Redd Iron v. International Sales & Services

• Decision Date: 24 December 2008
• Docket Number: No. 08CA0025.,08CA0025.
• Parties: REDD IRON, INC., Plaintiff-Appellee, v. INTERNATIONAL SALES AND SERVICE CORPORATION, d/b/a Commercial Building Services, Inc., and ALSCO, Inc., d/b/a Steiner Corporation, Defendants-Appellants.
• Court: Colorado Court of Appeals

200 P.3d 1133

REDD IRON, INC., Plaintiff-Appellee, v. INTERNATIONAL SALES AND SERVICE CORPORATION, d/b/a Commercial Building Services, Inc., and ALSCO, Inc., d/b/a Steiner Corporation, Defendants-Appellants.

No. 08CA0025.

Colorado Court of Appeals, Div. V.

December 24, 2008.

Bloom Murr & Accomazzo, P.C., Joseph A. Murr, Daniel R. Delaney, Denver, CO, for Plaintiff-Appellee.

Benjamin, Bain & Howard, LLC, Alvin M. Cohen, Greenwood Village, CO, for Defendants-Appellants.

Opinion by Judge VOGT.

Defendants, International Sales and Service Corporation, d/b/a Commercial Building Services, Inc. (CBS), and ALSCO, Inc., d/b/a Steiner Corporation (ALSCO), appeal the trial court's judgment in favor of plaintiff, Redd Iron, Inc., on Redd's claim of unjust enrichment. We vacate the judgment and remand with directions.

I. Background

ALSCO owns real property in Denver. It retained CBS as the general contractor to construct improvements on the property. CBS subcontracted with Excel Metals, Inc. to supply and erect steel for the construction project. Excel, in turn, subcontracted with Redd to provide labor and supplies for a portion of the steel work. Redd performed its work but was not paid by Excel.

Redd then commenced this action, asserting claims against Excel, CBS, and ALSCO for breach of contact, unjust enrichment, foreclosure of a mechanics' lien, and an adjudication of the rights of all parties claiming an interest in ALSCO's property. Redd was unable to locate or personally serve Excel or its registered agent and therefore served Excel by mail pursuant to section 7-90-704(2), C.R.S.2008. Excel filed no response, and the trial court entered a default against it.

After CBS and ALSCO answered the complaint, Redd filed a "contested motion for judgment on the pleadings," asserting that the facts stated in the complaint and the answer established its right to recover on its unjust enrichment claim. Shortly thereafter, CBS and ALSCO moved for summary judgment on all of Redd's claims, and the parties submitted affidavits supporting and opposing summary judgment. As to the unjust enrichment claim, CBS and ALSCO took the position that, under DCB Construction Co., Inc. v. Central City Development Co., 965 P.2d 115 (Colo.1998) (DCB), they could not have been "unjustly" enriched by Redd's services because they had engaged in no improper conduct. Redd argued that DCB was inapplicable and that defendants were liable because they received a benefit at Redd's expense.

The trial court entered summary judgment for ALSCO and CBS on three of Redd's four claims. It concluded that Redd's claim to foreclose its mechanics' lien was untimely, that there was no contract between Redd and CBS or Redd and ALSCO that would support a claim for breach of contract, and that Redd had no interest in the property that would permit it to seek adjudication of rights to the property. Redd has not appealed from this ruling.

On the same day it entered summary judgment, the trial court issued the following order granting Redd's motion for judgment on the pleadings:

The Court, having reviewed the Plaintiff's Complaint and Motion, and Defendants' Answer and response to the Motion, if any, and considering itself sufficiently advised, hereby grants Plaintiff's Motion and orders the following:

DCB ... is not applicable in this case. Judgment is entered in favor of Redd Iron, Inc. against Defendants CBS and Alsco, jointly and severally in an amount to be determined.

The trial court subsequently entered judgment for Redd for $28,304 based on the parties' stipulation that that amount represented "the unpaid balance owed to Redd Iron for the work done for steel work which was fabricated for the Project."

II. Analysis

ALSCO and CBS contend that the trial court erred in ruling that, as a matter of law, Redd was entitled to recovery on its unjust enrichment claim. We conclude that the judgment must be vacated and the case remanded to permit the court to consider whether, under the standards set forth below, Redd is entitled to recovery on this claim and to make findings explaining the basis for its determination.

