Haz-Mat Response, Inc. v. Certified Waste Services Ltd.

• Decision Date: 02 February 1996
• Docket Number: No. 72004,HAZ-MAT,72004
• Citation: 259 Kan. 166,910 P.2d 839
• Parties: RESPONSE, INC., Appellant, v. CERTIFIED WASTE SERVICES LIMITED; Chief Supply Corporation; Coastal Refining & Marketing, Inc.; and CIC Industries, Appellees.
• Court: Kansas Supreme Court

Page 839

910 P.2d 839

259 Kan. 166

HAZ-MAT RESPONSE, INC., Appellant, v. CERTIFIED WASTE SERVICES LIMITED; Chief Supply Corporation;

Coastal Refining & Marketing, Inc.; and CIC

Industries, Appellees.

No. 72004.

Supreme Court of Kansas.

Feb. 2, 1996.

Syllabus by the Court

1. K.S.A. 60-1101 is remedial in nature, enacted for the purpose of providing effective security to any persons furnishing labor, equipment, material, or supplies used or consumed for the improvement of real property under a contract with the owner. The theory underlying the granting of a lien against the property is that the property improved by the labor, equipment, material, or supplies should be charged with the payment for such labor, equipment, material, or supplies.

2. K.S.A. 60-1101 is purely a creation of statute, and those claiming a mechanic's lien must bring themselves clearly within the provisions of the authorizing statute. The statute must be followed strictly with regard to the requirements upon which the right to

a lien depends. However, because the statute is remedial and designed for the benefit and protection of persons designated by the act, once a lien has been found to have attached, the law is to be liberally construed in favor of such claimant

3. The phrase "improvement of real property" is not defined in the Kansas mechanic's lien statute. Several observations from past cases may be drawn concerning the statutory construction of the phrase "improvement of real property" used in K.S.A. 60-1101: (1) What is or is not an improvement of real property must necessarily be based upon the circumstances of each case; (2) improvement of the property does not require the actual construction of a physical improvement on the property; (3) the improvement of real property need not necessarily be visible, although in most instances it is; (4) the improvement of the real property must enhance the value of the property, although it need not enhance the market value of the property; (5) for labor, equipment, material, or supplies to be lienable items, they must be used or consumed and thus become part of the real property; (6) the nature of the activity performed is not necessarily a determining factor of whether there is an improvement of real property within the meaning of the statute; rather, the purpose of the activity is more directly concerned in the determination of whether there is an improvement of property which is thus lienable; and (7) the furnishing of labor, equipment, material, or supplies used or consumed for [259 Kan. 167] the improvement of real property may become lienable if established to be part of an overall plan to enhance the value of the property, its beauty or utility, or to adapt it for a new or further purpose, or if the furnishing of labor, equipment, material, or supplies is a necessary feature of a plan of construction of a physical improvement to the property.

4. Black's Law Dictionary most closely defines what is meant by use of the phrase "improvement of the property" in K.S.A. 60-1101: "A valuable addition made to real property (usually real estate) or an amelioration in its condition, amounting to more than mere repairs or replacement, costing labor or capital, and intended to enhance its value, beauty or utility or to adapt it for new or further purposes." Black's Law Dictionary 757 (6th ed. 1990).

5. Unjust enrichment/quantum meruit is an equitable doctrine. Unjust enrichment is the modern designation for the older doctrine of quasi-contract. The theory of quasi-contract was raised by the law on the basis of justice and equity regardless of the assent of the parties. The substance of an action for unjustenrichment lies in a promise implied in law that one will restore to the person entitled thereto that which in equity and good conscience belongs to that person.

6. The basic elements of a claim based on a theory of unjust enrichment are: (1) a benefit conferred upon the defendant by the plaintiff; (2) an appreciation or knowledge of the benefit by the defendant; 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 payment of its value.

7. It is a generally recognized rule of law that, apart from unjust enrichment or from any special statutory rights and remedies, a subcontractor or supplier who has furnished labor or materials for an improvement has no right to a personal judgment against one not in privity.

8. The circumstances under which an unjust enrichment claim may be brought by a subcontractor against an owner, absent privity, are limited.

9. An essential prerequisite to unjust enrichment liability is the acceptance by the owner (the one sought to be charged) of benefits rendered under such circumstances as reasonably notify the owner that the one performing such services expected to be compensated therefor by the owner. In the absence of evidence that the owner misled a subcontractor to his or her detriment, or that the owner in some way induced a change of [259 Kan. 168] position in the subcontractor to his or her detriment, or some evidence of fraud by the owner against the subcontractor, an action for unjust enrichment does not lie against the owner by a subcontractor.

