Strauss Troy represented Ferguson Enterprises, which provided nearly $50,000 in high-end kitchen appliances, lighting fixtures and plumbing fixtures to a multi-million dollar home being constructed in Loveland, Ohio.
Near the end of the project, a dispute arose between the owners and the general contractor constructing the house, Pinnacle Building Group. The owners refused to make the final payments on the house, and the general contractor went out of business, leaving several sub-contractors and material suppliers owed money.
The sub-contractors and material suppliers had substantial unpaid invoices, yet the homeowners claimed that they didn’t owe the sub-contractors. Legal action was the next step.
Ferguson, along with three other sub-contractors, pursued claims against the homeowners for unjust enrichment.
Three Elements to Prove Unjust Enrichment:
- The plaintiff must have provided the defendant with something of value while expecting compensation in return.
- The defendant must have acknowledged, accepted and benefited from whatever the plaintiff provided.
- The plaintiff must show that it would be inequitable or unconscionable for the defendant to enjoy the benefit of the plaintiff’s actions without paying for it.
Before trial, the court ruled that, under Ohio law, payment in full by a homeowner to the general contractor could be used as a defense to both lien claims and unjust enrichment claims asserted by the unpaid subcontractors and material suppliers.
At trial, there was no dispute that the owners had paid more than $2 million to the general contractor. The key consideration was the total amount, or the “contract price,” of the contract between the owners and the general contractor because the contract was a “cost-plus” contract, which contained no total fixed dollar amount.
Among other things, Strauss Troy showed that the owners realized they were exceeding the general contractor’s budget when they selected high-end appliances, plumbing and lighting fixtures for their house from Ferguson.
After four hours of deliberation, the jury concluded that the homeowners had not paid the general contractor in full. Ferguson was awarded the full amount of its claim, plus prejudgment interest, totaling more than $50,000.
Here’s What Both Homeowners and Suppliers Can Learn From the Ferguson Case:
- If you’re building a new home, make sure there is a specified, fixed dollar amount in your contract with the general contractor.
- An unjust enrichment claim against a property owner is a viable alternative to a traditional mechanic’s lien claim for material suppliers and sub-contractors, but is likely subject to the same “paid in full” defense as a lien claim on residential projects.
Brian O’Connell is a member of the Strauss Troy litigation practice group. He focuses his practice in the areas of complex commercial litigation, construction litigation, intellectual property litigation, products liability and tort law. You can reach him at: 513-629-9451 or bjoconnell@strausstroy.com.