Opinion
No. COA12–271.
2012-08-7
NEW PRIME, INC., d/b/a Prime, Inc., Plaintiff v. HARRIS TRANSPORT COMPANY and Transport Clearings East, Inc., Defendants.
Haywood, Denny & Miller, LLP by George W. Miller, III for plaintiff-appellee. Clark, Griffin & McCollum, LLP by Joe P. McCollum, Jr. for defendant-appellants.
Appeal by defendants from order entered 30 September 2011 by Judge Christopher W. Bragg in Union County Superior Court. Heard in the Court of Appeals 7 June 2012. Haywood, Denny & Miller, LLP by George W. Miller, III for plaintiff-appellee. Clark, Griffin & McCollum, LLP by Joe P. McCollum, Jr. for defendant-appellants.
CALABRIA, Judge.
Harris Transport Company (“Harris”) and its factoring agent, Transport Clearings East, Inc. (collectively “defendants”), appeal from an order granting New Prime, Inc., d/b/a Prime, Inc.'s (“plaintiff”) motion for summary judgment. We affirm.
I. Background
Hurricane Ivan struck the Gulf Coast of the United States in September 2004, creating a national emergency and causing significant property damage and utility outages. The catastrophic storm created a significant demand for ice in that region. Federal Emergency Management Agency (“FEMA”) contracted with IAP Services Worldwide (“IAP”) to coordinate the production and transportation of ice to the Gulf Coast. IAP then subcontracted with Captain Phip's Seafood and Ice, Inc. (“Phip's”) to produce or procure 2,800,000 bags of ice and have it transported to the Coast. Phip's contracted with Harris and plaintiff, both interstate trucking companies, to transport ice to the Gulf Coast.
Plaintiff transported two truckloads of ice and later billed IAP. Harris transported the majority of the remaining truckloads and billed Phip's. Phip's sent invoices to IAP that included the ice and transportation services. When IAP paid Phip's for the ice as well as the transportation, Phip's mistakenly paid Harris for transporting all the deliveries billed and paid nothing to plaintiff.
When plaintiff learned that IAP paid Phip's for plaintiff's ice shipments, plaintiff contacted Phip's who informed plaintiff that Harris was paid for all billed ice shipments because the invoice Harris sent Phip's inadvertently included two loads that plaintiff delivered to the Gulf Coast. Plaintiff then contacted Harris. Although Harris admitted that it did not provide the transportation services for loads 524–1–5 and 524–1–53, the two loads that plaintiff transported, Harris refused to reimburse plaintiff for the loads it did not deliver.
On 9 June 2008, plaintiff filed a complaint against defendants alleging that Phip's mistakenly paid Harris in the amount of $18,176 .90 for transporting ice that plaintiff, not Harris, delivered. Plaintiff alleged, inter alia, that defendants received a benefit, were aware of the benefit and should pay restitution for unjust enrichment and unfair and deceptive practices. On 25 July 2011, defendants filed a motion for summary judgment on the grounds that no genuine issue as to any material fact existed. On 17 August 2011, plaintiff filed a cross motion for summary judgment also on the grounds that no genuine issue as to any material fact existed. After a hearing, on 30 September 2011 the trial court entered an order granting plaintiff's cross motion for summary judgment on the basis of unjust enrichment in the amount of $18,176.90. The trial court also granted defendants' motion for summary judgment on the issue of unfair and deceptive practices. Defendants appeal.
II. Standard of Review
Defendants allege that the trial court erred in granting plaintiff's motion for summary judgment because there was never a contract between plaintiff and Harris and the trial court did not address the contract in the order on appeal. We disagree.
Summary judgment is appropriate if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen.Stat. § 1A–1, Rule 56(c). When “the parties have cross motions for summary judgment, and there is no dispute as to any material fact, the sole issue on appeal is whether the trial court properly concluded that one party was entitled to judgment as a matter of law or if judgment should have been entered in favor of the opposing party.” IMT, Inc. v. City of Lumberton, ––– N.C.App. ––––, ––––, 724 S.E.2d 588, 592 (2012). When reviewing an order of summary judgment, the standard of review is de novo. Builders Mut. Ins. Co. v. North Main Constr. Ltd., 361 N.C. 85, 88, 637 S.E.2d 528, 530 (2006).
III. Unjust Enrichment
“The doctrine of unjust enrichment was devised by equity to exact the return of, or payment for, benefits received under circumstances where it would be unfair for the recipient to retain them without the contributor being repaid or compensated.” Collins v. Davis, 68 N.C.App. 588, 591, 315 S.E.2d 759, 761 (1984). An unjust enrichment claim “is neither in tort nor contract but is described as a claim in quasi contract or a contract implied in law.” Booe v. Shadrick, 322 N.C. 567, 570, 369 S.E.2d 554, 556 (1988). A party must prove three elements to establish a claim for unjust enrichment: “that it conferred a benefit on another party, that the other party consciously accepted the benefit, and that the benefit was not conferred gratuitously or by an interference in the affairs of the other party.” Southeastern Shelter Corp. v. BTU, Inc., 154 N.C.App. 321, 330, 572 S.E.2d 200, 206 (2002) (citing Booe at 570, 369 S.E.2d at 556).
