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Green v. Jenkins Services, LLC

United States District Court, D. Maryland, Southern Division

April 11, 2018

MARK A. GREEN, et al., Plaintiffs,
v.
JENKINS SERVICES, LLC, Defendant.

          MEMORANDUM OPINION

          Paul W. Grimm United States District Judge.

         Plaintiffs Mark and Marcia Green (the “Greens”) entered into a contract (“Contract”) with Defendant Jenkins Services, LLC d/b/a Jenkins Restorations (“Jenkins”) for Jenkins to demolish their house, which had been destroyed by fire, and rebuild it. Jenkins worked on the demolition and architectural planning but did not begin construction because the land was found unsuitable for an on-site sewage system, and as a result, Jenkins was unable to acquire the necessary construction permits. Stip. Facts ¶¶ 16, 37-38, ECF No. 88-1.[1] The Greens sued for damages on various grounds based on Jenkins's failure to perform, Compl., ECF No. 2, and the parties have filed cross-motions for summary judgment on the Greens' breach of contract and money-had-and-received claims, the two claims that remain at this stage of the litigation.[2] ECF Nos. 88, 89.

         I find that no genuine dispute of material facts exists regarding Jenkins's liability for breach of contract. But, the amount of damages to which the Greens are entitled cannot be determined on the record before me. I also find that the Greens cannot recover under their money-had-and-received claim, as they have prevailed on their breach of contract claim, which entitles them to the same damages. Lastly, I find the Greens' request for statutory interest to be premature. Accordingly, I will grant the Greens' motion in part and deny it in part, grant Jenkins's motion in part and deny it in part, and this case shall proceed to a trial regarding the remaining damages.

         Background

         The Greens owned a single family home on land they owned in Prince George's County, Maryland. Stip. Facts ¶ 1. On January 15, 2014, the Greens' home was destroyed by a fire. Id. ¶ 9. The Greens filed a claim with their insurer, USAA Casualty Insurance Company, who accepted the claim to cover the loss. Id. ¶ 10. The Greens, Jenkins, and a USAA adjuster signed an Authorization of Work on February 2, 2014 for the rebuilding of the Greens' home. Id. ¶ 11 (citing Authorization of Work, Jt. R. 84).[3] USAA directed Wells Fargo Bank, N.A. to hold the funds it was providing in escrow as the home was rebuilt. Id. ¶¶ 14-15.

         On May 12, 2014, the Greens entered into the Contract with Jenkins to demolish and rebuild their home. The Contract included a “Description of Work” that stated the scope of the work Jenkins was to perform.[4] Stip. Facts ¶ 21 (citing Description of Work, Jt. R. 95-167). The Greens agreed to pay $581, 222.90 in installments (either personally or from the insurance policy funds in escrow) to Jenkins. Stip. Facts ¶¶ 15-16, 18-24. Jenkins was paid a total of $133, 311.88 from the Greens and Wells Fargo. Id. ¶ 29.

         Jenkins agreed to obtain the necessary permits. Contract § 2, Jt. R. 86. As part of the permitting process, Prince George's County (“County”) issued a demolition permit, and the Health Department conducted three percolation tests to determine whether a septic system could be installed. Id. ¶¶ 30-33. The property failed all three percolation tests. Id. ¶¶ 33-34. The test results caused the County to deem the property unsuitable for an on-site sewage system. Id. ¶¶ 36-37. Following the failed tests, the County wrote a letter informing the Greens that the property would require public sewerage facilities before it could issue a permit for the home to be rebuilt. Id. ¶ 37 (citing June 9, 2015 Cty. Ltr., Jt. R. 179). After that, “Jenkins ceased attempting to obtain permits for the construction, ” and the house was not rebuilt. Id. ¶ 38. By that time, however, Jenkins had incurred labor costs for the demolition (although it is not clear whether it completed demolition), as well as costs for a dumpster and a backhoe loader and operator; architectural and drafting fees; estimating and consulting fees; and costs for taxes, insurance, permits, and fees. Invoice, Jt. R. 194.