A. Standard of Review

In considering a motion for judgment on the pleadings pursuant to C.R.C.P. 12(c), the trial court must construe the allegations in the pleadings strictly against the movant, must consider the allegations of the opposing parties' pleadings as true, and should not grant the motion unless the pleadings themselves show that the matter can be determined on the pleadings. Connecticut General Life Ins. Co. v. A.A.A. Waterproofing, Inc., 911 P.2d 684, 687 (Colo.App.1995), aff'd sub nom. Constitution Associates v. New Hampshire Ins. Co., 930 P.2d 556 (Colo. 1996); see City & County of Denver v. Qwest Corp., 18 P.3d 748, 754 (Colo.2001) (by granting plaintiffs' motion for judgment on pleadings, "the district court necessarily determined, in light of the controlling law and undisputed facts, that the matter could finally be resolved at that stage"). Our review of a trial court's determination of such a motion is de novo. Connecticut General Life Ins. Co., 911 P.2d at 687.

C.R.C.P. 12(c) states that if matters outside the pleadings are presented on a motion for judgment on the pleadings "and not excluded by the court," the motion "shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Here, when the trial court ruled on Redd's motion for judgment on the pleadings, it had before it affidavits submitted in connection with the pending summary judgment motion filed by ALSCO and CBS. The court did not expressly exclude those affidavits, and we cannot determine whether the court in fact considered them in entering judgment for Redd. However, even if Redd's motion is treated as one for summary judgment under C.R.C.P. 56, our analysis remains the same. Entry of judgment was proper under that rule only if the material facts were undisputed and Redd was entitled to judgment as a matter of law. See C.R.C.P. 56(c). Our review remains de novo. See Aspen Wilderness Workshop, Inc. v. Colorado Water Conservation Board, 901 P.2d 1251, 1256 (Colo.1995).

B. Unjust Enrichment

1. General Principles

Unjust enrichment is a form of quasi-contract or contract implied in law. The test for recovery under an unjust enrichment theory, as stated by the Colorado Supreme Court, requires a showing that: "(1) at plaintiff's expense, (2) defendant received a benefit (3) under circumstances that would make it unjust for defendant to retain the benefit without paying." Robinson v. Colorado State Lottery Division, 179 P.3d 998, 1007 (Colo.2008); DCB, 965 P.2d at 119-20.

If the elements of unjust enrichment are established, the party who has received the benefit is ordinarily required to make restitution in the amount of enrichment received. That amount is often, but not always, coextensive with the other party's loss. Where the amount of the recovery may reasonably be measured in different ways, the choice is within the discretion of the trial court. See Engel v. Engel, 902 P.2d 442, 445 (Colo.App.1995); W.H. Woolley & Co. v. Bear Creek Manors, 735 P.2d 910, 912 (Colo.App. 1986); Restatement (First) of Restitution § 1 cmts. a, d (1937).

Whether a party is entitled to recovery on a theory of unjust enrichment requires a trial court to "engage in a highly fact-intensive inquiry," Dudding v. Norton Frickey & Associates, 11 P.3d 441, 445 (Colo. 2000), and to "make extensive factual findings to determine whether a party has been unjustly enriched." Lewis v. Lewis, 189 P.3d 1134, 1140 (Colo.2008). Where a ruling on unjust enrichment is based on facts developed at trial, an appellate court affords deference to the trial court's discretion to fashion equitable remedies, and it reviews for abuse of discretion; nevertheless, whether the trial court has applied the appropriate test to determine the existence of unjust enrichment is reviewed de novo on appeal. Id. at 1140-41.

It is the third prong of the unjust enrichment test — namely, whether the enrichment of the defendant was "unjust" — that "creates difficult questions for trial courts." Id. at 1142; see DCB, 965 P.2d at 120 ("The notion of what is or is not `unjust' is an inherently malleable and unpredictable standard."). Because the third prong of the unjust enrichment test is the focus of the dispute in this case, we turn our analysis to the standards governing that determination.

2. Standards for Determining Whether Enrichment is "Unjust"

In DCB, a contractor who had been hired by a commercial tenant to remodel its premises brought an unjust enrichment action against the landlord after the tenant became insolvent and could not pay for the work. After discussing unjust enrichment generally and the difficulties of determining what is unjust in a particular case, the supreme court concluded that it was "important to articulate a general rule, applicable in this context, that provides more stability and predictability than an ad hoc review." 965 P.2d at 120. The court continued:

With this principle in mind, we begin our analysis with two basic propositions. First, there is the general rule that when an individual who is not the owner orders improvements on the owner's land and then fails to pay the contractor or supplier, "the owner is not liable to the contractor or supplier unless he agreed to pay them." 3 Dan B. Dobbs, The Law of Remedies § 12.20(3) at 473 (2d ed. 1993). ...

. . .

Second, the Restatement of Restitution § 110 provides that "[a] person who has conferred a benefit upon another as the performance of a contract with a third person is not entitled to restitution from the other merely because of the failure of performance by the third person." Restatement of Restitution § 110 (1937). ...

Id. at 121 (emphasis in original).

Applying those principles to ...