Francis O. Day Co., Inc. v. Montgomery County

• Citation: 102 Md.App. 514,650 A.2d 303
• Decision Date: 01 September 1994
• Docket Number: No. 463,463
• Parties: FRANCIS O. DAY CO., INC. v. MONTGOMERY COUNTY, Maryland. ,
• Court: Court of Special Appeals of Maryland

Page 514

102 Md.App. 514

650 A.2d 303

FRANCIS O. DAY CO., INC. v. MONTGOMERY COUNTY, Maryland.

No. 463, Sept. Term, 1994.

Court of Special Appeals of Maryland.

Dec. 5, 1994.

Charles Norman Shaffer (Peter I.J. Davis and Shaffer & Davis Chartered, on the brief), Rockville, for appellant.

Frank E. Couper, Asst. County Atty., (Joyce R. Stern, County Atty. and Marc P. Hansen, Sr. Asst. County Atty., on the brief), Rockville, for appellee.

Argued before ALPERT, CATHELL and MURPHY, JJ.

CATHELL, Judge.

Appellant, Francis O. Day Co., Inc. (Day), appeals from the granting of summary judgment in favor of appellee, Montgomery County, Maryland, in respect to a claim for unjust enrichment filed by Day against Montgomery County. ¹ The factual predicate, in spite of appellant's assertion, is not in dispute. In other words, the result would be the same under any interpretation of the facts. Thus, the issue was appropriately addressed below in a summary judgment context. Day, nevertheless, presents a unique basis for claiming relief under unjust enrichment principles.

Facts

Aldre, Inc. (Aldre), was a general partner for several limited partnerships involved in developing several properties. Aldre entered into an agreement or agreements with Montgomery County in respect to the developments in which it was required to construct infrastructure, including roads, according to appellee's standards, in order to service the needs of the potential inhabitants of the development. The agreements required Aldre at a certain point in time to dedicate such improvements to appellee, after which the appellee would be required to include those improvements in its infrastructure network and be responsible for their maintenance and upkeep.

Aldre was required by appellee to post performance bonds but no payment bond. The arrangements between Aldre and appellee were pursuant to the County's various subdivision and developmental statutes.

Thereafter, Aldre entered into a contract with appellant for the latter to construct substantial portions of the infrastructure for the various developments. Aldre suffered financial difficulties and defaulted on payment to appellant. Unable to collect from Aldre or to enforce liens against Aldre's property, appellant instituted suit against the County. Appellant appears to have posited its theory of recovery initially on a concept that, because the infrastructure was to be dedicated to appellee after it was completed, the agreement between Aldre and appellant was for the construction of a public improvement and, thus, was subject to the Little Miller Act ². Appellant then argued that appellee was derelict or negligent in not requiring a payment bond as required under that act.

Although appellant discusses the Little Miller Act extensively in its brief, it has not appealed the trial court's decision on the counts that alleged the provisions of the Act had been violated. We, accordingly, shall not address the Act further.

The issue for us to decide is rephrased as:

When a governing body, pursuant to its statutes, requires a developer to enter into agreements to construct the infrastructure necessitated by the potential demands of the developments' inhabitants and later dedicate the improvements to the governing entity, is that governing entity unjustly enriched if the developer fails to pay fully the subcontractor for the work performed in constructing the improvements?

The answer is "No," and we shall affirm.

The Law

We shall discuss generally the Maryland law on unjust enrichment, noting initially that neither party has directed us to any Maryland cases involving unjust enrichment claims under factual situations remotely similar to those extant in the case sub judice. We likewise have failed to find any Maryland cases on point.

While we shall resolve the issue presented in our discussion of the granting of the summary judgment, we cannot help noting that, even if appellant had made it past the summary judgment motion, the problems it would then have faced on an unjust enrichment claim would appear to be insurmountable. In this context, we first address the absence of a written contract between appellant and appellee and the relationship between that fact and the County's governmental immunity.

As in the case at bar, there was no written contract between appellant and appellee in Leese v. Baltimore County, 64 Md.App. 442, 477-79, 497 A.2d 159, cert. denied, 305 Md. 106, 501 A.2d 845 (1985), where we opined:

Where a county is attempting to assert governmental immunity as a bar to a contract claim, the common law allows it to "abrogate its responsibility under a contract entered into in performance of a governmental function if dictated by the public good." American Structures, Inc. v. Baltimore, 278 Md. 356, 359, 364 A.2d 55 (1976). This is not to suggest that counties and municipalities are fully immunized against contractual liability. Rather, they are "answerable in damages incurred to the time of cancellation." Id.

