SUPERIOR STEEL, INC., AND BEN HUR CONSTRUCTION COMPANY, INC. APPELLANTS/CROSS-APPELLEES
THE ASCENT AT ROEBLING'S BRIDGE, LLC.; CORPOREX DEVELOPMENT AND CONSTRUCTION MANAGEMENT LLC;, DUGAN & MEYERS CONSTRUCTION COMPANY AND WESTCHESTER FIRE INSURANCE COMPANY APPELLEES/CROSS-APPELLANTS AND DUGAN & MEYERS CONSTRUCTION COMPANY CROSS-APPELLANT
THE ASCENT AT ROEBLING'S BRIDGE, LLC; CORPOREX DEVELOPMENT AND CONSTRUCTION MANAGEMENT LLC; SUPERIOR STEEL, INC.; BEN HUR CONSTRUCTION COMPANY, INC. AND WESTCHESTER FIRE INSURANCE COMPANY CROSS-APPELLEES
REVIEW FROM COURT OF APPEALS CASE NOS. 2012-CA-000440-MR,
2012-CA-000441-MR, 2012-CA-000494-MR AND 2012-CA-000495-MR
KENTON CIRCUIT COURT NOS. 07-CI-03886 AND 08-CI-01309
COUNSEL FOR APPELLANTS/CROSS-APPELLEES: SUPERIOR STEEL, INC.,
AND BEN HUR CONSTRUCTION COMPANY, INC. Griffin Terry Sumner
John Kendrick Wells, IV Donald Scott Gurney Frost Brown Todd,
COUNSEL FOR APPELLEES/ CROSS-APPELLANTS AND CROSS-APPELLEES:
THE ASCENT AT ROEBLING'S BRIDGE, LLC Mark T. Hayden John
Nalbandian Taft Stettinius & Hollister LLP CORPOREX
DEVELOPMENT AND CONSTRUCTION· MANAGEMENT LLC., AND
WESTCHESTER FIRE INSURANCE COMPANY . Mark T. Hayden John.
Nalbandian Taft Stettinius & Hollister LLP.
COUNSEL FOR CROSS-APPELLANT: DUGAN & MEYERS CONSTRUCTION
COMPANY Thomas J. Kirkwood Kimberly Ellen Ramundo Heather
Hawkins Thompson Hine LLP.
COUNSEL FOR AMICUS CURIAE, THE AMERICAN INSTITUTE OF STEEL
CONS°TRUCTION: Kenneth Allen Bohnert Edward Francis Busch
Scott Alan Johnson Conliffe, Sandman & Sullivan.
COUNSEL FOR AMICUS CURIAE, THE AMERICAN SUBCONTRACTORS
ASSOCIATION: Thomas Russell Yocum Richard Weber Benjamin
Yocum & Heather LLC.
Ascent at Roebling's Bridge (the "Project") is
a 21-floor, luxury condominium building in downtown
Covington, owned by Appellee/Cross-Appellant The Ascent at
Roebling's Bridge, LLC ("Ascent") and developed
by Appellee/Cross-Appellant Corporex Development and
Construction Management LLC ("Corporex"). Corporex,
the design builder, contracted with Appellee/Cross-Appellant
Dugan & Meyers Construction Company
("D&M"), the construction manager and general
contractor. D&M worked directly with subcontractors,
including Appellant/Cross-Appellee Superior Steel, Inc.
("Superior"), the steel fabricator, and
Appellant/Cross-Appellee Ben Hur Construction Company, Inc.
("Ben Hur"), the steel erector and installer. When
new drawings led to extra work outside the scope of the
original bid documents, Superior and Ben Hur proceeded with
the work, but they were never paid for either that work or
the retainage amount owed under Superior's contract with
D&M. The two steel companies banded together as "the
Steel Team" and brought suit against D&M, Ascent and
fifteen-day jury trial, the Kenton Circuit Court entered
judgment in favor of Superior and Ben Hur against D&M and
Ascent for the cost of the extra work and the unpaid
retainage as well as attorneys' fees incurred by
Superior. D&M prevailed on its indemnification
cross-claim against Corporex and Ascent and on the negligence
cross-claim asserted against it by Corporex and Ascent. On
appeal, the Court of Appeals reversed the judgment in its
entirety, unwinding the majority of the trial court's
rulings and returning the record and applicable law, we
affirm the judgment of the Court of Appeals in part, reverse
in part, and remand for further proceedings consistent with
AND PROCEDURAL BACKGROUND
November 2005, Ascent hired Corporex to be the "design
builder" for the Project. Later, in March 2006, Corporex
hired D&M, as the construction manager/general
contractor, for the Project. Corporex agreed to pay D&M a
$2.2 million lump sum, a $975, 000 contractor's fee (plus
any participation in savings and a potential bonus), and a
sum for the cost of the work as identified in the
2006, D&M solicited bids for the fabrication and erection
of structural steel for the Project. The bid package that
D&M supplied to potential subcontractors included
architectural and structural drawings for the Project.
