Interbank Investments, LLC v. EAGLE RIVER, 02CA0556.

• Citation: 77 P.3d 814
• Decision Date: 27 March 2003
• Docket Number: No. 02CA0556.,02CA0556.
• Parties: INTERBANK INVESTMENTS, LLC, Plaintiff-Appellee, v. EAGLE RIVER WATER AND SANITATION DISTRICT, f/k/a Vail Valley Consolidated Water District, Defendant-Appellant.
• Court: Court of Appeals of Colorado

77 P.3d 814

INTERBANK INVESTMENTS, LLC, Plaintiff-Appellee, v. EAGLE RIVER WATER AND SANITATION DISTRICT, f/k/a Vail Valley Consolidated Water District, Defendant-Appellant.

No. 02CA0556.

Colorado Court of Appeals, Div. III.

March 27, 2003.

Certiorari Denied October 6, 2003.

Lottner Rubin Fishman Brown & Saul, P.C., Richard I. Brown, Michael D. Murphy, Denver, Colorado, for Plaintiff-Appellee.

Paul C. Rufien, P.C., Paul C. Rufien, Denver, Colorado, for Defendant-Appellant.

Opinion by Judge WEBB.

In this contract dispute, defendant, Eagle River Water and Sanitation District (district), appeals the trial court's judgment awarding damages for unjust enrichment in favor of plaintiff, Interbank Investments, LLC. We reverse.

The dispute arises from two similar contracts among a land developer, plaintiff's predecessor, and two other water districts, since consolidated into the district. Under these contracts, the predecessor districts would pay the developer its expenses of constructing a water distribution system in its project, after transfer of the system to the districts and to the extent that tap fees later collected by those districts from the project exceeded certain of their costs. Although the predecessor districts received the system and collected tap fees well above their costs, nothing was paid to either the developer or plaintiff.

Plaintiff, as successor to the developer, sued the district for breach of contract, unjust enrichment, and an accounting. The district asserted various defenses, including the unavailability of equitable relief where an adequate legal remedy exists. Following a bench trial, the court found that plaintiff failed to prove actual damages for breach of contract and that this claim was time barred. The trial court indicated that unjust enrichment "may apply" and unjust enrichment awards totaling $234,481.80 "might be" appropriate, but concluded that the unjust enrichment claim was also untimely. Plaintiff appealed and the district cross-appealed.

As relevant here, a division of this court affirmed the trial court's finding that plaintiff failed to prove actual damages for breach of contract, but reversed the court's determination that the contract and unjust enrichment claims were time barred. The division concluded that "plaintiff is entitled only to nominal damage awards on its contract claims." As to unjust enrichment, given the "tentative nature" of the trial court's rulings, the division was "unable to determine whether plaintiff should recover restitution for unjust enrichment in lieu of the nominal damage awards." The division remanded to determine whether plaintiff "is entitled to recover restitution for unjust enrichment, and, if so, in what amount." Interbank Invs., L.L.C. v. Vail Valley Consol. Water Dist., 12 P.3d 1224, 1231-32 (Colo.App.2000)(Interbank I).

On remand, the district argued, among other defenses, that plaintiff could not recover for unjust enrichment because the division's opinion recognized a valid express contract covering reimbursement of the water system construction expenses. The trial court found the district had been unjustly enriched and awarded plaintiff $234,481.80 plus interest, representing tap fees collected less certain costs. The court did not address the district's express contract argument.

I.

The district first argues the trial court erred because plaintiff's unjust enrichment claim was precluded by enforceable express contracts covering the same subject matter. We agree.

A party who has been unjustly enriched generally must make restitution to the other party by returning that party to the position it previously occupied. Salzman v. Bachrach, 996 P.2d 1263 (Colo.2000)(quoting Restatement of Restitution § 3 (1937)).

Unjust enrichment does not depend on the existence of an express or implied-in-fact contract. Cablevision of Breckenridge, Inc. v. Tannhauser Condo. Ass'n, 649 P.2d 1093 (Colo.1982). Instead, courts may imply a contract in law, often termed a quasi-contract, and allow recovery to serve the "law of natural immutable justice and equity." See DCB Constr. Co. v. Central City Dev. Co., 965 P.2d 115, 119 (Colo.1998),

aff'g 940 P.2d 958, 962 (Colo.App.1996)(quoting Valley Realty & Inv. Co. v. McMillan, 160 Colo. 109, 112, 414 P.2d 486, 488 (1966)).

In general, a party cannot recover for unjust enrichment by asserting a quasi-contract when an express contract covers the same subject matter because the express contract precludes any implied-in-law contract. Printz Servs. Corp. v. Main Elec., Ltd., 949 P.2d 77 (Colo.App.1997), aff'd in part and rev'd in part, 980 P.2d 522 (Colo. 1999); Stanford v. Ronald H. Mayer Real Estate, Inc., 849 P.2d 921 (Colo.App.1993). However, this principle recognizes two exceptions.

