M.G. Dyess, Inc. v. Markwest Liberty Midstream & Res., L.L.C.

• Decision Date: 15 September 2022
• Docket Number: Court of Appeals No. 20CA1742
• Citation: 522 P.3d 204,2022 COA 108
• Parties: M.G. DYESS, INC., a Mississippi corporation, Plaintiff-Appellant, v. MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C., a Delaware limited liability corporation, Defendant-Appellee.
• Court: Colorado Court of Appeals

522 P.3d 204

2022 COA 108

M.G. DYESS, INC., a Mississippi corporation, Plaintiff-Appellant,

v.MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C., a Delaware limited liability corporation, Defendant-Appellee.

Court of Appeals No. 20CA1742

Colorado Court of Appeals, Division IV.

Announced September 15, 2022

Wheeler Trigg O'Donnell LLP, Edward C. Stewart, Frederick R. Yarger, Denver, Colorado; Moore Williams PLLC, Marie E. Williams, Golden, Colorado; Kilpatrick Townsend & Stockton LLP, Adam H. Charnes, Dallas, Texas, for Plaintiff-Appellant

Snell & Willmer L.L.P., Michael E. Lindsay, James Kilroy, Ellie Lockwood, Denver, Colorado; Snell & Willmer L.L.P., Kelly H. Dove, Las Vegas, Nevada for Defendant-Appellee

Opinion by JUDGE RICHMAN

¶ 1 In this construction contract dispute, plaintiff, M.G. Dyess, Inc. (Dyess), appeals post-trial orders reducing the amount of damages awarded on its quantum meruit claim and denying its motion for judgment notwithstanding the verdict (JNOV) on defendant's counterclaim. Defendant, MarkWest Liberty Midstream & Resources, L.L.C. (MarkWest), and Dyess both appeal the trial court's denial of their motions for pre- and post-judgment interest. We affirm in part, reverse in part, and remand this case with directions.

I. Background

¶ 2 MarkWest, a corporation that processes and transports natural gas, entered into three contracts with Dyess, a pipeline construction company, to install thousands of feet of pipeline. Each of the three contracts concerned a particular length of pipeline, called a "spread," and each spread was assigned a lump sum payment amount and a "mechanical completion date" after which liquidated damages would accrue if the spread remained incomplete.

¶ 3 According to Dyess, MarkWest materially hindered its work, increasing the costs and duration of the project. Dyess sued MarkWest, asserting claims for breach of contract, negligent misrepresentation, fraudulent nondisclosure, fraud, promissory estoppel, and quantum meruit. MarkWest countered that it had not hindered Dyess's work, and Dyess failed to achieve mechanical completion by the contractual deadlines. MarkWest brought counterclaims for liquidated damages under the contract and declaratory judgment. Per jury demands by both parties, the case was set for a jury trial, which began on February 3, 2020.

¶ 4 During the trial, however, MarkWest asserted that Dyess's promissory estoppel and quantum meruit claims were not triable to the jury because they are equitable claims. Dyess argued that its claims were legal and contended that, in any case, MarkWest had waived any objection to a jury trial.

¶ 5 The trial court concluded that Dyess had brought "a mix of legal and equitable claims," but the court did not specify which claims were equitable. It stated an intention to submit all the claims to the jury under C.R.C.P. 39(c), which permits courts to "try any issue with an advisory jury" in "all actions not triable by a jury." The court also noted that, if the jury returned a verdict awarding relief on an "arguably equitable claim," it could permit further briefing.

¶ 6 The jury rejected all of Dyess's claims except its quantum meruit claim, for which it awarded $26,039,641 in damages. It also awarded MarkWest $4,500,000 in liquidated damages based on its breach of contract counterclaim. When the verdict was read, MarkWest immediately made an oral motion to treat the jury's quantum meruit verdict as advisory, asking the court to "decide this issue." The court ordered additional briefing.

¶ 7 In response, MarkWest filed a motion, captioned as a motion under C.R.C.P. 52, asking the court to make findings of fact and conclusions of law regarding the quantum meruit claim. It urged the court to conclude that MarkWest was not liable to Dyess for the quantum meruit claim, and in the alternative, that Dyess could only recover $934,436, the approximate amount Dyess claimed for the items listed in Instruction 60 (the quantum meruit jury instruction). Dyess countered that its expert had testified to overall losses equal to or greater than the amount awarded and, therefore, the $26,039,641 verdict was supported by evidence.

¶ 8 The trial court concluded, in a written order titled "Order Regarding Defendant's Brief in Support of Motion Pursuant to C.R.C.P. 52," that (1) MarkWest did not waive its objection to a jury trial; and (2) quantum meruit is "an equitable theory of recovery ... triable by the court and not by a jury, subject to the right of the court to impanel an advisory jury under C.R.C.P. 39(c)." It accepted the jury's "advisory verdict" insofar as the jury found that MarkWest was liable under a quantum meruit theory, but the court concluded that the amount awarded was not supported by the evidence. It reduced the amount of damages to $934,436. On the same day, it entered judgment on the jury verdict as modified by its C.R.C.P. 52 order.