         On February 9, 2016, the Greens demanded repayment of the $133, 311.88 they had provided to Jenkins. Stip. Facts ¶ 38. On February 17, 2016, Jenkins acknowledged that it was overpaid by $12, 526.36, which it then refunded during the pendency of this case. Id. ¶¶ 39, 43. Jenkins also “prepared an itemized statement of the costs it charged against the $133, 311.88 which the Plaintiffs dispute.” Id. ¶ 41; see Invoice, Jt. R. 194-97.

         On May 16, 2016, the Greens filed suit against Jenkins and others for, inter alia, breach of contract and money had and received. Compl., ECF No. 2; Am. Compl., ECF No. 29. Following the Greens' voluntary dismissal of their claims against the other defendants and all other claims against Jenkins, ECF Nos. 72, 73, 80, 81, 90, [5] the Greens and Jenkins filed cross-motions for summary judgment on the two remaining claims-breach of contract (Count XI) and money had and received (Count XII). Def.'s Mot.; Pls.' Mot.

         Standard of Review

         Summary judgment is proper when the moving party demonstrates, through “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials, ” that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c)(1)(A); see also Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). If the party seeking summary judgment demonstrates that there is no evidence to support the nonmoving party's case, the burden shifts to the nonmoving party to identify evidence that shows that a genuine dispute exists as to material facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 & n.10 (1986). The existence of only a “scintilla of evidence” is not enough to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). Instead, the evidentiary materials submitted must show facts from which the finder of fact reasonably could find for the party opposing summary judgment. Id. A “genuine” dispute of material fact is one where the conflicting evidence creates “fair doubt”; wholly speculative assertions do not create “fair doubt.” Cox v. Cty. of Prince William, 249 F.3d 295, 299 (4th Cir. 2001); see also Miskin v. Baxter Healthcare Corp., 107 F.Supp.2d 669, 671 (D. Md. 1999). The substantive law governing the case determines what is material. See Hooven-Lewis v. Caldera, 249 F.3d 259, 265 (4th Cir. 2001). A fact that is not of consequence to the case, or is not relevant in light of the governing law, is not material. Id.; see also Fed. R. Evid. 401 (defining relevance).

         Discussion

         Breach of Contract “Under Maryland law, [6] ‘[t]he formation of a contract requires mutual assent (offer and acceptance), an agreement definite in its terms, and sufficient consideration.'” Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 777 (4th Cir. 2013) (quoting CTI/DC, Inc. v. Selective Ins. Co. of Am., 392 F.3d 114, 123 (4th Cir.2004)). “It is axiomatic that for a contract to be valid, both parties must mutually assent to be bound by it.” NeighborCare Pharmacy Servs., Inc. v. Sunrise Healthcare Ctr., Inc., No. JFM-05-1549, 2005 WL 3481346, at *2 (D. Md. Dec. 20, 2005). When construing an unambiguous contract, “courts focus on the four corners of the agreement[, ] and ascribe to the contract's language its customary, ordinary, and accepted meaning.” Dynacorp Ltd. v. Aramtel Ltd., 56 A.3d 631, 670 (Md. Ct. Spec. App. 2012) (citations and quotation marks omitted); see 100 Inv. Ltd. P'ship v. Columbia Town Ctr. Title Co., 60 A.3d 1, 23 (Md. 2013). In these circumstances, the contract's construction is “an issue of law for resolution by the trial judge.” Bd. of Educ. of Charles Cty. v. Plymouth Rubber Co., 569 A.2d 1288, 1296 (Md. Ct. Spec. App. 1990).