Robert M. Thompson, of Bryan Cave, Kansas City, Missouri, argued the cause and was on thebriefs, for appellant.

James D. Oliver, of Foulston & Siefkin L.L.P., Wichita, argued the cause, and Stephen M. Kerwick, and Darrell L. Warta, of the same firm, were with him on the briefs, for appellees.

DAVIS, Justice:

This appeal comes before us upon our grant of review on two issues: (1) whether the removal of hazardous waste from landowners' property was an "improvement of real property" within the meaning of the mechanic's lien statute, K.S.A. 60-1101; and (2) whether a subcontractor not in privity with the owner of the property may initiate an action for unjust enrichment against the owner when the prime contractor fails or refuses to pay the subcontractor.

The trial court granted summary judgment to the defendant on both issues. The Court of Appeals affirmed the trial court's judgment that the plaintiff's removal of waste was not lienable under K.S.A. 60-1101 but reversed and remanded for consideration of the plaintiff's unjust enrichment claim. Haz-Mat Response, Inc., v. Certified Waste Services, Ltd., 21 Kan.App.2d 56, 896 P.2d 393 (1995).

The material facts necessary for the resolution of the issues presented are largely undisputed. Defendant Coastal Refining and Marketing (Coastal) contracted with defendants Certified Supply Corporation (Certified) and Chief Supply Corporation (Chief) to dispose of up to 500,000 pounds of Coastal's hazardous waste located on Coastal's property in four containers: two above-ground emulsion breaking tanks, one API separator, and one in-ground [259 Kan. 169] tank. Certified and Chief subcontracted with plaintiff Haz-Mat Response, Inc., (Haz-Mat) to perform part of the work.

Problems arose during performance of the contract, and although Haz-Mat removed the waste from the storage tanks, it was not disposed of as required by the prime contract. Coastal hired other contractors to complete the work. Coastal refused to pay Certified and Chief, who in turn refused to pay Haz-Mat. Haz-Mat filed a mechanic's lien and thereafter filed suit against Certified, Chief, Coastal, and CIC Industries, the apparent owner of the real property on which Coastal conducted business. (Hereinafter, CIC and Coastal will be referred to simply as "Coastal.") In its petition, along with breach of contract claims against Chief and Certified, Haz-Mat asked for foreclosure of a mechanic's lien against Coastal. In the alternative, Haz-Mat asked for judgment against Coastal, Chief, and Certified on the theory of quantum meruit/unjust enrichment. In a separate claim, Haz-Mat asserted a fraud claim against Chief.

Coastal filed a summary judgment motion, claiming that hazardous waste removal would not support a mechanic's lien because the removal is not an improvement of real property. Coastal also claimed that a subcontractor may not recover against a property owner on the basis of unjust enrichment in the absence of privity of contract. On the basis of undisputed facts, the trial court granted Coastal summary judgment on both claims.

Haz-Mat then entered into a stipulation with Chief and Certified for dismissal of all other claims. The trial court dismissed in accord with the stipulation. Haz-Mat appealed. The Court of Appeals affirmed the trial court's ruling that Haz-Mat's activities under the circumstances of this case could not form the basis for a mechanic's lien. However, the Court of Appeals reversed the trial court, concluding that under the circumstances, Haz-Mat had a viable unjust enrichment claim against Coastal notwithstanding a lack of privity. 21 Kan.App.2d at 65-66, 896 P.2d 393. We granted petitions for review on both issues.

MECHANIC'S LIEN

The Court of Appeals concluded that the removal of hazardous [259 Kan. 170] material under the given facts did not constitute an "improvement of real property" within the meaning of K.S.A. 60-1101 and, therefore, was not lienable. As recognized by the Court of Appeals, the issue presented was a matter of first impression in this state.

We agree with the Court of Appeals' conclusion that the removal of hazardous waste in the circumstances of this case was not lienable; we also agree with some of the rationale provided for this conclusion. However, because this is a case of first impression, we choose to conduct our own analysis of the issues presented. Because this analysis involved the interpretation of a statute, our standard of review is unlimited. See Todd v. Kelly, 251 Kan. 512, 515, 837 P.2d 381 (1992).

Our mechanic's lien law is remedial in nature, enacted for the purpose of providing effective security to any persons...