Opinion
NO. 2010-CA-001891-MR
10-26-2012
KENNETH A. ISAACS APPELLANT v. GARY LAWSON AND ELAINE LAWSON APPELLEES
BRIEFS FOR APPELLANT: Michael A. Galasso Cincinnati, Ohio BRIEF FOR APPELLEE: Richard M. Rawdon, Jr. Georgetown, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM SCOTT CIRCUIT COURT
HONORABLE PAUL F. ISAACS, JUDGE
ACTION NO. 08-CI-00190
OPINION
AFFIRMING
BEFORE: CLAYTON, LAMBERT AND STUMBO, JUDGES. STUMBO, JUDGE: Kenneth A. Isaacs appeals from Findings of Fact, Conclusions of Law, Opinion and Order of the Scott Circuit Court. Isaacs contends that the circuit court erred in rendering a judgment in favor of Appellees Gary Lawson and Elaine Lawson under the theory of quantum meruit where the parties were bound by an express real estate sales contract. He also argues that the court erred in its calculation of damages. For the reasons stated below, we affirm the judgment on appeal.
In 2007, Kenneth A. Isaacs owned a parcel of unimproved real property located at 313 Lakeshore Circle, Georgetown, Kentucky. Isaacs entered into an agreement with Jerry Cornett providing that Cornett would build a house on the parcel, after which the house and parcel would be sold and Isaacs and Cornett would divide the proceeds.
In August, 2007, Gary and Elaine Lawson responded to a sale sign on the parcel and contacted Cornett. At the time, the house was under construction but was not completed. After negotiations, the Lawsons orally agreed to purchase the parcel and house. The Lawsons drafted a contract and presented it to Cornett, which stated
8/30/07The Lawsons and Cornett signed the contract. Isaacs did not sign the contract. The Lawsons then paid $20,000 to Cornett, which was placed in a joint banking account controlled by Isaacs and Cornett.
GARY & ELAINE LAWSON AGREE TO PURCHASE HOUSE & LOT AT 313 LAKESHORE CIRCLE FOR $292,000 FROM JERRY CORNETT & KEN ISAACS.
GARY & ELAINE LAWSON WILL PAY $20,000 DOWN WITH $272,000 DUE UPON CLOSING.
Thereafter, the Lawsons and Cornett orally agreed that the Lawsons could purchase and install various items and upgrades to the house such as a refrigerator, dishwasher, and stove. Pursuant to the oral agreement, the Lawsons would be responsible for selecting, purchasing and installing the items through third party vendors and installers. As Cornett continued to build the house, these items were installed.
As the construction reached completion, the parties attempted on two occasions to close the sale and transfer title. Despite the parties' efforts, the closing never took place. The Lawsons would later allege that the closing did not occur because construction was not complete, whereas Isaacs and Cornett would maintain that the Lawsons breached the contract by refusing to close without receiving a $5,100 credit representing three months of interest on their bridge loan. When it became clear that these issues were not going to be resolved, Isaacs and/or Cornett sought other purchasers by listing the home for sale with a real estate agent.
On March 3, 2008, the Lawsons filed an action in Scott Circuit Court against Isaacs, Cornett and Rector-Hayden Realtors with whom the home had been listed for sale. The Lawsons sought specific performance under the contract (Count I), or in the alternative a Judgment in the amount of $46,406.00 representing their deposit plus the cost of the appliances and other additions (Count II). Additionally, the Lawsons sought to enjoin Rector-Hayden from marketing and selling the house until the dispute was resolved (Count III). The Defendants responded with general denials. Isaacs maintained that he was not a partner with Cornett and never signed the contract, and moved to be dismissed from the action. Isaacs and Cornett also filed counterclaims against the Lawsons alleging breach of contract and loss of the bargain.
The matter proceeded in Scott Circuit Court for several months, where Isaacs continued to maintain that he was not Cornett's business partner and was not bound by the contract because he did not sign it. On May 24, 2010, and with the trial court's consent, the Lawsons filed an Amended Complaint seeking to clarify that Count II of the original complaint sought the return of the $20,000 deposit plus costs for the appliances under the theory of quantum meruit. At some time thereafter, and though not memorialized in the record, the Lawsons chose not to pursue Count I of the complaint alleging breach of contract and seeking specific performance.
Thereafter, the matter proceeded to a bench trial on the sole claim of quantum meruit (Count II) under which the Lawsons sought recovery of the $20,000 deposit and cost of the appliances and improvements. On September 14, 2010, the trial court rendered its Findings of Fact, Conclusions of Law, Opinion and Order. The court ruled that the Lawsons were entitled to the return of their deposit "because the purchase contract at issue falls within the statute of frauds and therefore was voidable by either party without regard to fault. Thus, equitable principles must be used to put the parties back in the status quo." As to their claim for $27,745 for the materials and appliances the Lawsons supplied, the court applied the elements of quantum meruit to determine that the Lawsons were entitled to full recovery of these costs. The court rejected Isaacs' contention that the Lawson's retail receipts for the materials and appliances were not a proper basis for establishing the amount of damages. This appeal followed.
