United States for the Use of Palmer Construction, Inc. v. Cal State Electric, Inc. United Pacific Reliance Insurance Company

This case presents a clash of principles at the interface between the law of expressed contracts and the law of quasi contracts. Here, Cal State Electric, Inc. (CSE) entered into a contract with Palmer Construction, Inc. (Palmer). Palmer breached its contract, and after a trial the district court found that CSE should pay damages and attorneys fees to Palmer. CSE appealed 1 *1261 the final judgment arising out of that somewhat jarring result. We agree that the judgment is in error and reverse.

BACKGROUND FACTS

CSE entered into a prime contract with the U.S. Army Corps of Engineers to construct the STS Power Plant at Vandenburg Air Force Base in California. CSE then entered into a contract with Palmer in which a portion of the work was subcontracted to the latter entity. The contract price for Palmer’s work was to be $220,162. Due to agreed extra work, an additional $14,975 was added to the contract price for a total of $235,137.

Palmer commenced work but, after completing a portion of the job, Palmer breached. There is no doubt about that. By the time of the breach Palmer had supplied some goods and services which the district court found to have a value of $204,845.26. Against…

concurring:

I concur in Judge Fernandez’s fine opinion harmonizing various principles of law. However, I do not think the problem is nearly as complicated as it appears. All that is required is a little common sense.

In the rush of dealing with an overwhelming daily calendar, the district judge made a simple error, as we all do from time to time. She could have applied the two formulas that she utilized and reached the right result. The error occurred because she applied them in the wrong order. These things happen.

Conceptually, it is easy to see the error that results when the damages formula is applied first and the quantum meruit formula second. Under that approach, the damages included in the damage formula are not the total damages CSE will incur— they fail to include the quantum meruit payment, which has not yet been calculated, but which it will be required to pay. Thus, if both formulas are to be utilized, CSE’s damages cannot properly be determined until after the quantum meruit calculation is performed. Otherwise, we may end up, as we did here, with the non-breaching party having to pay more than the contract price.

On the other hand, when the quantum meruit theory…

940 F.2d 1260 37 Cont.Cas.Fed. (CCH) 76,175 UNITED STATES for the Use of PALMER CONSTRUCTION, INC., Plaintiff-Appellee, v. CAL STATE ELECTRIC, INC.; United Pacific Reliance Insurance Company, Defendants-Appellants. No. 90-55575. United States Court of Appeals, Ninth Circuit. Argued and Submitted July 10, 1991. Decided July 31, 1991. Howard A. Allen, Evelyn R. Wiggins, Deb C. Pedersdotter, Hillyer & Irwin, San Diego, Cal., for defendants-appellants. Irwin E. Sandler, Sandler & Breier, Los Angeles, Cal., for plaintiff-appellee. Appeal from the United States District Court for the Central District of California. Before REINHARDT and FERNANDEZ, Circuit Judges, and CROCKER, * District Judge. FERNANDEZ, Circuit Judge: 1 This case presents a clash of principles at the interface between the law of expressed contracts and the law of quasi contracts. Here, Cal State Electric, Inc. (CSE) entered into a contract with Palmer Construction, Inc. (Palmer). Palmer breached its contract, and after a trial the district court found that CSE should pay damages and attorneys fees to Palmer. CSE appealed 1 the final judgment arising out of that somewhat jarring result. We agree that the judgment…