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2008-UP-282 - Environmental Solutions International, Inc. v. J.C. Construction, Inc.

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals


Environmental Solutions International, Inc., Appellant,

v.

J.C. Construction, Inc., Wolfe Creek Construction, Inc., and Woolpert L.L.P.,

of whom:

J.C. Construction, Inc. is Respondent.


Appeal from Colleton County
Jackson V. Gregory, Circuit Court Judge


Unpublished Opinion No. 2008-UP-282
Submitted June 1, 2008 – Filed June 2, 2008


AFFIRMED


R. Clenton Campbell and Grahame E. Holmes, both of Walterboro, for Appellant.

Amanda A. Bailey and M. Mark McAdams, both of Myrtle Beach, for Respondent.


PER CURIAM:  Environmental Solutions International, Inc. appeals the trial judge’s grant of summary judgment, contending the trial judge committed error in finding no issue of material fact as to whether ESI was compensated for services rendered to J.C. Construction, Inc., thus barring claims under quantum meruit and breach of contract.  We affirm.[1]

FACTS

In May 2003, Respondent J.C. Construction, Inc. (JCC), a general construction company, successfully submitted a bid for a project to refurbish a waste water treatment facility for the Town of St. Matthews, South Carolina.  One aspect of the workload required JCC to remove and dispose of sludge from the treatment facility’s basins.  To effectuate the sludge removal, JCC solicited bids for this portion of the work and subcontracted with Appellant Environmental Solutions International, Inc. (ESI) in November 2003.  ESI agreed to payment of $108.00 per ton of sludge removed.  The scope of the sludge removal was based on an estimate by Woolpert, L.L.P. (Woolpert), an engineering consultant hired by the town, and was limited by the terms of the contract.  Under the subcontract, ESI was required to:

Remove, solidify, transport and dispose of approximately 350 tons of waste treatment sludge.  Payment to be determined by measure of sludge hauled to the landfill.  The unit cost rate of $108.00 per ton hauled shall apply (as per the project bid form).  Approximate total commitment for accounting purposes only is $37,800.00.

After contracting with JCC, ESI hired Wolfe Creek Construction, Inc. (Wolfe Creek) to perform the actual removal.  In December 2003, ESI and Wolfe Creek began the removal process.  A number of delays plagued the project from the beginning resulting from leakage in sludge dewatering containers, inclement weather, and the lengthy process required to dry the sludge.  Additionally, the total amount of sludge requiring removal greatly exceeded the scope originally estimated by Woolpert.  In response to this discovery, ESI submitted a change order to JCC, increasing the scope of removal from 350 tons to 5,000 tons to reflect Woolpert’s error in the original estimate.

In April 2004, ESI quit work and left the jobsite, leaving behind a partially-filled dewatering bag of sludge, various equipment, and sawdust used in solidifying the sludge.  In May 2004, ESI faxed JCC a new agreement demanding a price increase from $108.00 per ton to $220.00 per ton for the sludge removal.  ESI alleged the price increase was in line with the increased costs associated with the larger workload which would require more personnel and different equipment in order to meet the project deadlines.  JCC never accepted this agreement and solicited new bids in order to facilitate the removal.  Wolfe Creek offered to complete the project, subcontracted with JCC, and completed all remaining sludge removal.  Wolfe Creek compensated ESI for the materials left behind at the jobsite by giving ESI a $10,350.00 credit.  The credit memo sent to ESI by Wolfe Creek noted the credit was for time, materials, and labor exhausted in filling the remaining bag and for three loads of ESI’s sawdust. 

Thereafter, ESI filed suit against several parties including JCC over the subcontract for sludge removal.  ESI alleged JCC was liable for breach of contract, quantum meruit, conversion, and intentional interference with contractual relations.  JCC moved for summary judgment on all causes of action.  At the hearing, ESI withdrew its claim of conversion.  Subsequently, the trial judge granted JCC’s Motion for Summary Judgment as to all of ESI’s claims. 

DISCUSSION

ESI alleges there are genuine issues of material fact as to whether it was paid under the contract for (1) the total amount of sludge hauled to the landfill and (2) for the sludge pumped into dewatering bags but left at the jobsite, and therefore, the grant of summary judgment was inappropriate as to the claims for quantum meruit and breach of contract.  We disagree. 