Notably, those drawings did not include a forces table (a
chart which identifies the forces acting upon each piece of
steel to be used on the Project) or designs for the steel
August 4, 2006, D&M received three bids, including one
from Superior, to be the subcontractor for the structural
steel work. Subsequently, D&M contacted Superior and
inquired whether the company would be willing to modify its
bid proposal. As a cost saving measure, D&M wanted
Superior to fabricate the steel for the project and have Ben
Hur complete the erection and installation work. Prior to
Superior submitting its modified bid, the Project's
architect issued a revised set of drawings. Despite that
fact, - D&M instructed Superior to not acknowledge the
revised drawings in making its bid; D&M wanted
to be able to evaluate each of the bids it
had received on an equal basis. Superior's modified bid
was accepted by D&M in September 2006 and the
parties' contract had a fixed price of $1, 814, 000. In
turn, Superior contracted with Ben Hur to erect the steel and
metal decking for $444, 000. As structured, payment for all
of the steel work flowed from Corporex to D&M and then
from D&M to Superior. Superior would then pay Ben Hur
what it was owed for erection and installation of the steel
fabricated by Superior.
Superior and Ben Hur were retained to work on the Project,
further alterations were made to the structural design
drawings issued by Ascent/Corporex. Corporex alerted D&M
to the changes, and D&M in turn informed Superior and Ben
Hur. Superior and Ben Hur expressed concern about the design
changes as they would require additional work to be
performed, work beyond the original scope of the
contract. In response, D&M separately directed
both Superior and Ben Hur to perform the extra work, while
keeping track of the time and costs.
to starting the additional work, Ben Hur's Vice
President, Mark Douglas, sought the personal assurance of
D&M's President, Jay Meyers, along with Corporex
Vice-President Mike O'Donnell, that Ben Hur would be paid
for the additional work. In a meeting with Meyers, Douglas
was directed to proceed with the extra work, while tracking
the time and costs. Meyers reassured Douglas that Ben Hur
would not be cheated. On the day following the meeting, Dan
Dugan of D&M drafted a letter to Superior acknowledging
that additional work was necessitated due to changes to the
design from the original bid documents and authorizing
Superior to proceed with the additional work. That draft
letter was forwarded to O'Donnell at Corporex, who
directed Dugan not to send the letter.
Ben Hur and Superior submitted work orders to D&M
detailing the additional work done on the Project. In turn,
D&M submitted those work orders to Corporex. While
Ascent/Corporex did pay for some of the extra work performed,
they failed to pay for additional work performed on the
forces table/design load increase, the roof edge condition,
and the roof tip. When Superior submitted its written change
order for this extra work, Bill Butler, a principal at Ascent
and Corporex, ordered O'Donnell, the Corporex
vice-president, to address the claim at a later time.
Eventually, Ascent/Corporex refused to provide any additional
compensation to Ben Hur and Superior. As the basis for their
refusal, Ascent/Corporex asserted that the amounts requested
by Superior and Ben Hur were excessive and that those claims
were due to D&M's mismanagement of the Project.
Ultimately, in addition to not being paid for additional work
performed on the forces table/design load increase, the roof
edge condition, and the roof tip, Superior also was not paid
the $195, 143.40 owed in retainage earned on the base
several months passed without payment, Superior and Ben Hur
filed mechanics' liens on the Project to secure payment
of the amounts owed. Subsequently, Ascent purchased lien
discharge bonds from Westchester Fire Insurance Company
("Westchester") to remove the liens and enable
Ascent to begin selling condominium units. In April 2008,
Superior and Ben Hur filed this suit naming Ascent, Corporex,
D&M, and Westchester as defendants. Superior and Ben Hur
asserted claims against Ascent, Corporex, and D&M for
breach of contract, unjust enrichment, breach of express and
implied warranties, negligence, negligent misrepresentation,
negligent supervision, and promissory estoppel. D&M then
filed a crossclaim against Ascent/Corporex for breach of
contract and indemnification for all monies owed to Superior
and Ben Hur. Ascent/Corporex also filed a crossclaim
against D&M alleging breach of contract, negligent
performance of contract, constructive fraud and
trial, D&M disputed whether a written contract with
Superior had been agreed upon, and if so, which version of
the contract would be enforced. Further, while D&M and
Ascent admitted at trial that Superior and Ben Hur had
performed extra work, they asserted that the work was within
the original scope of the contract. Additionally, D&M
argued that the retainage was not owed due to Superior's
alleged failure to comply with certain contract provisions.