Isaacs first argues that the trial court erred in rendering a judgment under the equitable theory of quantum meruit because the express contract is controlling. He directs our attention to the Statute of Frauds (KRS 371.010), which provides that no action shall be brought to charge any person upon any contract for the sale of real property unless the contract is in writing and is signed by the person to be charged or his agent. Isaacs argues that contract at issue, which was prepared by the Lawsons and signed by Cornett, satisfies the Statute of Frauds and therefore was not voidable as determined by the circuit court. Specifically, Isaacs contends that the contract is dated, identifies the parties and the property, the consideration or purchase price, and the terms or conditions with the balance being due at closing. Isaacs argues that the contract meets the elements of the Statute of Frauds, and that as such the court erred in finding the contract to be voidable and/or otherwise failing to enforce the contract at trial. Isaacs also maintains that "the undisputed evidence at trial proves that Cornett was the authorized agent of Isaacs," and therefore the Lawsons' action against Isaacs must proceed, if at all, under contract theory rather than quantum meruit.
In response, the Lawsons argue that this issue is not preserved for appellate review. They note that the issue of whether the contract is controlling was never raised or otherwise presented to the circuit court either as part of Isaacs' case in chief, or by way of motions for summary judgment or other relief. The Lawsons also point out that Isaacs consistently argued below that Cornett was not his agent, that Isaacs did not sign the contact, and that as such there was no enforceable contract as against Isaacs. Additionally, the Lawsons note that Isaacs went so far as to list the house for sale with Rector-Hayden, thus evincing Isaacs' belief that he was not bound by any contract with the Lawsons. In sum, the Lawsons argue that this issue was not raised below or otherwise preserved for appellate review, does not constitute palpable error, and therefore cannot serve as a basis for seeking relief from judgment.
We have closely examined the record and the law, and must conclude that Isaacs has not preserved this argument for appellate review. CR 76.12(4)(c)(v) requires the Appellant to state at the beginning of the written argument if the issue was preserved and, if so, in what manner. We are not required to consider portions of the appellant's brief not in conformity with CR 76.12, and may summarily affirm the trial court on the issues contained therein. Skaggs v. Assad, By and Through Assad, 712 S.W.2d 947 (Ky. 1986); Pierson v. Coffey, 706 S.W.2d 409 (Ky. App. 1985). Additionally, Isaacs' argument is not palpable error sufficient to overcome the lack of preservation. "A palpable error which affects the substantial rights of a party may be considered by the court on motion for a new trial or by an appellate court on appeal, even though insufficiently raised or preserved for review, and appropriate relief may be granted upon a determination that manifest injustice has resulted from the error." CR 61.02. Such palpable error, however, "must result from action taken by the Court rather than from an act or omission by the attorneys or litigants." Burns v. Level, 957 S.W.2d 218, 222 (Ky. 1997), quoting Carrs Fork Corp. v. Kodak Mining Corp., 809 S.W.2d 699 (Ky. 1991) (emphasis added). In the matter at bar, the alleged palpable error did not result from action taken by the trial court, but rather by Isaacs' waiver of the issue below.
Additionally, throughout the months leading up to trial, Isaacs consistently argued that Cornett was not his business partner or agent; therefore, Isaacs was not bound by Cornett's signature on the purchase contract. Now on appeal, Isaacs contends just the opposite, i.e., that "[w]hile the contract was not signed by Isaacs, it was signed by Cornett and the undisputed evidence at trial proves that Cornett was the authorized agent of Isaacs." Arguendo, even if this issue were preserved or was found to be palpable error, which we do not find to be the case, Isaacs may not "feed one can of worms to the trial judge and another to the appellate court." Kennedy v. Commonwealth, 544 S.W.2d 219, 222 (Ky. 1976), overruled on other grounds by Wilburn v. Commonwealth, 312 S.W.3d 321 (Ky. 2010). That is to say, a "new theory of error cannot be raised for the first time on appeal." Springer v. Commonwealth, 998 S.W.2d 439, 446 (Ky. 1999). We have no basis for finding error as to the circuit court's award of $20,000 representing the Lawson's deposit, and affirm the trial court on this issue.
Isaacs next argues that the circuit court erred in basing the award for the cost of the appliances and improvements on the Lawson's retail receipts rather than the increase in value of the home. He maintains that though the Lawsons paid retail prices for all of the items they purchased, as a builder, Isaacs and Cornett would have been able to purchase these items at a lower cost. Isaacs contends that the measure of damages under quantum meruit is not the amount that the Lawsons paid for the items, but rather the value received by Isaacs. The focus of his claim of error on this issue is that the measure of the remedy under the theory of quantum meruit is the value conferred upon Isaacs rather than the amount paid by the Lawsons. He also maintains that damages must be proven with reasonable certainty, and uncertain, contingent or speculative damages cannot be recovered whether in contract or tort. Finally, Isaacs notes that the elements of quantum meruit include the requirement that the provider of the goods or services at issue must have expected payment. In the matter at bar, Isaacs contends that the Lawsons had no expectation of being paid for the appliances and improvements, and that they are not entitled to damages under the theory of quantum meruit. In support of his claim that the Lawsons had no expectation of being paid for the improvements, he notes that they anticipated buying and occupying the house rather than being paid for the improvements; therefore, Isaacs contends that at least one of the elements of quantum meruit cannot be met. He seeks an Order reversing the award on this issue.
