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Alpha Contracting Services, Inc. v. Professional Retail Services, Inc.

Superior Court of Delaware, Kent

January 9, 2019

ALPHA CONTRACTING SERVICES, INC., Plaintiff,
v.
PROFESSIONAL RETAIL SERVICES, INC., and ANN, INC. Defendants.

          Submitted: December 21, 2018

          ORDER

          NOEL EASON PRIMOS, JUDGE

         Before the Court is Defendant Ann, Inc.'s (hereinafter "Ann") Motion to Dismiss and Plaintiff Alpha Contracting Services, LLC's (hereinafter "Alpha") response. Alpha filed its Complaint on August 17, 2018, against Ann and Professional Retail Services (hereinafter "PRS"). In its Complaint, Alpha asserted four counts: (1) breach of contract; (2) unjust enrichment; (3) quantum meruit; and (4) violation of 6 Del. C. § 3501 et. seq. Ann's motion requests dismissal of all Counts asserted in the Complaint. For the reasons set forth below, Defendant Ann's motion is DENIED in part and GRANTED in part.

         A. Factual Background and Procedural History

         The facts recited are those as alleged in Plaintiffs Complaint.[1] PRS, as prime contractor for Ann, entered into a contract on April 4, 2018, with Alpha (hereinafter "the Contract") for renovations at the Ann Taylor Loft Store (hereinafter "the Store") located in the Tanger Outlets in Rehoboth Beach, Delaware. PRS was hired by Ann to act as general contractor and oversee the work performed at the Store. The scope of the work included furnishing drywall, paint, trim, lumber, mud, hardware, ceiling tiles, equipment, rentals and labor for restoration. The original contract amount was to be between $70, 000.00 and $80, 000.00; however, PRS approved changes that were in addition to the contracted scope of work in the amount of $4, 070.00. Thus, the agreed contract price between Alpha and PRS was $84, 070.00. The Contract provided for installment payments to be made upon certain dates and upon completion of certain work. Alpha alleges that it completed all of the contracted work in a timely manner but has been paid only $40, 000.00.

         On April 19, 2018, Alpha emailed Kathleen Larmour at PRS to inquire as to the payment status of the remaining $44, 070.00 owed. Ms. Larmour responded via email on April 20, 2018, and stated that she disagreed with the project completion percentage and would contact Alpha within a few weeks. On April 25, 2018, Alpha sent a final invoice via first class mail to PRS for $44, 070.00. PRS did not pay this invoice, prompting Alpha to bring the instant suit.

         B. Standard of Review

         On a motion to dismiss, the moving party bears the burden of demonstrating that "under no set of facts which could be proven in support of its [complaint] would the [plaintiff] be entitled to relief."[2] Upon this Court's review of a motion to dismiss, "(i) all well-pleaded factual allegations are accepted as true; (ii) even vague allegations are well-pleaded if they give the opposing party notice of the claim; (iii) the Court must draw all reasonable inferences in favor of the non-moving party; and (iv) dismissal is inappropriate unless the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof."[3]

         C. Discussion

         I. Count I: Breach of Contract Claim

         The parties agree that Alpha seeks no relief against Ann under Count I. Therefore, Ann's motion to dismiss is moot as to Count I.

         II. Counts II and III: Unjust Enrichment and Quantum Meruit Claims

         As to Counts II and III of its Complaint, Alpha alleges that Ann was unjustly enriched under the Contract and that Alpha may recover under a theory of quantum meruit. The Court will address the unjust enrichment claim first, followed by the quantum meruit claim.

         Pursuant to the Restatement of Restitution, a person who has been unjustly enriched at the expense of another must make restitution to the other person.[4]However, "[a] person [i.e., Alpha] who has conferred a benefit upon another [i.e., Ann] as the performance of a contract with a third person [i.e., PRS] is not entitled to restitution from the other merely because of the failure of performance by the third person."[5] In order to recover under a theory of unjust enrichment, the plaintiff must prove five elements: "(1) an enrichment, (2) an impoverishment, (3) a relation between the enrichment and the impoverishment, (4) the absence of justification, and (5) the absence of a remedy provided by law."[6]

         Ann asserts two primary arguments against the viability of Alpha's unjust enrichment claim. First, Ann argues that there is already a remedy at law for Alpha, as it may sue PRS, the other party to the Contract, for damages. Ann asserts that the Contract set forth the work that Alpha was to perform in exchange for money owed by PRS. Because this Contract was entered into between PRS and Alpha, Ann argues that Alpha's breach of contract claim against PRS is a sufficient remedy at law. Second, Ann asserts that it was not unjustly enriched to the detriment of Alpha, particularly as it paid PRS for the work performed at the Store.

         In Delaware, it is well established that a subcontractor is barred from recovery under an unjust enrichment theory where an owner has made full payment to a general contractor.[7] "When that occurs, a subcontractor who is not paid by the general contractor cannot complain about the owner's benefit. The benefit was purchased, and, therefore, its receipt is just."[8] However, this is not the case where an owner has not paid the general contractor. Rather, this Court has permitted recovery for a subcontractor under an unjust enrichment theory where the general contractor was not paid or was not paid in full.[9] In order for a subcontractor to recover in that instance, it must demonstrate an inability to collect under the subcontract combined with the owner's failure to pay the general contractor.[10]

         Here, Alpha argues that whether there is an adequate remedy at law will depend on PRS's defense theories. Specifically, Alpha has pointed to PRS's Answer to the Complaint and Counterclaim, which alleges that Ann back-charged and owes PRS $58, 582.50.[11] The Court agrees with Alpha that it cannot force PRS to bring an action against Ann for this back-charged amount in order to recover its $44, 070.00 owed. If PRS's assertion is correct, and if Ann is dismissed from this action, Alpha could be left without a remedy, and Ann may be unjustly enriched.

         The evidence presented by Alpha clearly demonstrates that it did not intend to provide its work gratuitously. Rather, the Contract demonstrates an intent to be paid for the work performed. The sufficiency and quality of the work performed remains a question for the jury, as does whether Ann was unjustly enriched to the impoverishment of Alpha. Accepting all well-pleaded factual allegations as true, the ...


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