hearing all the evidence, the trial court directed a partial
verdict in favor of Superior against Ascent and D&M,
jointly and severally, for the unpaid retainage due under the
contract, plus pre- and post-judgment interest. The trial
court also concluded "as a matter of law that there was
an implied contract between [D&M] and Ben Hur. That
implied contract would allow Ben Hur to recover from
[D&M] for work performed by it on the project if the work
had been authorized by [D&M]." The remaining issues
were submitted to the jury.
conclusion of the fifteen-day trial, the jury rendered its
verdict in less than an hour. The jury's conclusions,
each of which was unanimous, were as follows: 1) a contract
existed between Superior and D&M (identified at trial as
Joint Exhibit #226) to fabricate and erect the structural
steel; 2) Superior and Ben Hur performed extra work; 3) the
total value of Superior's extra work was $124, 017.26; 4)
the total value of Ben Hur's extra work was $284, 295.53;
and 5) D&M did not fail to exercise ordinary care in the
performance of its obligations under the construction
management contract with Corporex.
the trial court entered a final judgment consistent with the
jury's verdict and the directed verdict on the retainage.
In its judgment, the trial court rejected Superior and Ben
Hur's trial claim that they were a unitary plaintiff, the
so-called "Steel Team." The trial court determined
that there was no legal basis for entering a judgment in
favor of Superior and Ben Hur as a unit, but that the
companies needed to be evaluated individually. . Accordingly,
the trial court awarded $124, 017.26 in damages to Superior
for the extra work it performed on the Project. The joint and
several judgment was based on contract as to D&M and on
unjust enrichment as to Ascent. Further, the trial court
determined that $195, 143.40 was due to Superior for the
unpaid retainage under its contract with D&M. Again, the
award against D&M was based on contract and the award
against Ascent on unjust enrichment. As for Ben Hur, the
trial court awarded $284, 295.53 for the value of the extra
work it performed on the Project. The joint and several
judgment was premised on implied contract as to D&M and
on unjust enrichment as to Ascent.
both Superior and Ben Hur requested an award of
attorneys' fees, expenses, and costs, the trial court
determined that Superior was the only party entitled to this
relief. Superior, as the prevailing party, was due an award
of attorneys' fees, expenses, and costs in the amount of
$349, 241.70 under the terms of its contract with D&M.
The trial court concluded that Ben Hur had no contractual
right to an award of attorneys' fees and no other legal
grounds for an award of attorneys' fees.
the dispute between D&M and Ascent/Corporex, the trial
court concluded that Ascent/Corporex were jointly and
severally liable to D&M for all sums D&M was mandated
to pay to Superior and Ben Hur on their contract judgments
(including attorneys' fees, costs, and expenses) by
virtue of indemnification. Further, the trial court ordered
that the judgments entered in favor of Superior and Ben Hur
against D&M be stayed until Ascent/Corporex either 1)
satisfied D&M's indemnity judgment or 2) satisfied
Superior and Ben Hur's judgments for unjust enrichment.
parties appealed the trial court's final judgment to the
Kentucky Court of Appeals. The Court of Appeals vacated the
judgment of the trial court in its entirety and remanded the
case for a new trial. Dissatisfied with the rulings of the
Court of Appeals, all parties sought and were granted
discretionary review. The principal issues before us are:
1. Superior and Ben Hur's unjust enrichment claim against
Ascent and Corporex. The Court of Appeals vacated the trial
court's unjust enrichment award to Superior and Ben Hur,
reasoning that the existence of contractual remedies barred
an equitable remedy.
2. Superior's breach of contract claim against D&M.
In vacating the judgment of the trial court, the Court of
Appeals agreed with D&M that the jury should have been
explicitly instructed as to the "pay-if-paid"
provisions in the D&M/Superior contract. Those provisions
mandated that Superior was entitled to payment from D&M
when D&M received payment from Corporex. In the appellate
court's view, "[t]he jury should have been
instructed to determine if D&M's obligation to pay
Superior ever arose, and thus if D&M was in breach, or if
D&M was not obligated to pay Superior Steel until it
first received payment from Corporex, and thus it did not
breach the contract."