In order for a motion of summary judgment to warrant denial, a triable issue must exist.  Worsley Cos., Inc. v. Town of Mount Pleasant, 339 S.C. 51, 55, 528 S.E.2d 657, 660 (2000).  “A court considering summary judgment neither makes factual determinations nor considers the merits of competing testimony; however, summary judgment is completely appropriate when a properly supported motion sets forth facts that remain undisputed or are contested in a deficient manner.”  David v. McLeod Reg’l Med. Ctr., 367 S.C. 242, 250, 626 S.E.2d 1, 5 (2006).    

In the case at bar, ESI has failed to raise a genuine issue of material fact it was not compensated for services provided to JCC.  The record is barren of evidence to support this contention.  Therefore, the trial judge’s grant of summary judgment was appropriate. 

ESI alleges it was not paid for the amount of sludge it disposed of according to the terms of the contract and for the amount of sludge it pumped into dewatering bags and left at the jobsite.  However, ESI did not properly support these claims to the extent necessary to raise a genuine issue of material fact.  As in this case, summary judgment is completely appropriate when facts are contested in a deficient manner.  See David, 367 S.C. at 250, 626 S.E.2d at 5.

1.  Sludge Removal Fully Performed under the Terms of the Contract

ESI alleges that it was not paid for the 350 tons of sludge removed, transported, and disposed of at the dump.  Based on our review of the record, this issue is not preserved.  Even if preserved, the issue fails on the merits. 

This sludge removal was specifically covered by the terms of the contract.  ESI performed under the contract by disposing of approximately 350 tons of sludge and would have a cause of action for breach of contract against JCC if JCC failed to pay for these services.  However, sufficient evidence is not contained in the record to support this contention. 

The cause of action for breach of contract requires the plaintiff to establish the following elements:  (1) the existence of a contract, (2) a breach of the contract, and (3) damages to the plaintiff proximately resulting from the breach.  Fuller v. Eastern Fire & Cas. Ins. Co., 240 S.C. 75, 89, 124 S.E.2d 602, 610 (1962).  A breach occurs when a party to the contract fails to carry out a term, promise, or condition of the contract.  See Freeman Dodge, Inc. v. Fin. Servs., Inc., 272 S.C. 164, 249 S.E.2d 897 (1978) (finding finance company’s failure to offer car back to dealership as required by the terms of the contract was breach).

ESI has failed to produce evidence supporting the elements required for a breach of contract action.    Looking to “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits” in the record, ESI did not present sufficient evidence of a breach by JCC to create an issue for trial.  See Rule 56(c), SCRCP.   

It is undisputed JCC and ESI entered into a mutual contract.  By the terms of the contract, ESI was required to “[r]emove, solidify, transport and dispose of approximately 350 tons of waste treatment sludge.”  After disposal of the sludge, JCC was required to pay ESI according to the “measure of sludge hauled to the landfill.”  To establish a breach, ESI was required to prove JCC did not pay for sludge removal complying with the terms of the agreement.  However, there is no evidence in the record suggesting JCC failed to compensate ESI for the work it performed.  The only evidence offering insight into JCC’s payment for ESI’s services is the deposition of Brian Larry Penfield, Jr. (Penfield), the president and owner of ESI.  In his deposition, Penfield testified:

Q:  Okay.  And do you know how much money J.C. Construction paid you?

A:  Without pulling it out I do not know, sir.

Q:  So you have no idea as you sit here today whether they paid you the entire $38,000, do you?

A:  Not right this moment I do not.

Q:  All right.  As we sit here today can you tell me what services or materials that you provided to my client, J.C. Construction that you were not compensated for?

A:  Well, the contract for the first 350 tons and first $37,800 I would say that that there was falling in line with the $108 a ton and then due to circumstances either caused by delays, change orders and other nature like that, that the materials that was in the bag on the bottom of the hill and the prevention of moving further with the job since we were basically . . . when we put a work stoppage in to try and get things hashed out it prevented us from making up the rest of the money, particularly time, the cost of the bags.  We had multitude of down days to where we drove up there and we couldn’t do anything, some of which may have been in our error but some of which were not, so those are the things that I think that should be calculated in regard to that. 

In the appellant’s brief, ESI’s counsel concedes this testimony confirms ESI was paid for the first 350 tons of sludge removal but argues that Penfield’s testimony was erroneous and inaccurate.  While counsel maintains that Penfield was mistaken and ESI was not paid for the sludge removal fully performed, no additional evidence is offered anywhere in the record to support this contention.    

