United States of America for the Use and Benefit of Wells Cargo, Inc. v. Alpha Energy and Electric, Inc.
2:18-cv-01182
| D. Nev. | Nov 4, 2022Background:
- In Aug. 2016 Alpha (prime) and Northcon (subcontractor) formed a teaming agreement; Northcon prepared bids and led project administration.
- Alpha won the FamCamp contract (~$4.7M) and obtained a payment bond from ACIC; Northcon and Alpha operated under an unsigned but enforceable fixed-price subcontract listing a ceiling of $1,848,964.54.
- Northcon billed monthly; beginning Oct. 2017 invoices exceeded the subcontract ceiling, and Northcon internally increased the subcontract "scheduled value" to $2.2M then $2.7M without Alpha’s written consent; Alpha paid a total of $2,081,398.26 (including direct payments to some Northcon subcontractors to avoid upstream claims).
- Northcon project manager Ellard Comstock authorized extra work and change orders without following written approval limits; Northcon submitted an REA to the government that the government rejected as "no merit."
- Southwestern had a separate subcontract with Alpha ($1.25M) and Northcon sought to assert Southwestern’s claims as assignee; Northcon also imposed an $80,000 back-charge reducing Southwestern’s contract to $1.17M.
- After a two-day bench trial, the court entered judgment for Alpha and ACIC on all claims and directed the parties to meet-and-confer on attorneys’ fees (with a briefing schedule if they cannot agree).
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract — subcontract ceiling | Northcon: performed extra work and was not paid; course of conduct and change orders increased price | Alpha: fixed-price ceiling controls; no written, mutual modification; Comstock lacked authority; Northcon billed excess internally | For Alpha — subcontract enforceable; no authorized modification; Northcon paid full contract amount |
| Quantum meruit / unjust enrichment | Northcon: entitled to recover value for extra work performed outside contract | Alpha: express written subcontract governs payment; prevents quasi-contract recovery | For Alpha — quantum meruit barred by express contract; no abandonment or direction to perform extra work |
| Miller Act claim | Northcon: provided labor/materials under subcontract and not paid | Alpha: Northcon was compensated under subcontract; some claims submitted to government were rejected | For Alpha — Miller Act claim fails; no unpaid authorized work shown |
| Breach of covenant of good faith | Northcon: Alpha thwarted recovery for extra work and benefits | Alpha: acted within contract, objected to excess charges, refused unauthorized payments | For Alpha — no breach; covenant cannot expand express contractual limits |
| Southwestern assignment / change orders | Northcon/Southwestern: extra work owed, Alpha failed to pay | Alpha: change-order rules and pay-when-paid clause not followed; some work was within original scope; Alpha paid adjusted amount | For Alpha — no authorized change orders; claims fail; court found risk of double recovery |
| Attorneys' fees | Northcon: opposed fee award | Alpha/ACIC: prevailing parties under subcontracts' fee provisions | For Alpha & ACIC — prevailing; court ordered meet-and-confer and set motion schedule for fees |
Key Cases Cited
- Ellison v. California State Auto Ass'n, 797 P.2d 975 (Nev. 1990) (contracts interpreted by plain and unambiguous terms).
- Calloway v. City of Reno, 993 P.2d 1259 (Nev. 2001) (elements of breach of contract claim).
- Orbit Stations, Inc. v. Curtis, 678 P.2d 1153 (Nev. 1984) (agency/actual authority limits binding principal).
- Leasepartners Corp. v. Robert L. Brooks Trust, 942 P.2d 182 (Nev. 1997) (no unjust enrichment recovery when express contract exists).
- Ewing v. Sargent, 482 P.2d 819 (Nev. 1971) (quantum meruit not available where express contract covers subject matter).
- Griffin v. Old Republic Ins. Co., 133 P.3d 251 (Nev. 2006) (implied covenant cannot increase contractual obligations).
- Hilton Hotels v. Butch Lewis Prods., 808 P.2d 919 (Nev. 1991) (standard for breach of covenant of good faith and fair dealing).
- J.A. Jones Constr. Co. v. Lehrer McGovern Bovis, Inc., 89 P.3d 1009 (Nev. 2004) (exceptions to contract bar for equitable recovery: abandonment/cardinal change).
- Udevco, Inc. v. Wagner, 678 P.2d 679 (Nev. 1984) (quantum meruit recovery when party directed to perform outside contract).
- United States ex rel. Hawaiian Rock Prods. Corp. v. A.E. Lopez Enters., Ltd., 74 F.3d 972 (9th Cir. 1996) (elements of a Miller Act claim).