By: Alexander A. Miuccio Gregory J. Spaun Published: November 2017

Sub's Unjust Enrichment Claim Against Town Dismissed

Subcontractors’ claims under a theory of unjust enrichment against owners are often one of those “Hail Mary” passes that they make when they have no other legal remedies available, such as a breach of contract action or where mechanic’s lien rights have expired. 

To recover in unjust enrichment against an owner, a subcontractor must demonstrate that the owner, by its actions, has agreed to pay the general contractor’s debt.  In the case of County Wide Flooring Corp. v. Town of Huntington, the Court addressed a subcontractors’ claim of unjust enrichment against an owner.   

Background

County Wide entered into a subcontract with Wenger Construction Co., Inc. to install flooring and perform related work in connection with the expansion of an ice rink in Dix Hills Park in the Town of Huntington. County Wide was owed $147,930.87 in connection with the work that it performed at the project.    

County Wide commenced a lawsuit against Wenger, the Town, and Hanover Insurance Co., Wenger’s payment bond surety. Both Wenger and Hanover moved to dismiss the respective claims against them, arguing that as the lawsuit was commenced more than one year after the completion of County Wide’s work at the project, those claims were time-barred under the terms of the subcontract and the payment bond. County Wide’s claim against the Town, however, remained to be adjudicated. The Town later moved for summary judgment dismissing the unjust enrichment claim, arguing that the existence of the contract between County Wide and Wenger bars the claim against the Town for unjust enrichment.

Decision

The court granted the Town’s motion and dismissed the unjust enrichment claim, relying upon well settled case law that the existence of an express contract between a general contractor and a subcontractor precludes an owner from being held liable to the subcontractor for unjust enrichment unless the owner has, in fact, agreed to such an obligation. The court pointed out that the mere fact that the owner has consented to the improvements provided by the subcontractor and has accepted their benefit does not render the owner liable to the subcontractor, whose sole remedy is against the general contractor.

As to County Wide’s reliance upon Section 106-b of the General Municipal Law, which sets forth the procedure for payment on public projects, the court cited the language of the statute itself, which provides that it shall not be construed to create any independent obligation on the part of a public owner to pay or see to the payment of monies owed to any subcontractor.

Finally, the court noted that the record “does not reflect that the Town expressed a willingness to pay County Wide for the work it performed at the ice rink.”

Comment

Typically, a subcontractor who does not have a contractual relationship with an owner will seek to enforce a mechanic’s lien on the project to recover payment refused him by the general contractor. Where the subcontractor has failed to comply with the filing time limits or other technical requirements of the Lien Law, the subcontractor will seek to invoke equity to prevent the owner’s being unjustly enriched at the subcontractor’s expense. But, as this court demonstrates, “unjust enrichment” is always a difficult theory of recovery against the owner.  

            

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