         A breach of contract is “a failure without legal excuse to perform any promise which forms the whole or part of a contract . . . .” In re Ashby Enters., Ltd., 250 B.R. 69, 72 (Bankr. D. Md. 2000) (quoting Conn. Pizza, Inc. v. Bell Atl.-Wash., D.C., Inc., 193 B.R. 217, 225 (Bankr. D. Md. 1996) (quoting Weiss v. Sheet Metal Fabricators, Inc., 110 A.2d 671, 675 (Md. 1955)) (quotation marks omitted)). Under Maryland law, “[t]he elements of a claim for breach of contract include ‘contractual obligation, breach, and damages.'” Tucker v. Specialized Loan Servicing, LLC, 83 F.Supp.3d 635, 655 (D. Md. 2015) (quoting Kumar v. Dhanda, 17 A.3d 744, 749 (Md. Ct. Spec. App. 2011)). “When performance is due, . . . anything short of full performance is a breach, even if the party who does not fully perform was not at fault and even if the defect in his performance was not substantial.” See Nat. Prod. Sols., LLC v. Vitaquest Int'l, LLC, No. CCB-13-436, 2014 WL 6383482, at *4 (D. Md. Nov. 13, 2014) (citing Restatement (Second) of Contracts § 235 cmt. b (1981)).

         Contractual Obligations and Impossibility

         Jenkins moves for summary judgment, arguing that although it had agreed to rebuild the Greens' home, its ability to do so became impossible through no fault of its own when the land failed the water table and percolation tests required to obtain a building permit and, consequently, the County did not issue a permit. Def.'s Mem. 7-8. The Greens move for summary judgment, arguing that Jenkins assumed the risk by unequivocally promising to gain all required permits, or alternatively, that rebuilding their home is not impossible but merely more expensive. Pls.' Opp'n & Mem. 12-16.[7]

         If a contract becomes impossible to perform due to “the inability to obtain a necessary governmental permit to carry out a contract” and by no fault of the alleged breaching party, that party is excused from performing its contractual obligations, provided that “such interference was not foreseeable at the time of the execution of the contract and the risk was not assumed by the promisor.” Acme Moving & Storage Corp. v. Bower, 306 A.2d 545, 547-48 (Md. 1973). This is an exception to the “general rule of the common law that when the impossibility of performance arises after the formation of the contract, the failure of the promisor to perform is not excused, ” which the Maryland courts noted had “unjust consequences.” Id. (quoting State v. Dashiell, 75 A.2d 348, 354 (Md. 1950)). The general rule “was founded on the theory that if the promisor makes his promise unconditionally, he takes the risk of being held liable even though performance should become impossible by circumstances beyond his control.” Id. (quoting Dashiell, 75 A.2d at 354). Now, under this exception, “a contractual duty is discharged where performance is subsequently prevented or prohibited by a judicial, executive, or administrative order, in the absence of circumstances showing either a contrary intention or contributing fault on the part of the person subject to the duty.” Id. (quoting Dashiell, 75 A.2d at 354 (citing Wischhusen v. Am. Medicinal Spirits Co., 163 A. 685 (Md. 1933); Fast Bearing Co. v. Precision Dev. Co., 44 A.2d 735 (Md.1945); 2 Restatement (First) of Contracts § 458)). But, as noted, “if the circumstances surrounding the formation of the contract are such as to indicate that the possibility of such interference was recognized and the risk of its [sic] was assumed by the promisor, ” then “an order which interferes with the performance of the contract is not an excuse.” Id. (quoting Dashiell, 75 A.2d at 354).

         Thus, “in those cases where a regulation of an administrative agency is already in force at the time of the formation of the contract, the decisive question is whether or not the promisor assumed the risk of interference by the regulation.” Dashiell, 75 A.2d at 354. If the contracting party “ha[s] knowledge that it was necessary to obtain a permit, and they knew or ought to have known that there was a possibility that there might be [an issue] in obtaining the permit, ” then the party “recognized and assumed the risk of getting the permit.” Id. Notably, a party is bound by what it promised to do in the contract and “[w]hat he promised to do is to be found in the words he used, and in what is reasonably implied by those words. Compliance with a governmental requirement of which he knew, or should have known or foreseen, is reasonably implied.” Damazo v. Neal, 363 A.2d 252, 256 (Md. Ct. Spec. App. 1976).

         The Contract between the parties states that “Jenkins Restorations shall comply with applicable building code and with all local requirements for building permits, inspections, and zoning. Jenkins Restorations shall obtain the necessary permits.” Contract § 2, Jt. R. 86. This clause is unambiguous and ...


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