The elements of a claim of quantum meruit are:
1. that valuable services were rendered, or materials furnished;Cherry v. Augustus, 245 S.W.3d 766, 779 (Ky. App. 2006).
2. to the person from whom recovery is sought;
3. which services were accepted by that person, or at least were received by that person, or were rendered with the knowledge and consent of that person; and
4. under such circumstances as reasonably notified the person that the plaintiff expected to be paid by that person.
The circuit court determined that the Lawsons tendered proof sufficient to satisfy these elements. At issue, however, is the valuation of the appliances and materials provided by the Lawsons. In determining damages on this issue, the circuit court relied on a spreadsheet provided by the Lawsons which set out their retail costs in purchasing the appliances and materials. In so doing, and citing Duncan v. Duncan, 259 Ky. 844, 83 S.W.2d 485 (Ky. 1935), the court opined that "those costs 'shed light on the enhancement of the value of the premises by reason thereof.'"
It is helpful to examine the distinction between quantum meruit, which requires no proof of the defendant's retained benefit, and the theory of unjust enrichment, which does require such proof:
Quantum meruit literally means "as much as he has deserved." BLACK'S LAW DICTIONARY 1255 (7th ed. 1999). In like manner, the damages thereunder are based upon a legal fiction implying an obligation to pay reasonable compensation for services rendered. 66 Am.Jur.2d Restitution and Implied Contracts §§ 6, 37 (2010); 1 Williston on Contracts §§ 1:6, 68:1 (4th ed. 2010). Although never specifically enunciated in this Commonwealth, it has been recognized that recovery under quantum meruit does not depend upon the conferment or retention of a benefit, as such is not absolutely necessary for recovery. Linquist Ford, Inc. v. Middleton Motors, Inc., 557 F.3d 469 (7th Cir. 2009). We are convinced that this is a correct statement ofJP White, LLC v. Poe Companies, LLC, 2011 WL 1706751 (Ky. App. 2011).
law.FN3.
FN3. Particularly, under the third element of quantum meruit, services must have been either: (1) accepted, (2) received, or (3) rendered with knowledge and consent. Thus, the services may have resulted in a "benefit" when accepted or received but may not have resulted in a benefit when merely performed with knowledge and consent. Simply put, a benefit may be conferred and retained under quantum meruit; however, same is not necessary to recover under quantum meruit. (Emphasis added).
By contrast, unjust enrichment is a distinct theory of restitutionary relief wherein damages are based directly upon the benefit conferred and retained. To prevail upon an unjust enrichment claim, it must be demonstrated: "(1) benefit conferred upon defendant at plaintiff's expense; (2) a resulting appreciation of benefit by defendant; and (3) inequitable retention of benefit without payment for its value." Jones v. Sparks, 297 S.W.3d 73, 78 (Ky. App. 2009). Unlike quantum meruit, a benefit must be conferred and retained before one may recover under unjust enrichment.
Thus, once the elements of quantum meruit have been proven, damages are awarded based on the value of the services rendered rather than the benefit received. We conclude that this rule is applicable to both goods and services rendered, as the elements of quantum meruit apply equally to both. Cherry, supra. Additionally, damages arising under the theory of quantum valebat, or the apparent 19th century analog to quantum meruit meaning "as much as it was worth," were overturned only upon a showing that they were "flagrantly excessive." Long v. Perry, Hard. 317, 3 Ky. 317 (Ky. 1808).
Webster's Revised Unabridged Dictionary, 1913.
The Lawsons offered proof of damages based on their cost of purchasing the appliances and improvements. Isaacs did not rebut this evidence before the circuit court nor offer countervailing proof of damages. The presumption is that a trial court conducts its proceedings according to law, and renders the correct judgment under the facts developed before it. City of Jackson v. Terry, 302 Ky. 132, 194 S.W.2d 77 (Ky. 1946). Isaacs has not overcome this presumption, and based on the totality of the record and the case law, we find no error in the circuit court's determination of damages arising under the Lawsons' claim of quantum meruit.
For the foregoing reasons, we affirm the Findings of Fact, Conclusions of Law, Opinion and Order of the Scott Circuit Court.
ALL CONCUR. BRIEFS FOR APPELLANT: Michael A. Galasso
Cincinnati, Ohio
BRIEF FOR APPELLEE: Richard M. Rawdon, Jr.
Georgetown, Kentucky