3. The attorneys' fee award to Superior. The vacating of
the trial court's breach of contract judgment in favor of
Superior on the D&M/Superior contract also resulted in
the Court of Appeals reversing the award of prevailing parry
attorneys' fees and costs to Superior Steel from
4. D&M's indemnification claims against
Ascent/Corporex. The Court of Appeals vacated the portion of
the trial court's order which held Ascent/ Corporex were
responsible to D&M under an indemnification theory for
the extra work and attorneys' fees awards. The appellate
court held that D&M lacked a legal right to
indemnification from Ascent/Corporex under either a
contractual or common law theory.
5. Corporex's cross-claims against D&M. At trial,
Corporex had raised cross-claims for breach of contract and
negligence against D&M alleging that D&M failed to
adequately oversee and manage the construction of the
Project. However, the trial court decided to submit only the
negligence claim to the jury, concluding that the claims were
mutually exclusive. The Court of Appeals disagreed,
determining that these were two separate and distinct claims
and both should have been presented to the jury.
Additionally, the Court of Appeals concluded that the trial
court's negligence instruction was erroneous as it
assumed Corporex was responsible for the disputed extra work.
The Court of Appeals Erred by Reversing the Trial Court's
Judgment Against Ascent for Unjust Enrichment.
trial court awarded Superior and Ben Hur judgment against
Ascent under a claim for unjust enrichment for the extra work
performed on the forces table/design load increase, the roof
edge condition, and the roof tip as well as the unpaid
retainage amount owed under Superior's contract with
D&M. Ascent/Corporex maintain that the Court of Appeals
properly reversed this judgment as the chain of contracts on
this construction project,  including specifically the
contract between Superior and D&M, bars any equitable
claim for unjust enrichment. We disagree, and begin our
analysis with unjust enrichment.
recover on a claim of unjust enrichment a plaintiff is
required to "prove the following three elements:
'(1) benefit conferred upon defendant at plaintiffs
expense; (2) a resulting appreciation of benefit by
defendant; and (3) inequitable retention of [that] benefit
without payment for its value.” Furlong Dev. Co. v.
Georgetown-Scott Cty. Planning & Zoning Comm'n,
504 S.W.3d 34, 39-40 (Ky. 2016) (quoting Jones v.
Sparks, 297 S.W.3d 73, 78 (Ky. App. 2009)). Because
unjust enrichment is rooted in equity and "law trumps
equity" Bell v. Commonwealth, 423 S.W.3d 742,
748 (Ky. 2014), courts frequently note that "unjust
enrichment is unavailable when the terms of an express
contract control." Furlong Dev. Co., 504 S.W.3d
at 40 (citing Sparks Milling Co. v. Powell, 283 Ky.
669, 143 S.W.2d 75, 76 (Ky. 1940); and Bates v.
Starkey, 212 Ky. 347, 279 S.W. 348, 350 (Ky. 1926)). A
leading Court of Appeals decision, Codell Constr. Co. v.
Commonwealth, 566 S.W.2d 161 (Ky. App. 1977),
illustrates this basic principle.
Codell, a road contractor won a bid to complete a
construction project for the Highway Department. Id.
at 163. In making its bid, the contractor relied upon
information provided by the Highway Department concerning the
amount of rock to be excavated as part of the project.
Significantly, the contract between the contractor and the
Highway Department included an express disclaimer regarding
the accuracy of this information. After starting work on the
project, the contractor determined that additional work was
necessary and requested additional compensation. Id.
The Highway Department refused to pay more than the contract
amount, and the contractor initiated a lawsuit. Following the
circuit court's grant of summary judgment for the Highway
Department, the Court of Appeals affirmed. After explaining
that the disclaimer precluded extra compensation under the
contract, the Court of Appeals stated that "[t]he
doctrine of unjust enrichment has no application in a
situation where there is an explicit contract which has been
performed." Id. at 165 (citing Ashton
Contractors & Eng'rs, Inc. v. State 454
P.2d 1004 (Ariz. 1969)). In the appellate court's view,
the contractor had entered into a bad bargain and the court
had no "basis to salvage the operation."
case at bar, the jury determined that the relationship
between D&M and Superior was governed by contract.