¶ 9 Dyess subsequently filed a motion for JNOV on MarkWest's breach of contract counterclaim, asserting that it had achieved mechanical completion before the final mechanical completion dates, which it claimed MarkWest had extended. The trial court did not rule on the motion, and it was therefore deemed denied by rule. See C.R.C.P. 59(j).

¶ 10 Dyess did not file any other post-trial motions challenging the jury's verdict, although the jury had denied Dyess's other claims. MarkWest did not seek post-trial relief on any claim. However, both parties filed C.R.C.P. 59(c)(4) motions to amend the judgment to include pre- and post-judgment interest. These motions were also deemed denied. See C.R.C.P. 59(j).

¶ 11 Dyess now appeals (1) the order treating the verdict in its favor as advisory and reducing the damages award; (2) the denial of its motion for JNOV with respect to MarkWest's counterclaim; and (3) the denial of its motion for pre- and post-judgment interest. MarkWest cross-appeals the denial of its motion for pre- and post-judgment interest.

II. Quantum Meruit Claim

A. Standard of Review and Law

¶ 12 Dyess asks us to decide whether the trial court erred when it partially rejected the jury's verdict under C.R.C.P. 52, ultimately reducing the amount of damages awarded. This question turns, in part, on whether Dyess had a right to a jury trial because, as relevant here, Rule 52 only applies in "actions tried ... with an advisory jury."

¶ 13 We review a party's right to a jury trial in a civil case de novo. People v. Shifrin , 2014 COA 14, ¶ 14, 342 P.3d 506. To the extent the issues raised require us to construe the Colorado Rules of Civil Procedure, we also employ a de novo standard of review. See Mason v. Farm Credit of S. Colo. , 2018 CO 46, ¶ 7, 419 P.3d 975.

¶ 14 There is no constitutional right to a jury trial in civil cases in Colorado. Id. at ¶ 9. To the extent the right exists, it is derived from C.R.C.P. 38(a). Rule 38(a) provides for a jury trial only in "proceedings that are legal in nature, not equitable." Mason , ¶ 10.

¶ 15 There are two methods for determining whether an action is legal or equitable. Id. at ¶ 27. The first method is to examine the nature of the remedy sought. Id. Actions seeking an award of monetary damages are generally legal, while actions seeking to employ the coercive powers of the court are generally equitable. Id. The second method is to look to the historical nature of the right to be enforced. Id. "If the plaintiff is seeking to enforce a right historically decided by equity courts, the claim is equitable. If the right was historically enforced by a court of law, the claim is legal." Id. (citation omitted). Of the two methods, the remedial method is generally preferred. Peterson v. McMahon , 99 P.3d 594, 598-99 (Colo. 2004) (noting that because the plaintiff in this trust action sought the immediate and unconditional payment of money, the action was legal despite the "overwhelmingly equitable history of trusts").

B. Analysis

¶ 16 In its complaint, Dyess sought to recover, under a quantum meruit theory, the reasonable market value of labor and materials it provided on an extracontractual basis. In other words, Dyess asked for a simple money judgment. See Mason , ¶ 11 (stating that whether an action is legal or equitable is dictated only by the claims in a plaintiff's complaint). Given our supreme court's preference for the remedial method of deciding this issue, the remedy that Dyess sought strongly favors the conclusion that the claim is legal. Stuart v. N. Shore Water & Sanitation Dist. , 211 P.3d 59, 62 (Colo. App. 2009) (noting that actions for money damages are legal). Nonetheless, the fact that a plaintiff sought monetary relief does not, by itself, necessarily determine if a claim is legal or equitable. State ex rel. Weiser v. Ctr. for Excellence in Higher Educ., Inc. , 2021 COA 117, ¶ 65, 499 P.3d 1081 ; Shifrin , ¶ 17 (stating that, even if a plaintiff seeks money damages, a jury trial is not required if the action is equitable). We must therefore examine the nature and history of quantum meruit claims.

¶ 17 In Colorado, a plaintiff may bring a quantum meruit claim when substantial changes have occurred that are "not covered by the contract and are not within the contemplation of the parties," and those changes have required extra work or caused substantial loss to one party. Specialized Grading Enters., Inc. v. Goodland Constr., Inc. , 181 P.3d 352, 354 (Colo. App. 2007). The purpose of the claim is to avoid unjust enrichment despite the absence of an express agreement to pay. Melat, Pressman & Higbie, L.L.P. v. Hannon L. Firm, L.L.C. , 2012 CO 61, ¶ 19, 287 P.3d 842.

¶ 18 Because a quantum meruit claim is grounded on principles of fairness, our supreme court and some divisions of this court have called it, or its related claims, an "equitable doctrine," an "equitable theory," or an "equitable remedy." Id. ("equitable theory of recovery"); Dudding v. Norton Frickey & Assocs. , 11 P.3d 441, 445 (Colo. 2000) ("equitable doctrine"); Jorgensen v. Colo. Rural Props.,...