In the instant case, defendants cite Concrete Co. v. Lumber Co., to support the proposition that “an express contract precludes an implied contract with reference to the same matter.” 256 N.C. 709, 713, 124 S.E.2d 905, 908 (1962). In Concrete, the plaintiff, a supplier of building materials, contracted with Fore–Taylor Building Company (“Fore–Taylor”) to sell and deliver the materials to construction sites. Id. at 710, 124 S.E.2d at 905. Plaintiff delivered the materials to lots that were owned by Troy Lumber Co. (“the defendant”). Id. The plaintiff, unable to recover from Fore–Taylor, filed a claim for breach of implied contract against the defendant, the recipient of the building materials. Id. at 713, 124 S.E.2d at 907. The Court held that “when there is a contract between two persons for the furnishing of services or goods to a third, the latter is not liable on an implied contract simply because he has received such services or goods.” Id. at 714, 124 S.E.2d at 908. However, Concrete is distinguishable from the instant case. The defendant in Concrete received the building materials pursuant to a contract between the plaintiff and Fore–Taylor. Id. Although the defendant never ordered the building materials from the plaintiff and never agreed to pay for the materials it received, the defendant received an expected benefit, not an unexpected and unearned benefit. Id. at 713, 124 S.E.2d at 907.
In the instant case, unlike Concrete, plaintiff and Harris each had separate contracts to transport ice to the Gulf Coast for their own benefit. Each delivered and billed for the ice they transported. IAP paid Phip's and Phip's mistakenly paid Harris for all truckloads billed which included two truckloads that plaintiff delivered. Harris received an unexpected and unearned benefit but refused to reimburse plaintiff those funds. Harris billed Phip's for plaintiff's work, received payments for shipments plaintiff delivered and refused to send plaintiff the payments it mistakenly received.
Defendants are not disputing the second and third elements under the theory of unjust enrichment. However, defendants claim that plaintiff cannot recover because plaintiff failed to show the first requirement for unjust enrichment: that plaintiff conferred a benefit on defendants, citing Sellers v. Morton, 191 N.C.App. 75, 661 S.E.2d 915 (2008). In Sellers, the plaintiff sold his business to SGI Acquisitions, LLC (“SGI”). Id. at 77, 661 S.E.2d at 918. Thomas Morton (“Morton”) and Frank Kincaid (“Kincaid”) were the principal officers, directors and shareholders of SGI. Id. Shortly thereafter, the plaintiff entered into a consulting and non-compete agreement and a lease agreement with SGI. Id. Subsequently, SGI changed its name to Glass Solutions, LLC. (“Glass”). Id. When Glass later encountered financial trouble, it sold all its assets to Stroupe Mirror (“Stroupe”). Id. at 78, 661 S.E.2d at 919. Stroupe entered into employment and consulting agreements with Morton and Kincaid, but did not assume liability for either the lease agreement or the non-compete agreement. Id. The plaintiff stopped receiving payment and received a letter from Glass notifying him that Glass had ceased operations and had no remaining funds for payments on the lease agreement or non-compete agreement. Id. Subsequently, the plaintiff initiated an action against Morton, Kincaid and Stroupe, claiming, inter alia, that Morton and Kincaid were unjustly enriched because funds which would have been used to pay the plaintiff were used for Morton and Kincaid's employment and consulting contracts. Id. at 84, 661 S.E.2d at 922. This Court held that the plaintiff could not recover under the theory of unjust enrichment because he had failed to prove that he conferred a benefit on Morton and Kincaid. Id. at 84, 661 S.E.2d at 923.
The instant case is distinguishable. In Sellers, Morton and Kincaid received funds which the plaintiff thought he should have received. However, there was no evidence that the plaintiff had a superior legal title to those funds or that Morton and Kincaid received money for work performed by plaintiff. In contrast, here Harris received payment for two truckloads of ice that plaintiff delivered. When Harris billed Phip's for the truckloads it delivered, plaintiff's deliveries were also included, and Phip's paid Harris for all the transportation billed. Plaintiff learned, after billing both IAP and Phip's, that Harris also received the payment for the two loads that plaintiff delivered. When plaintiff requested payment from Harris, Harris refused to pay plaintiff, even though Harris had no legal or equitable right to those funds.
