the trustee's sale of the 172 acres to all whose liens were then of record. While these foreclosure proceedings were in progress, Sun Coast, through its president, Michael Fizzolio, continued to let subcontracts for completion of the water system on the 172 acres. In December 1974, Irwin Concrete, Inc., began work pursuant to a contract with Fizzolio and on January 7, 1975 Fox Automatic Sprinkler Systems, Inc., started work under a contract with Sun Coast Water Co., a corporation formed by Sun Coast Properties to complete the water system. David Davis performed work for Fox pursuant to an oral contract. All work pursuant to these contracts was done on various phases of the water system installed on the 172 acres.
At the trustee sale on January 24, 1975, Continental bid in and bought Olympic's interest in the 172 acres. Four days later the shopping center was finished and Traveler's paid off Continental's $1.5 million construction loan. In February 1975, Irwin, Fox, and Davis filed liens on all the land. A fourth claimant, Hernando Chaves and Associates, engineered the water system, working first for Olympic and later for Sun Coast. Chaves filed a lien on all the land on December 5, 1974. The fifth claimant, Active Construction, worked on the water system early in 1974 at the instance of Olympic.
By summary judgment, the trial court dismissed all liens but, after trial, awarded judgment in varying amounts in favor of all five claimants against Continental. Continental appeals. The claimants 1 cross-appeal dismissal of their liens. Primarily at issue is whether the trial court erred in awarding judgment against Continental based on unjust enrichment, in dismissing the liens, in denying pre-judgment interest and in dismissing Chaves' promissory estoppel claim. Other satellite issues are also raised. We find no error and affirm.
Although the liens were dismissed, the trial court nevertheless allowed a recovery to all claimants on the theory of unjust enrichment. Continental assigns error to this arguing that it did not request any work, that whatever specific benefit it might have received from completion of the shopping center was not proved and that the water system on which claimants worked operates at a loss and therefore constitutes no benefit. We disagree.
Under the doctrine of unjust enrichment, one who receives a benefit must pay for it only if the circumstances of its receipt or retention make it unjust for him to keep the benefit without paying. Chandler v. Washington Toll Bridge Auth., 17 Wash.2d 591, 137 P.2d 97 (1943). A benefit includes any form of advantage. Chandler, 17 Wash.2d at 603, 137 P.2d 97. The trial court found that the claimant's work on the water system helped complete the shopping center thereby enabling Continental to close out its $1.5 million construction loan to Sun Coast, and also that the water system increased the value of the 172 acres Continental now owns. 2 These findings are supported by substantial evidence and will not be disturbed on appeal. Hudson House, Inc. v. Rozman, 82 Wash.2d 178, 509 P.2d 992 (1973). Plainly, Continental received a substantial benefit because of the work. Would it be unjust to allow Continental to retain this benefit without paying? The trial court concluded it would be and we agree.
The trial court found that the claimants completed the water system at the urging and with consent of Continental, and that Continental knew about and silently acquiesced in the work when it was foreclosing its deed of trust. Substantial evidence also supports these findings. The record discloses, inter alia, that early in 1974, Continental told Chaves that he had to continue his work in order to receive loan funds. In February 1974, Walt Smith of Active Construction Co. worked on the 172 acres. Before Smith started work, David Ballaine of Continental told him that loan funds from Continental to pay for Smith's work were secure. Late in 1974, Continental knew that Chaves was still certifying work by subcontractors. Continental knew that Irwin, Fox and Davis were working on the water system because Chaves certified their completed work. We conclude that under these circumstances it would be unjust for Continental to receive the benefit of the claimants' work without paying.
Continental asserts that the trial court erred in awarding damages measured by contract prices, arguing that the correct measure is the value conferred. The argument is correct as far as it goes but that is not far enough, because it simply does not follow that a contract price cannot represent that value. A claim for unjust enrichment is a quasi-contractual claim. Bill v. Gattavara, 34 Wash.2d 645, 209 P.2d 457 (1949). Quantum meruit--"a reasonable amount for the work done"--is the measure of recovery. Heaton v. Imus, 93 Wash.2d 249, 252-53, 608 P.2d 631 (1980). The only evidence presented was that of the various contract prices. It was not error, therefore, for the trial court to conclude, as it did, that the contract prices represented the value of the work in making a quantum meruit award. See Losli v. Foster, 37 Wash.2d 220, 222 P.2d 824 (1950).
Irwin, Fox, Davis and Chaves cross-appeal from a summary judgment dismissing their liens. At the threshold of our discussion we emphasize the obvious distinction between a lien, which provides security for a claim, and the underlying claim itself. See RCW 60.04.180. This is necessary because the claimants, in advancing their contentions, appear to confuse these concepts. The trial court's ultimate judgment was based on the underlying claims.
The lien claims in question were filed under the provisions of RCW 60.04.010, which authorizes a mechanic's lien for work performed "... at the instance of the owner of the property ... or his agent; ..." RCW 60.04.030 allows a lien "to the extent of the interest of the ... company, who in ... its own behalf, or who, through any of the persons designated in RCW 60.04.010 to be agent of the owner ... caused the performance of the labor ..." The agents so designated by RCW 60.04.010 are "... every registered or licensed contractor, registered or licensed subcontractor, architect, or person having charge of the construction ..." Continental never caused the performance of any labor by Irwin, Fox or Davis. Chaves seems to suggest that Continental caused him to perform work but, except for the estoppel claim discussed below, Chaves claims no lien on Continental's interest. 3 The deed of trust foreclosure operated to deprive Olympic of any interest in the land (See RCW 61.24.030(6)(i)) and, to the extent that Olympic or its agents requested the work, also operated to extinguish the liens. See W.T. Watts, Inc. v. Sherrer, 89 Wash.2d 245, 571 P.2d 203 (1977). 4
However, Irwin, Fox and Davis assert that a fact question existed which required denial of the summary judgment. They argue that Fizzolio could have been found to be the agent of Continental and thus, under the lien statute, the liens could have attached to Continental's interest in the property. We disagree. The summary judgment record is devoid of any facts which would support the conclusion that Fizzolio was ever Continental's agent for any purpose.
Chaves contends that his lien was not foreclosed by the trustee sale because it was senior to that of Continental. 5 He argues...
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