Mays v. Pierce, --S.W.3d--, 2006 WL 2729684 (Tex. App.-Hous. (14 Dist.) Sept. 26, 2006)
This case involves a mold remediation gone awry, and is part of the new wave of litigation against mold remediation contractors.
In 2001, Connie Pierce contracted with Edward Mays d/b/a Pro-Tech to perform work on her home. The contract described the scope of work as “mold and water remediation/restoration of contents and structure.” Pro-Tech arranged for mold testing of Ms. Pierce’s home and told her after the results revealed toxic mold that she and her daughter should leave the house immediately. Ms. Pierce followed this advice and moved into a motel without packing any of her belongings.
By early 2002, Pro-Tech had placed toxic warning signs on the house and removed the carpet, cabinets, sheetrock, appliances, air conditioner and almost all other contents from the house. Pro-Tech left the job in March 2002, without restoring the house or arranging for mold clearance testing. Pro-Tech did not even return the house key to Pierce until July 2002. When Ms. Pierce finally got into the house, she retained a separate company to test it for mold. The test revealed that the house was still contaminated.
Pierce sued Pro-Tech for breach of contract and violation of the DTPA. At trial, Mays testified that Pro-Tech was paid for remediation of the house itself but was not paid to rebuild the house or remediate the contents of the house. He further testified that if he had been paid to perform these tasks, he would have done so. The trial court rendered judgment in favor of Pierce, awarding actual damages of $43,000, additional DTPA damages of $43,000, attorneys’ fees and pre- and post-judgment interest. Pro-Tech appealed.
Pierce asserted two distinct claims under the DTPA: 1) an unconscionable action, and 2) a false, misleading, or deceptive act or practice. The appeals court held that a plaintiff must establish more than a mere breach of contract in order to recover the damages authorized by the DTPA under either theory. The appeals court found that although Pierce presented sufficient evidence to recover compensatory damages for breach of contract, she failed to present sufficient evidence that Pro-Tech engaged in an unconscionable action or deceptive practice sufficient to recover additional damages under the DTPA.
The appeals court concluded that the fact that Pro-Tech persuaded Pierce to move out of the house, gutted the house beyond the point of habitability, deserted the job without establishing that the mold had been removed, and failed to restore the house was insufficient to establish that Pro-Tech engaged in an unconscionable action or deceptive practice. After all, Pierce presented no evidence that Pro-Tech misrepresented the presence of mold in the house or its risks, and she did not contend that it was unnecessary for her to move out of the home. Pro-Tech’s gutting of the house was performed in accordance with the contract – though it ultimately failed to complete the job. In sum, the appeals court found, the evidence supported a breach of contract claim, but not a DTPA claim.
James River Equipment, Inc. v. Tharpe’s Excavating, Inc., 634 S.E.2d 548 (N.C. App. Sept. 5, 2006)
This case arises out of the construction of a new public high school in Orange County, North Carolina. In 2000, the Orange County Board of Education (“the Board”) contracted with Mecklenburg Utilities, Inc. (“Mecklenburg”) to perform grading services in preparation for the construction of a new high school. The contract required Mecklenburg to furnish a payment bond as required by North Carolina’s Little Miller Act. Mecklenburg procured a payment bond from Amwest Surety Insurance Company (“the Surety”). Mecklenburg then subcontracted with Tharpe’s Excavating, Inc. (“Tharpe”) for a portion of the grading work. Tharpe rented equipment from James River Equipment (“Plaintiff”).
Tharpe failed to pay over $500,000 owed to Plaintiff for the rental of equipment used on the grading project. In April 2001, the plaintiff gave notice of non-payment to the Board, Mecklenburg, and the Surety. In June 2001, the Surety gave notice to the Board and Mecklenburg that it was insolvent and in receivership. Mecklenburg did not furnish a replacement bond, although the project was still underway. In 2002, Plaintiff sued the Board, Mecklenburg, and Tharpe. The trial court dismissed the claims against the Board and Mecklenburg and certified the case for interlocutory appeal.
North Carolina’s Little Miller Act requires payment and performance bonds for state construction contracts exceeding $50,000 where the project exceeds $300,000 in total value. N.C. Gen.Stat. § § 44A-25 through 44A-35 (2003). Although the Board and Mecklenburg conceded that a payment bond was required, they alleged that they complied with the Little Miller Act when they secured a bond effective upon the awarding of the original grading contract. Noting that the Little Miller Act is silent regarding whether a bond is required for the life of the project, the appeals court examined the legislative history of the Act and the payment bond form included in the Act (which contains language to the effect that the bond shall “remain in full force and virtue”). The appeals court concluded that the bond requirement of the Little Miller Act extends throughout the life of a project. To hold otherwise would undermine the public policy underlying the Act and fail to provide the protection the Act explicitly seeks to provide laborers and subcontractors.
Although the appeals court found that the Little Miller Act required the Board, as the contracting body, to provide a payment bond for the life of the project, it concluded that the Plaintiff had no civil remedy against the Board for violating the Act. The Act requires each contracting body to designate an official to require the bonds and provides that if the designated official “shall fail to require said bond, he shall be guilty of a Class 1 misdemeanor.” The North Carolina Supreme Court has held that as against a government contracting body, criminal indictment is the only remedy prescribed by the Act. Thus, the Board cannot be found civilly liable to Plaintiff for failure to provide an adequate payment bond for the life of the project.