This common law contract immunity, however, is limited by statute. Under § 1A, Article 25A, Annotated Code of Maryland, "a chartered county ... may not raise the defense of sovereign immunity ... in an action in contract based upon a written contract executed on behalf of the county or its department, agency, board, commission or unit by an official or employee acting within the scope of his authority." Md.Code Ann. Art. 25A, § 1A(a) (1984 Supp.). See also Md. State Gov't Art. § 12-202 (1984); Md.Code Ann. Art. 25, § 1A (1984 Supp.).

....

... His attempted reliance upon Section 1A to avoid sovereign immunity is misplaced. By its terms, Section 1A requires a "written contract" that was "executed on behalf of the county." A failure to meet either of these requirements nullifies the operation of the section. [Emphasis added.]

We discussed similar statutory language applicable to the State's waiver of immunity in contract cases where unjust enrichment was at issue in Mass Transit Admin. v. Granite Constr. Co., 57 Md.App. 766, 770, 471 A.2d 1121 (1984), noting:

Our review of the facts persuades us that MTA was not unjustly enriched; and an analysis of the parties' arguments pertaining to the doctrine of sovereign immunity and the principle of unjust enrichment leads us to conclude that, in this case at least, the two concepts are sufficiently incompatible to bar recovery by Granite. In order to steer a course safely past Scylla (the State's waiver of sovereign immunity is limited to claims based on written contracts), appellee would have to sail into the maws of Charybdis (the principle that unjust enrichment does not apply if there is a written contract).

We explained:

"The doctrine of sovereign immunity from suit, rooted in the ancient common law, is firmly embedded in the laws of Maryland." Katz v. Wash. Suburban Sanitary Comm'n, 284 Md. 503, 507, 397 A.2d 1027 (1979); Austin v. City of Baltimore, 286 Md. 51, 53, 405 A.2d 255 (1979). "If an action is brought for a money judgment in contract or in tort against the State or an agency of the State without the State's consent, actual or implied, it must be defended on the ground of sovereign immunity, which cannot be waived unless funds have been appropriated for the purpose or the agency can provide funds by taxation...." American Structures v. City of Baltimore, 278 Md. 356, 359, 364 A.2d 55 (1976) (citations omitted).

... It has since been partially abrogated or waived. Chapter 450 of the Laws of 1976, originally codified as art. 41, § 10A of the Annotated Code of Maryland, subsequently recodified as Md.Ann.Code art. 21, §§ 7-101 through 7-104, ³ prohibits the State and its officers, departments, agencies, boards, commissions or other units of State government from raising the defense of sovereign immunity in the courts of this State "in an action in contract based upon a written contract executed on behalf of the State, or its department, agency, board, commission or unit by an official or employee acting within the scope of his authority." [Footnote omitted.]

Id. 57 Md.App. at 773, 471 A.2d 1121.

We then noted the elements of unjust enrichment:

1. A benefit conferred upon the defendant by the plaintiff;

2. An appreciation or knowledge by the defendant of the benefit; and

3. The acceptance or retention by the defendant of the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without the payment of its value....

.... A quasi-contract or implied in law contract, on the other hand, involves no assent between the parties, no "meeting of the minds." Instead the law implies a promise on the part of the defendant to pay a particular "debt." See 1 Palmer, supra, § 1.2. Thus, "[t]he implied in law contract is indeed no contract at all, it is simply a rule of law that requires restitution to the plaintiff of something that came into defendant's hands but belongs to the plaintiff in some sense." ...

It should also be remembered that a money judgment recovered by virtue of [a] quasi-contract is a remedy to prevent against the unjust enrichment of the defendant. Thus, the measure of the recovery is the gain to the defendant, not the loss by the plaintiff.

Id. at 774-75, 471 A.2d 1121 (footnote omitted). We concluded:

THE SOVEREIGN IMMUNITY--UNJUST ENRICHMENT DILEMMA

Even if we were persuaded that MTA had been unjustly enriched to the extent of Granite's gas line relocation work, we would be forced to conclude that sovereign immunity would be a complete bar to recovery.

As we have seen, sovereign immunity bars recovery unless waived or abrogated by the State and that the State has waived the defense only with respect to those contract claims which are "based upon a written contract executed on behalf of the State, ... by an official or employee acting within the scope of his authority." Md.Ann.Code, art. 21, § 7-101. We have also seen that recovery for unjust enrichment is...