In Embree Const. Group, Inc. v. Rafcor, Inc., the plaintiff, a general contractor, entered into an agreement to build a restaurant with a property owner. 330 N.C. 487, 411 S.E.2d 916 (1992). The property owner had a construction loan with the defendant, a bank. Id. When the defendant refused to pay the plaintiff, even though the plaintiff completed the project prior to the property owner defaulting on the loan, the plaintiff filed a claim for unjust enrichment against the defendant. Id. The plaintiff claimed that the defendant was unjustly enriched because it did not disburse the funds remaining in the construction loan to the plaintiff, but acquired the completed building as a security for the loan, and thus received the benefit it had bargained for under the loan agreement with the property owner. Id. Our Supreme Court agreed, and held that the defendant was unjustly enriched. Id. Embree relied on Booe v. Shadrick, indicating that “[a] person who has been unjustly enriched at the expense of another is required to make restitution to the other.” Id. at 496,411 S.E.2d at 923 (citing Booe, 322 N.C. at 570, 369 S.E.2d at 555–56).
In the instant case, plaintiff alleged that defendants was unjustly enriched at plaintiff's expense because defendants received funds, and admitted receiving funds for two loads of ice, 524–1–5 and 524–1–53, that it did not deliver. Harris knew that plaintiff had delivered these two loads but refused to pay plaintiff from the funds. Therefore, Harris received the benefit that it bargained for in its contract with Phip's but also received an extra benefit because it received funds that should have been paid to plaintiff and refused to make restitution to plaintiff.
Plaintiff cites Primerica Life Ins. Co. v. James Massengill & Sons to support the theory of unjust enrichment. In Primerica the recipient of funds refused to return the money, but the Court found that he had been unjustly enriched because the money was conferred on him, he consciously accepted the benefit, and it was not conferred gratuitously since it was obviously a mistake. ––– N.C.App. ––––, 712 S.E.2d 670, 679 (2011). In the instant case, both plaintiff and Harris delivered ice but only defendants got paid, therefore a $18,176.90 financial benefit was conferred on defendants. Defendants “consciously accepted the benefit” by admitting that Phip's paid for both Harris's work and some of the plaintiff's work but refused to pay plaintiff the amount over and above the amount it had earned for transporting ice. The benefit was not “conferred gratuitously” because plaintiff did not transport ice for Harris's benefit, and Phip's paid defendants an amount in excess of the amount it had earned by mistake. Since there is no issue of material fact as to these three requirements, summary judgment was appropriate.
Our holding in the instant case is in line with the Restatement and other states. Many jurisdictions do not require that the plaintiff confer a direct benefit on the defendant in order to recover under a theory of unjust enrichment. See Town of New Hartford v. Conn. Res. Recovery Auth., 970 A.2d 592, 618 (Conn.2009) (“Although unjust enrichment typically arises from a plaintiff's direct transfer of benefits to a defendant, it also may be indirect, involving, for example, a transfer of a benefit from a third party to a defendant when the plaintiff has a superior equitable entitlement to that benefit.”); Smith v. Whitener, 856 S.W.2d 328, 330 (Ark.Ct.App.1993) (recognizing that although enrichment to the defendant must be at the expense of the plaintiff, the enrichment need not come directly from the plaintiff, but rather may come from a third party.). See also Bates–Farley Sav. Bank v. Dismukes, 33 S.E. 175 (Ga.1899); In re Turer's Estate, 133 N.W .2d 765 (Wis.1965); Dechen v. Dechen, 59 A.D. 166 (N.Y.App.Div.1901).
The Restatement indicates that “[i]f a third person makes a payment to the defendant to which (as between claimant and defendant) the claimant has a better legal or equitable right, the claimant is entitled to restitution from the defendant as necessary to prevent unjust enrichment.” Restatement (Third) of Restitution and Unjust Enrichment § 48 (2011). Illustration 1 further states, “A owes B $500. Intending to pay this debt, A sends $500 by mistake to C, to whom A has no obligation. C is liable to A ... and to B by the rule of this section. C's payment of $500 to either of them discharges both of C's liabilities.” Restatement (Third) of Restitution and Unjust Enrichment § 48, cmt. b, illus. 1 (2011).
IV. Conclusion
The trial court did not err in granting plaintiff's cross motion for summary judgment because plaintiff established all three elements of unjust enrichment and therefore there was no genuine issue as to any material fact and plaintiff was entitled to judgment as a matter of law. What is especially troubling in this case is that it was an emergency situation and it appears the primary mission of the vendors was to get ice to those in need. The fact that payment for two loads of ice was sent to the wrong vendor was understandable, and excusable. It is a pity that this case could not be resolved without going to court.
Affirmed. Judges STROUD and McCULLOUGH concur.
Report per Rule 30(e).