The appeals court did reverse the trial court’s dismissal of Plaintiff’s third party beneficiary claim against Mecklenburg, the general contractor, for failure to provide an adequate payment bond for the life of the project. Although Plaintiff was not party to the contract between the Board and Mecklenburg, the bond requirement of the contract between the Board and general contractor Mecklenburg was intended for the direct benefit of laborers, suppliers and subcontractors such as Plaintiff.
The appeals court also reversed the dismissal of Plaintiff’s claim in quantum meruit against Mecklenburg. To recover in quantum meruit, a plaintiff must show that services were rendered to the defendant, that the services were knowingly and voluntarily accepted, and that the services were not given gratuitously. It was undisputed that there was no express contract between Plaintiff and Mecklenburg, that Plaintiff rented and serviced equipment for grading the school site, and that Plaintiff was not paid. Thus the appeals court concluded that Plaintiff had alleged a prima facie case for recovery in quantum meruit. The appeals court did affirm the trial court’s dismissal of Plaintiff’s quantum meruit claim against the Board, because Plaintiff has no civil remedy against the Board as a matter of law.
James River Equipment, Inc. v. Tharpe’s Excavating, Inc., 634 S.E.2d 548 (N.C. App. Sept. 5, 2006)
This case arises out of the construction of a new public high school in Orange County, North Carolina. In 2000, the Orange County Board of Education (“the Board”) contracted with Mecklenburg Utilities, Inc. (“Mecklenburg”) to perform grading services in preparation for the construction of a new high school. The contract required Mecklenburg to furnish a payment bond as required by North Carolina’s Little Miller Act. Mecklenburg procured a payment bond from Amwest Surety Insurance Company (“the Surety”). Mecklenburg then subcontracted with Tharpe’s Excavating, Inc. (“Tharpe”) for a portion of the grading work. Tharpe rented equipment from James River Equipment (“Plaintiff”).
Tharpe failed to pay over $500,000 owed to Plaintiff for the rental of equipment used on the grading project. In April 2001, the plaintiff gave notice of non-payment to the Board, Mecklenburg, and the Surety. In June 2001, the Surety gave notice to the Board and Mecklenburg that it was insolvent and in receivership. Mecklenburg did not furnish a replacement bond, although the project was still underway. In 2002, Plaintiff sued the Board, Mecklenburg, and Tharpe. The trial court dismissed the claims against the Board and Mecklenburg and certified the case for interlocutory appeal.
North Carolina’s Little Miller Act requires payment and performance bonds for state construction contracts exceeding $50,000 where the project exceeds $300,000 in total value. N.C. Gen.Stat. § § 44A-25 through 44A-35 (2003). Although the Board and Mecklenburg conceded that a payment bond was required, they alleged that they complied with the Little Miller Act when they secured a bond effective upon the awarding of the original grading contract. Noting that the Little Miller Act is silent regarding whether a bond is required for the life of the project, the appeals court examined the legislative history of the Act and the payment bond form included in the Act (which contains language to the effect that the bond shall “remain in full force and virtue”). The appeals court concluded that the bond requirement of the Little Miller Act extends throughout the life of a project. To hold otherwise would undermine the public policy underlying the Act and fail to provide the protection the Act explicitly seeks to provide laborers and subcontractors.
Although the appeals court found that the Little Miller Act required the Board, as the contracting body, to provide a payment bond for the life of the project, it concluded that the Plaintiff had no civil remedy against the Board for violating the Act. The Act requires each contracting body to designate an official to require the bonds and provides that if the designated official “shall fail to require said bond, he shall be guilty of a Class 1 misdemeanor.” The North Carolina Supreme Court has held that as against a government contracting body, criminal indictment is the only remedy prescribed by the Act. Thus, the Board cannot be found civilly liable to Plaintiff for failure to provide an adequate payment bond for the life of the project.
The appeals court did reverse the trial court’s dismissal of Plaintiff’s third party beneficiary claim against Mecklenburg, the general contractor, for failure to provide an adequate payment bond for the life of the project. Although Plaintiff was not party to the contract between the Board and Mecklenburg, the bond requirement of the contract between the Board and general contractor Mecklenburg was intended for the direct benefit of laborers, suppliers and subcontractors such as Plaintiff.
The appeals court also reversed the dismissal of Plaintiff’s claim in quantum meruit against Mecklenburg. To recover in quantum meruit, a plaintiff must show that services were rendered to the defendant, that the services were knowingly and voluntarily accepted, and that the services were not given gratuitously. It was undisputed that there was no express contract between Plaintiff and Mecklenburg, that Plaintiff rented and serviced equipment for grading the school site, and that Plaintiff was not paid. Thus the appeals court concluded that Plaintiff had alleged a prima facie case for recovery in quantum meruit. The appeals court did affirm the trial court’s dismissal of Plaintiff’s quantum meruit claim against the Board, because Plaintiff has no civil remedy against the Board as a matter of law.
