Dugan & Meyers Construction Company v. The Ascent at Roebling's Bridge, LLC
2015 SC 000635
| Ky. | Dec 12, 2017Background
- The Ascent at Roebling’s Bridge (owner) hired Corporex (design-builder), which contracted with Dugan & Meyers (D&M) as construction manager/general contractor; D&M subcontracted steel fabrication to Superior Steel and erection to Ben Hur.
- Architectural/structural drawings omitted a forces table and connection designs; revised drawings were issued but D&M instructed bidders to ignore revisions; Superior’s subcontract (fixed price) was later formed and Superior contracted with Ben Hur.
- Later design changes required extra steel work; D&M directed Superior and Ben Hur to perform extra work, but Ascent/Corporex did not pay D&M for those extras and refused some claims as excessive.
- Superior was also not paid $195,143.40 retainage under its subcontract; Superior and Ben Hur filed liens, which Ascent discharged via bond; the subcontractors sued Ascent, Corporex, D&M, and insurer Westchester.
- At trial the jury found (inter alia) a contract between D&M and Superior, that both subcontractors performed extra work (values awarded), and that D&M was not negligent; the trial court awarded unjust enrichment recovery against Ascent/Corporex and attorneys’ fees to Superior under its subcontract.
- The Court of Appeals vacated the trial judgment and ordered a new trial on multiple grounds; the Kentucky Supreme Court affirmed in part, reversed in part, reinstated the unjust enrichment award against the owner, reversed the attorney-fee award against D&M, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/recovery on unjust enrichment against owner (Ascent/Corporex) for unpaid extras and retainage | Superior/Ben Hur: owner received benefit and has not paid; unjust enrichment is available because contractual remedies are ineffective (owner didn’t pay GC) | Ascent/Corporex: existence of contractual remedies (chain of contracts) bars equitable recovery | Court: reinstated trial court — unjust enrichment available where claimant rendered uncompensated performance that benefited owner and contractual remedies are inadequate due to “contractual gridlock.” |
| Effect/enforceability of pay‑if‑paid clause in D&M–Superior subcontract | Superior: clause should be unenforceable as against public policy or harmonized so it doesn’t bar recovery | D&M: clause unambiguous — payment to Superior is conditioned on D&M’s receipt from owner, so D&M had no breach | Court: clause is clear and enforceable under Kentucky law; it shifts nonpayment risk to subcontractor, so breach-of-contract judgment against D&M cannot stand on that theory (but does not bar pursuing the contract claim). |
| Award of attorneys’ fees to Superior under subcontract provision | Superior: prevailing-party provision in subcontract entitles it to fees for dispute resolving rights under the agreement | D&M: Superior did not prevail on contract claim against D&M (pay‑if‑paid insulated D&M); owner is not a party to subcontract, so fees against owner are not authorized | Court: reversed fee award — Superior prevailed against owner (unjust enrichment) but did not prevail on contract claim against D&M, and the subcontract’s fee clause does not authorize fees against non‑signatories (Ascent/Corporex) or in absence of a contract victory over D&M. |
| Whether trial court properly instructed jury on owner’s breach of contract and negligence claims against D&M | Ascent/Corporex: both breach and negligent performance were distinct theories and should have been submitted | D&M: negligence only; breach instruction not necessary or was abandoned | Court: trial court abused discretion by refusing breach instruction; breach and negligence may both be submitted where supported, but the negligence instruction was adequate and not reversible error. |
Key Cases Cited
- Furlong Dev. Co. v. Georgetown-Scott Cty. Planning & Zoning Comm'n, 504 S.W.3d 34 (Ky. 2016) (elements of unjust enrichment and availability of equitable relief when contract remedies inadequate)
- Codell Constr. Co. v. Commonwealth, 566 S.W.2d 161 (Ky. Ct. App. 1977) (express contract precludes unjust enrichment recovery for same performance)
- Brown Sprinkler Corp. v. Somerset-Pulaski Cty. Dev. Found., Inc., 335 S.W.3d 455 (Ky. Ct. App. 2010) (mechanics’ lien or statutory remedy does not necessarily preclude unjust enrichment claim)
- BMD Contractors, Inc. v. Fidelity & Deposit Co., 679 F.3d 643 (7th Cir. 2012) (discussion of pay‑if‑paid clauses and condition‑precedent meaning)
- Giddings & Lewis, Inc. v. Industrial Risk Insurers, 348 S.W.3d 729 (Ky. 2011) (contract interpretation is a question of law; discussion relevant to economic-loss boundaries)
- Steelvest, Inc. v. Scansteel Service Ctr., Inc., 908 S.W.2d 104 (Ky. 1995) (equitable claims are for the court, not jury; trial court makes findings and may rely on jury fact‑findings)