Accordingly, had the trial court permitted Superior to
recover against D&M under a claim of unjust enrichment,
long-standing precedent makes clear that judgment would not
be sustained by this Court. Ascent/Corporex maintain that the
same result applies to them even though they have no
contractual relationship with either Superior or Ben Hur
because the controlling legal principle is that where a party
has an "adequate legal remedy available" it bars
unjust enrichment entirely regardless of whether the party
against whom unjust enrichment is sought is the same party
against whom the legal remedy lies. We largely agree with
Ascent/Corporex's statement of the general principle but
reject the conclusion that its application precludes an
unjust enrichment award in this case.
Ascent/Corporex acknowledge, their desired outcome is
premised on Superior and Ben Hur having an adequate remedy
elsewhere, and in fact they have no such remedy. In short,
they do not have a viable contractual remedy against D&M
because Ascent/Corporex have not paid D&M for the extra
steel work, relieving D&M of any immediate obligation to
pay Superior (and consequently Superior paying Ben Hur) for
the work performed for Ascent/ Corporex's
benefit. As explained more fully below, the
D&M/Superior contract contains "pay-if-paid"
provisions wherein D&M's obligation to pay Superior
is premised on having first received payment from "the
Owner, " z.e., Ascent/Corporex. Additionally, the
D&M/Superior contract, the form of which Corporex had
authority to approve under Section 3.8 of the Corporex/
D&M contract, specifically states: "The
Subcontractor [Superior] hereby acknowledges that it relies
on the credit of the Owner [Ascent/Corporex], not the
Contractor [D&M] for payment of Subcontract Work."
So there is a "chain of contracts" as
Ascent/Corporex repeatedly note but there is also undeniable
"contractual gridlock" that traces back to
Ascent/Corporex's failure to pay for work received.
Unless and until Ascent/Corporex pay D&M, Superior has no
real contractual remedy.
tendency of courts and litigants to disfavor unjust
enrichment claims when contracts abound, as in construction
disputes such as this one, is fairly commonplace but as the
drafters of the Restatement (Third) of Restitution and Unjust
Enrichment aptly state:
Judicial statements to the effect that "there can be no
unjust enrichment in contract cases" can be misleading
if taken casually. Restitution claims of great practical
significance arise in a contractual context, but they occur
at the margins, when a valuable performance has been rendered
under a contract that is invalid, or subject to avoidance, or
otherwise ineffective to regulate the parties'
obligations. Applied to any such circumstance, the
statement that there can be no unjust enrichment in contract
cases is plainly erroneous.
Id. at § 2, cmt. c (2011) (emphasis supplied).
As Superior and Ben Hur note, the Restatement specifically
addresses the situation where a party is uncompensated under
a contract with a third party for a performance that
ultimately benefits the defendant, the scenario presented
If the claimant renders to a third person a contractual
performance for which the claimant does not receive the
promised compensation, and the effect of the claimant's
uncompensated performance is to confer a benefit on the
defendant, the claimant is entitled to restitution from the
defendant as necessary to prevent unjust enrichment.
Id. at § 25(1). ("Uncompensated
Performance Under Contract with Third Person"). Here,
Superior and Ben Hur indisputedly rendered a contractual
performance to D&M, conferring a substantial benefit on
Ascent/Corporex, for which Superior and Ben Hur have never
in other jurisdictions have not hesitated to allow
subcontractors to recover from property owners that receive
the benefit of their work provided that the owner has not
already paid the general contractor for the exact same work.
Thus, in Nation Elec. Contracting, LLC v St. Dimitrie
Romanian Orthodox Church, 74 A.3d 474, 481 (Conn. App.
2013), an electrical contractor recovered judgment on an
unjust enrichment theory against a church that had received
the benefit of extra electrical work beyond the scope of the
original contract but never paid the contractor or
subcontractor for it. Similarly, in Zaleznik v. Gulf
Coast Roofing Co., 576 So.2d 776, 778-79 (Fla. App.
1991), three subcontractors recovered judgments against a
homeowner for unjust enrichment based on the work they
performed for which the homeowner had never paid the
contractor or the subcontractors.
cite competing authority including several cases addressing
New York law, which limits a subcontractor to its contractual
recovery against the contractor and precludes recovery
against the owner unless the owner expressly agreed to be
held liable to the subcontractor. See, e.g., A&V 425
LLC Contracting Co. v. RFD 55th St. LLC, 15
Misc.3d 196, 830 N.Y.S.2d 637 (N.Y. Sup. Ct. 2007). Kentucky
has no such rule. Nor do we have case law that allows unjust
enrichment recovery against the owner only where the