Superior Steel, Inc. v. The Ascent at Roebling's Bridge, LLC
2015 SC 000204
| Ky. | Dec 12, 2017Background
- The Ascent at Roebling's Bridge (owner) hired Corporex (design-builder); Corporex hired Dugan & Meyers (D&M) as construction manager/GC; D&M subcontracted structural steel to Superior Steel, which subcontracted erection to Ben Hur.
- Revised structural drawings (including forces table/connection changes) led Superior and Ben Hur to perform extra work at D&M's direction; Ascent/Corporex paid some extras but refused payment for specific items and retained $195,143.40 in retainage to Superior.
- Superior and Ben Hur sued Ascent, Corporex, D&M, and insurer Westchester for breach of contract, unjust enrichment, negligence, and related claims; D&M cross-claimed for indemnification; Corporex cross-claimed for breach and negligence against D&M.
- At trial the jury found (inter alia) that a contract existed between Superior and D&M, Superior and Ben Hur performed extra work (values awarded), and D&M was not negligent in performance vis-à-vis Corporex; trial court awarded Superior retainage, extra work, and attorneys’ fees under the subcontract; trial court also entered unjust enrichment judgment against owner (Ascent/Corporex).
- Court of Appeals vacated the entire judgment and ordered a new trial; Kentucky Supreme Court affirmed in part, reversed in part, and remanded: it reinstated the unjust enrichment judgment against the owner, reversed the award of attorneys’ fees to Superior (because breach judgment against D&M could not stand given the pay‑if‑paid clause), and held various trial-instruction issues merited retrial on some claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Unjust enrichment claim against owner (Ascent/Corporex) | Superior/Ben Hur: owner received benefit of unpaid extra work; equitable relief available because contractor not paid so legal remedy inadequate | Ascent/Corporex: existence of contracts (chain) and contractual remedies bars equitable recovery | Court: Unjust enrichment available where contractual "gridlock" (owner not paying GC) leaves subcontractor without adequate remedy; reinstated unjust enrichment award against owner |
| Breach of contract claim vs D&M given "pay‑if‑paid" clause | Superior: contract claim permissible; pay‑if‑paid clause should be harmonized or deemed unenforceable on public policy grounds | D&M: clause is an unambiguous condition precedent excusing payment until owner pays; jury needed instruction on whether condition occurred | Court: Clauses were unambiguous condition precedents shifting nonpayment risk to subcontractor; Superior could pursue breach claim but the pay‑if‑paid defenses mean D&M was not in breach as a matter of contract here; appellate reversal of contract judgment against D&M was proper |
| Attorneys’ fees award to Superior under subcontract (Article 11.6) | Superior: prevailed in multiparty proceeding "arising out of or relating to" the subcontract and is prevailing party entitled to fees | D&M/Owner: fees provision applies only against a party bound by the subcontract; Ascent/Corporex are not bound; Superior did not prevail on contract claim against D&M | Court: Because Superior did not prevail against D&M (pay‑if‑paid), Article 11.6 could not be used to recover fees from D&M or the owner; attorneys' fee award reversed |
| Jury instructions / presentation of Corporex's cross‑claims (breach and negligence) | Corporex: both breach of contract and negligent performance should have been submitted to jury | D&M: negligence instruction was proper; breach instruction was either waived or not supported | Court: Trial court abused discretion by not instructing jury on Corporex's breach claim (evidence supported it); negligence instruction was adequate and not erroneous; case remanded for further proceedings consistent with opinion |
Key Cases Cited
- Furlong Dev. Co. v. Georgetown-Scott Cty. Planning & Zoning Comm'n, 504 S.W.3d 34 (Ky. 2016) (elements for unjust enrichment and when contract precludes equitable relief)
- Codell Constr. Co. v. Commonwealth, 566 S.W.2d 161 (Ky. App. 1977) (where an explicit contract covers the dispute, unjust enrichment does not apply)
- Brown Sprinkler Corp. v. Somerset-Pulaski Cty. Dev. Found., Inc., 335 S.W.3d 455 (Ky. App. 2010) (mechanics' lien or statutory remedy does not necessarily preclude unjust enrichment)
- BMD Contractors, Inc. v. Fidelity & Deposit Co., 679 F.3d 643 (7th Cir. 2012) (discussion of pay‑if‑paid clauses shifting risk of owner nonpayment)
- Presnell Constr. Managers, Inc. v. EH Constr., 134 S.W.3d 575 (Ky. 2004) (differentiating contract and tort claims; independence requirement for tort recovery)