Given Penfield’s uncertain testimony and the lack of other supporting evidence, this court does not find a genuine issue of material fact as to whether ESI was paid under the contract.  Although Penfield appears to be unsure as to what amount he received from JCC at the time of the deposition, the testimony establishes ESI was paid.  When asked what services ESI was not compensated for, Penfield seems to suggest ESI wants payment for the sludge pumped into the dewatering bags and left at the jobsite and the costs associated with delays as opposed to the money due under the original terms of the contract.  His response to the question is ambiguous at best.  This ambiguity is not sufficient to raise a genuine issue of material fact sufficient for trial on the claim ESI was not paid for work fully performed under the contract.  Facts contested in a deficient manner cannot overcome a properly supported motion for summary judgment. 

After JCC established a lack of evidentiary support for the case, the burden shifted to ESI to prove the existence of a genuine issue of material fact.  See Regions Bank v. Schmauch, 354 S.C. 648, 660, 582 S.E.2d 432, 438 (Ct. App. 2003).  A party opposing a motion for summary judgment must allege facts clearly showing a material issue for trial and cannot rely on a mere scintilla of evidence to overcome the motion.  See Thomas v. Waters, 315 S.C. 524, 526, 334 S.E.2d 659, 661 (2001).  ESI failed to meet this burden.  Looking to Rule 56(c), SCRCP, we are limited to examining the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits to find a genuine issue of material fact warranting a denial of a grant of summary judgment.  Based on the record in this case, no such factual dispute exists to support the claim ESI was not compensated for the sludge removal fully performed under the contract.  Therefore, the grant of summary judgment was proper in regards to this claim. 

2.  Excess Sludge Pumped into Dewatering Bags without Disposal

Additionally, ESI is seeking recovery for sludge removed in excess of the terms of the contract and left in dewatering bags at the jobsite without proper disposal.  ESI alleges it is entitled to recover for this work under a theory of quantum meruit, or in the alternative, under a claim for breach of contract. 

Quantum meruit is an equitable remedy.  Columbia Wholesale v. Scudder May N.V., 312 S.C. 259, 261, 440 S.E.2d 129, 130 (1994); Landbank Fund VII, LLC v. Dickerson, 369 S.C. 621, 630, 632 S.E.2d 882, 887 (Ct. App. 2006).  “ ‘In a law action, the measure of damages is determined by the parties’ agreement, while in equity, ‘the measure of the recovery is the extent of the duty or obligation imposed by law, and is expressed by the amount which the court considers the defendant has been unjustly enriched at the expense of the plaintiff.’ ’ ”  QHG of Lake City, Inc. v. McCutcheon, 360 S.C. 196, 203, 600 S.E.2d 165, 108 (Ct. App. 2004) (quoting Myrtle Beach Hosp. v. City of Myrtle Beach, 341 S.C. 1, 8, 532 S.E.2d 868, 872 (2000) (quoting United States Rubber Prods., Inc. v. Town of Batesburg, 183 S.C. 49, 55, 190 S.E. 120, 126 (1937))).   

To prevail on a quantum meruit claim, the following elements must be established:  (1) the plaintiff conferred a benefit to the defendant; (2) the defendant realized the benefit; and (3) the defendant retained the benefit under circumstances making it inequitable for the defendant to retain the benefit without paying its value.  Myrtle Beach Hosp., 341 S.C. at 8-9, 532 S.E.2d at 872; Landbank, 369 S.C. at 630, 632 S.E.2d at 888; QHG of Lake City, 360 S.C. at 203-204, 600 S.E.2d at 108; Swanson v. Stratos, 350 S.C. 116, 121, 564 S.E.2d 117, 119 (Ct. App. 2002).  However, “[i]f the tasks the plaintiff is seeking compensation for under a quantum meruit theory are encompassed within the terms of an express contract which has not been abandoned or rescinded, the plaintiff may not recover under quantum meruit.”  Swanson, 350 S.C. at 122, 564 S.E.2d at 120 (citing 66 Am.Jur.2d Restitution and Implied Contracts § 81 (2001) (“[I]t is a defense to an action in quantum meruit that there is an express contract covering the issue of compensation for services or materials furnished.”)); see also Texcon, Inc. v. Anderson Aviation, Inc., 284 S.C. 307, 326 S.E.2d 168 (Ct. App. 1985) (finding master erred in allowing recovery in quantum meruit where express contract existed).

