Pepi Corp. v. Galliford

Decision Date08 February 2007
Docket NumberNo. 01-05-00788-CV.,01-05-00788-CV.
Citation254 S.W.3d 457
PartiesPEPI CORPORATION, Appellant, v. Brett GALLIFORD, d/b/a Green Electronics, Appellee.
CourtTexas Court of Appeals

Don L. Hendrix, Houston, for Appellee.

Panel consists of Justices JENNINGS, HANKS, HIGLEY.

OPINION

LAURA CARTER HIGLEY, Justice.

Brett Galliford, appellee, performed work as a subcontractor on property owned by Pepi Corporation, appellant. Galliford brought suit against Pepi Corp. arguing that Galliford failed to receive payment from the contractor and Pepi Corp. allegedly assured Galliford that he would be paid. After holding a bench trial, the trial court found Pepi Corp. liable under quantum meruit.

In five points of error, Pepi Corp. argues that the trial court erred by ruling in favor of Galliford because (1) Galliford's claim of quantum meruit is barred by the statute of limitations; (2) the existence of a contract between Galliford and the contractor bars recovery under quantum meruit; (3) the evidence is legally insufficient to establish a claim of unjust enrichment; (4) the evidence is legally insufficient to establish a claim of quantum meruit; and (5) the evidence is legally insufficient to support a finding of damages.

We reverse and render.

Background

In 1999, Pepi Corp. hired a contractor to construct a restaurant on property it owned. The contractor, in turn, hired Galliford to perform electrical work on the building. Galliford submitted invoices to the contractor, but did not receive any payment. Galliford then contacted Pepi Corp., and allegedly spoke with Albert Pepi, the president of Pepi Corp. Galliford testified that during multiple conversations with Albert, he told Galliford, "I'll make sure you get paid." Almost two years after Galliford's completion of the electrical work, the contractor filed for bankruptcy protection. When Pepi Corp. refused to pay Galliford directly, Galliford brought suit.

Statute of Limitations

In the first point of error, Pepi Corp. argues that Galliford's claims are barred by a two-year statute of limitations. In order to decide this point of error, we must determine the type of claim that Galliford brought and decide whether a two or four-year statute of limitations applies to the claim brought.

A. Standard of Review

Both parties agree that Galliford's cause of action accrued in January of 2000. When the date of accrual of the cause of action is not disputed, the trial court may decide whether the plaintiff's claims are barred by limitations as a matter of law. Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845 (Tex.App.-Houston [1st Dist.] 1984, writ ref'd n.r.e.). We review a trial court's conclusions of law de novo. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.2002). The trial court did not file findings of fact or conclusions of law. However, the judgment for Galliford carries an implied finding that Galliford's claim was not barred by limitations. See id. at 795.

B. Type of Claim

Before deciding whether the trial court erred in finding as a matter of law that Galliford's claims were not barred by the statute of limitations, we first clarify the type of claim that Galliford brought. Galliford's petition states "Plaintiff seeks to recover damages from [Defendant] in quantum meruit. Plaintiff would show that the Defendant has unjustly enriched itself to Plaintiff's damage." The pleading states that Galliford seeks recovery in quantum meruit.

Unjust enrichment is an independent cause of action. See HECI Exploration Co. v. Neel, 982 S.W.2d 881, 891 (Tex. 1998). However, a claim that the opposing party is unjustly enriched by retaining the benefits of services rendered by the plaintiff can also be the basis for a quantum meruit cause of action, rather than a separate claim in itself. See Vortt Exploration Co., Inc. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex.1990) (recognizing recovery when non-payment for services rendered would result in unjust enrichment to party benefited).

To recover in quantum meruit, the plaintiff must prove (1) that valuable services were rendered or materials were furnished, (2) for the person sought to be charged, (3) which services and materials were accepted by the person sought to be charged, used and enjoyed by him, (4) under such circumstances as reasonably notified the person sought to be charged that the plaintiff, in performing such services, was expecting to be paid by the person sought to be charged. Id. Galliford's pleading addresses the first three elements by including statements that he had provided goods, materials, and services which were retained by Pepi Corp. for the improvement of property owned by Pepi Corp. Galliford also states in his pleading that Pepi Corp. repeatedly assured him that he would be paid, and the work was done "at the insistence and request" of Pepi Corp. These statements show that Galliford intended to plead and prove the fourth element of a quantum meruit claim.