First, a party can recover on a quasi-contract when the implied-in-law contract covers conduct outside the express contract or matters arising subsequent to the express contract. Scott Co. v. MK-Ferguson Co., 832 P.2d 1000 (Colo.App.1991).

Second, a party can recover on a quasi-contract when the party "will have no right under an enforceable contract." Backus v. Apishapa Land & Cattle Co., 44 Colo. App. 59, 62, 615 P.2d 42, 44 (1980). For example, quasi-contractual recovery may be allowed when an express contract failed or was rescinded. See Dudding v. Norton Frickey & Assocs., 11 P.3d 441 (Colo.2000)

; Alien, Inc. v. Futterman, 924 P.2d 1063 (Colo.App.1995).

Resolution of this issue presents a mixed question of law and fact. The existence of an express contract is a question of fact. Beach v. Beach, 56 P.3d 1125 (Colo. App.2002). Application of the rule that an express contract supersedes a quasi-contract covering the same subject is a question of law. Scott Co. v. MK-Ferguson Co., supra.

A.

Initially, we agree with the district that plaintiff's claim of unjust enrichment, which "is a legal claim in quasi-contract for money damages based upon principles of restitution," DCB Constr. Co. v. Central City Dev. Co., supra, 965 P.2d at 118, covers conduct within the scope of the predecessors' express contracts.

The Interbank I division's conclusions that the contract claims were not barred by the statute of limitations and that the contracts, which had not been materially breached by plaintiff or its predecessors, entitled plaintiff to nominal damages show that the contracts are enforceable.

Nevertheless, plaintiff asserts that the collection of tap fees arose subsequent to the express contracts and that the failure to pay any portion of those fees was unexpected. However, the contracts contemplated payment from tap fees to be collected over time, and the risk of nonpayment inheres in these as well as in most other contracts. Indeed, the trial court calculated unjust enrichment based on the contracts' reimbursement formula of tap fees collected less certain costs.

Accordingly, we conclude that enforceable express contracts cover the same subject matter as plaintiff's unjust enrichment claim.

B.

Nonetheless, plaintiff argues that the Interbank I division resolved the preclusion issue in its favor by concluding that it was entitled to nominal damages on its contract claims, but then remanding "to determine whether plaintiff should recover restitution for unjust enrichment in lieu of the nominal damage awards." Interbank I, supra, 12 P.3d at 1232. We are not persuaded.

Conclusions of an appellate court, and rulings logically necessary to those conclusions, become the law of the case and generally must be followed in later proceedings. In re Marriage of Burford, 26 P.3d 550 (Colo.App.2001). However, the law of the case doctrine recognizes limited exceptions to one division of this court being bound by the decision of another division in an earlier appeal. Vashone-Caruso v. Suthers, 29 P.3d 339 (Colo.App.2001).

The Interbank I division's opinion did not address the principle that an express contract precludes an implied-in-law contract on the same subject matter. The parties' briefs in the prior appeal did not raise this principle. Thus, we cannot conclude that the division's remand expressly resolved the conflict between the breach of contract and unjust enrichment claims, once both claims were resurrected on appeal.

Nor is an implicit determination that plaintiff's unjust enrichment claim survives the enforceable contracts logically necessary to the division's direction that on remand the trial court consider whether plaintiff could recover restitution for unjust enrichment. The division did not conclude that either the express contracts covered the same subject matter as the unjust enrichment claim or an award for unjust enrichment must be granted. And, the trial court had not addressed whether the contracts covered the same subject matter as the unjust enrichment claim.

E.H. Boly & Son, Inc. v. Schneider, 525 F.2d 20 (9th Cir.1975), cited by the division in explaining the remand, only holds that damages and restitution can be pleaded in the alternative. Alternative pleading, however, does not limit the principle that an express contract precludes an implied contract on the same subject matter.

In Backus v. Apishapa Land & Cattle Co., supra,

the division recognized that the plaintiff could proceed alternatively on a claim for unjust enrichment, but explained, "[I]f [the plaintiff's] assignment claim fails, he will have no right under an enforceable contract. Under such circumstances, [the plaintiff] may be able to recover for unjust enrichment." Backus v. Apishapa Land & Cattle Co., supra, 44 Colo.App. at 62, 615 P.2d at 44. These circumstances do not pertain here.

Accordingly, we conclude that the Interbank I division did not decide whether availability of nominal damages under the express contracts precludes relief for unjust enrichment.

C.

We also reject plaintiff's contention that the trial court's restitution award was correct because recovery of only nominal damages under the express...