In Ro-Lo Enterprises v. Hicks Enterprises, Inc., 294 S.C. 111, 113-114, 362 S.E.2d 888, 889 (Ct. App. 1987), this Court addressed what constitutes abandonment of a contract: 

Abandonment of contract by one party is the giving up of the right to a benefit due from the other party.  Pitcher v. Lauritzen, 18 Utah 2d 368, 423 P.2d 491 (1967).  A contract will be treated as abandoned when the acts of one party inconsistent with its existence are acquiesced in by the other party.  Sauder v. Dittmar, 118 F.2d 524 (10th Cir. 1941); 17 Am.Jur.2d Contracts Section 484 (1964).  To constitute abandonment of contract by conduct, the actions relied upon must be positive, unequivocal, and inconsistent with the existence of a contract.  Mood v. Methodist Episcopal Church South, 289 S.W. 461 (Tex. Civ. App. 1926). 

“The abandonment of a contract is a matter of intention to be ascertained from the facts and circumstances surrounding the transaction from which the abandonment is claimed to have resulted.”  Quality Concrete Products, Inc. v. Thomason, 253 S.C. 579, 589, 172 S.E.2d 297, 302 (1970).  “An abandonment of a contract need not be express but may be inferred from the conduct of the parties and the attendant circumstances.”  Id.  “[A]n abandonment of the contract involves a breach of the implied obligation of good faith and fair dealing.”  U.S. ex. rel. William Elec. Co., Inc. v. Metric Constructors, Inc., 325 S.C. 129, 135, 480 S.E.2d 447, 450 (1997). 

ESI cannot recover under a theory of quantum meruit if the work they are seeking compensation for is covered under the terms of an express contract.  However, if the express contract has been abandoned, recovery under quantum meruit may be possible.  In this case, an express contract covered the task for which ESI is seeking recovery, but ESI abandoned the contract when it unilaterally decided to quit the project.  This abandonment cannot allow ESI to recover under quantum meruit.  ESI left the jobsite, demanded an increase in price, and refused to perform any further work until JCC consented.  ESI sent a new service agreement to JCC stating, along with a price increase to $220.00 per ton removed: 

This cost will include all of the changes and the clarifications that Woolpert Engineering has imposed for this project.  No trucks can be loaded until there is an agreement signed and returned.  ESI will still need to obtain a new purchase order for the remaining sludge to reflect the cost changes as well as change orders signed and placed by Woolpert to insure it is done by the new specifications. 

(emphasis added).

In response to this demand, JCC hired another company to complete the remaining tasks.  ESI’s abandonment was a breach of contract and does not open the door to a claim under quantum meruit.  Therefore, ESI was barred from recovery. 

Furthermore, ESI is not entitled to recover for breach of contract until it fully performs under the terms of the contract.  By failing to properly transport and dispose of the sludge pumped into the dewatering bags, ESI did not complete performance.  Due to this failure, ESI was not yet entitled to compensation under the terms of the contract and cannot recover for breach of contract. 

3.  Ambiguity in the Contract

Additionally, ESI argues the contract was ambiguous by stating “approximately 350 tons of waste treatment sludge.”  Because “approximately” could be subject to conflicting interpretation, the question of whether the additional sludge removed is covered by the terms of an express contract is disputed.  If the additional sludge removal was not covered by an express contract, recovery under quantum meruit may be allowed. 

In HK New Plan Exch. Prop. Owner I, LLC v. Coker, 375 S.C. 18, 23, 649 S.E.2d 181, 184 (Ct. App. 2007), we discussed the effect of an ambiguous contract on a motion for summary judgment: 

Generally, the construction of a contract is a question of law for the court.  Soil Remediation Co. v. Nu-Way Envtl., Inc., 325 S.C. 231, 234, 482 S.E.2d 554, 555 (1997).  Where a motion for summary judgment presents a question as to the construction of a written contract, if the language employed by the agreement is plain and unambiguous, the question is one of law.  First-Citizens Bank Trust Co. v. Conway Nat'l Bank, 282 S.C. 303, 305, 317 S.E.2d 776, 777 (Ct. App. 1984).  “In such a case, summary judgment is proper and a trial unnecessary where the intention of the parties as to the legal effect of the contract may be gathered from the four corners of the instrument itself.”  Id.

However, summary judgment is improper where the motion presents a question as to the construction of a written contract, and the contract is ambiguous because the intent of the parties can not be gathered from the four corners of the instrument.  Bishop v. Benson, 297 S.C. 14, 17, 374 S.E.2d 517, 518-19 (Ct. App. 1988).  Where a contract is unclear, or is ambiguous and capable of more than one construction, the parties' intentions are matters of fact to be submitted to a jury.  Wheeler v. Globe Rutgers Fire Ins. Co. of City of N.Y., 125 S.C. 320, 325, 118 S.E. 609, 610 (1923).