Other than the statement that Pepi Corp. had "unjustly enriched itself," Galliford's pleading makes no specific reference to any proof of a separate unjust enrichment cause of action. The language used in the pleading indicates that Galliford's claim against Pepi Corp. is a quantum meruit claim founded on unjust enrichment, rather than an independent cause of action for unjust enrichment.

C. Statute of Limitations

The Supreme Court of Texas has stated that a two-year statute of limitations applies to unjust enrichment claims. See Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 737 (Tex.2001); HECI, 982 S.W.2d at 885. Appellant argues that the two-year statute of limitations applies whether the claim is for unjust enrichment or quantum meruit. We disagree.

An attempt to recover the value of materials and services rendered and accepted in quantum meruit is "a species of a suit for debt." Mann v. Jack Roach Bissonnet, Inc., 623 S.W.2d 716, 718 (Tex.Civ. App.-Houston [1st Dist.] 1981, no writ). Prior to 1985, the limitations statutes for debt actions were codified in Texas Civil Practices and Remedies Code articles 5526 and 5527.1 Before amendment in 1979, Article 5526 stated that a two-year statute applied to actions for certain debts and did not specify whether such debt was evidenced by a writing.2 The pre-1979 version of article 5527 limited debt actions grounded upon any contract in writing to a four-year statute of limitations.3 However, in 1979, article 5527 was amended and later recodified in Texas Civil Practices and Remedies Code section 16.004. TEX. CIV. PRAC. & REM.CODE ANN. § 16.004 (Vernon 2002). Section 16.004 states that actions in debt are governed by a four-year statute and makes no reference to a requirement that the debt must be evidenced by a written contract. Id; see also Livingston Ford Mercury, Inc. v. Haley, 997 S.W.2d 425, 428 (Tex.App.-Beaumont 1999, no pet.) (comparing pre-1979 art. 5527 language to section 16.004). Therefore, the four-year statute of limitations in section 16.004 applies to debt actions, whether or not the debt is evidenced by a written contract. See TEX. CIV. PRAC. & REM.CODE ANN. § 16.004 (Vernon 2002).

Appellant cites Johns v. Ram-Forwarding from this Court for the proposition that a two-year statute should govern quantum meruit claims. Johns v. Ram-Forwarding, Inc., 29 S.W.3d 635, 638 (Tex. App.-Houston [1st Dist.] 2000, no pet.). In Johns, we overruled an appellant's claim that the trial court erred in limiting his quantum meruit claim to two years. Id. However the statement in Johns refers to the appellant's argument against the application of a two-year statute of limitations, which appellant had not raised in the trial court. Id. Therefore, we held that appellant had not preserved error regarding the issue and did not reach whether the statute for quantum meruit was two or four years. Id.

Appellant also cites Williams v. Roberts as authority for his assertion that a two-year statute applies to quantum meruit claims. 621 S.W.2d 427 (Tex.App.-San Antonio 1981, no writ). In Williams, the court held that a quantum meruit claim, which otherwise would have been barred by either a two-year or four-year statute, was not barred by limitations because it arose from the same transaction as the original petition, which had been filed early enough to satisfy both statutes. Id. at 429. The court mentions a two-year statute of limitations only in reference to the cross-appellant's argument. Id. at 428. Similar to this Court in Johns, the San Antonio court in Williams did not reach whether the claim stated in the amended petition was governed by a two- or four-year statute of limitations. See id. at 429.

This Court has recently recognized that the four-year statute of limitations is applicable to quantum meruit claims. See C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 778 n. 7 (Tex.App.-Houston [1st Dist.] 2004, no pet.). Other courts of appeals have also applied a four-year statute of limitations to quantum meruit claims. See Frazier v. Havens, 102 S.W.3d 406, 410-11 (Tex.App.-Houston [14th Dist.] 2003, no pet.) (recognizing that four year statute applied to quantum meruit, but holding that overpayments made more than four years prior to filing of counterclaim were not barred because they arose from same transaction as original claim); Rainbow Group, Ltd. v. Johnson, No. 03-00-00559-CV, 2002 WL 1991141, at *4 (Tex.App.-Austin Aug. 30, 2002, pet. denied) (not designated for publication). The language of section 16.004 of the Texas Civil Practices and Remedies Code and the weight of authority in the courts of appeal show that quantum meruit claims should be governed by a four-year statute of limitations.

The parties agree that the services Galliford claims were provided to and retained by Pepi Corp. were completed in January of 2000. Galliford filed the lawsuit on October 17, 2003. Ac...

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