Typically, when a contract is ambiguous and a question of fact is raised to its interpretation, summary judgment would not be appropriate.  However, in this case, regardless of the interpretation of the contract, ESI would not be entitled to recover. 

If an express contract covered the excess sludge removed, then ESI would be limited to a recovery in breach of contract.  However, due to the fact ESI breached the contract and did not fully perform, it would be unable to recover. 

If the additional sludge removal was not covered by the contract because of the ambiguity of the term “approximately,” ESI would still be unable to recover under a theory of quantum meruit.  Before recovery is allowed, quantum meruit requires the defendant to retain a benefit under circumstances that make it inequitable for the defendant to do so without paying value.  In this case, it would not be inequitable for JCC to retain the benefit of ESI’s work because there was no inequitable conduct on the part of JCC leading to the removal.  ESI submitted a change order requesting an increase in tonnage removed to 5000 tons.  However, ESI failed to present any evidence JCC agreed to this increase.  Because it proceeded without a valid agreement, ESI bore the risk of not receiving a benefit for its services.  Therefore, recovery for the excess sludge removal is inappropriate under a theory of quantum meruit. 

In his deposition, Penfield testified to his understanding of the parties’ agreement regarding the disposal of additional sludge:

Q:  Okay.  You would agree with me that this contract doesn’t give you any more rights than to basically haul away 350 tons of sludge?

. . .

A:  I think there was also a change order sent in part to remove it . . . turn it to, I think 1,800 tons or so. 

Q:  Was that change order ever signed by my client?

A:  That I don’t know, sir. 

Q:  Well, I’ll show it to you.  I’m going to hand you what has been marked as Exhibit Number Four to your deposition. 

. . .

Q:  What is that, for the record, please?

A:  That is a change in calculation after we tried to meet every one of the change orders that had been placed upon us.

Q:  And in that you raised the price, you basically gave a quote that sais (sic), “Hey, we’ll do this for 200 bucks a ton,” is that correct?

A:  That’s correct.

Q:  In the second paragraph it says, “No trucks can be loaded until there is an agreement signed and returned.”

A:  That’s correct.

Q:  Okay.  So what you’re doing is you’re saying my company will do this if we enter into an agreement for this price to be $220, is that correct?

A:  Yes, sir. 

. . .

Q:  Well, they didn’t agree to this did they, to Exhibit Number Four?  They didn’t agree to pay two and a half times . . .

A:  No, sir, they never signed it and sent it back.

Q:  Right so you didn’t have an agreement to do any more work out there, did you?

A:  In the terms that you’re putting it, no sir.

Q:  Well, you put it right here that you weren’t going to load any trucks until they signed the agreement, didn’t you?

A:  That’s correct. 

The deposition of Laverne Anderson (Anderson) establishes JCC’s understanding of the agreement regarding any additional sludge removal beyond the terms of the contract.  Anderson explained: 

[W]e had ESI under contract, which is drawn up to meet our needs, and we had won the contract to remove 350 tons and that’s it.  And then if we chose to do so, to continue working with him, we could issue him a change order at the same unit rate he gave us to complete the job.  But he left the job because he hadn’t paid his suppliers, he pulled off, he couldn’t remove the sludge. 

Nothing in the record establishes any agreement between JCC and ESI for the removal of sludge beyond the terms of the original contract.  If the original contract had expired, ESI pumped the additional sludge without an agreement with JCC.  ESI cannot perform work without any agreement in place and then argue it is entitled to compensation.  Without evidence indicating it would be inequitable for JCC to retain this benefit, ESI is not entitled to recover under quantum meruit. 

Furthermore, we note ESI received a credit from its subcontractor, Wolfe Creek, for time, materials, and labor exhausted in filling the remaining bag and for three loads of ESI’s sawdust.  This credit compensated ESI for expenses it incurred in pumping the excess sludge into the dewatering bags before ESI abandoned the jobsite.  Even though ESI did not receive as much as it desired for the excess removal, the credit ensured that ESI was repaid for the incurred costs.  Therefore, equity does not require JCC to further compensate ESI for this work.  

CONCLUSION

ESI has not presented a theory of recovery for which it is entitled to prevail based on the evidence contained in the record.  Regardless of whether the contract is ambiguous, the grant of summary judgment is appropriate.  Accordingly, the grant of summary judgment is

AFFIRMED.

ANDERSON, HUFF, and KITTREDGE, JJ., concur.


[1] We decide this case without oral argument pursuant to Rule 215, SCACR.