Unjust Enrichment Claims Against Project Owner, Not so Fast.

When are subcontractor claims against an owner for unjust enrichment appropriate ?

In Maloney v. Therm Alum Industries, Corp., 636 So. 2d 767 (FL. 4th DCA 1994), the Court held that a subcontractor could not sue an owner for unjust enrichment unless and until the subcontractor had exhausted its legal remedies against the general contractor with whom the subcontractor had its contractual relationship. In Maloney. the owner entered into a contract with a general contractor to build an office building. The general contractor in turn, subcontracted a portion of the work out to furnish and install glass doors and windows.

When the owner failed to pay the general contractor, the subcontractor did not get paid and filed suit against the general contractor for breach of contract and against the owner for unjust enrichment. The Court in Maloney held that since the subcontractor had not exhausted its direct remedy against the general contractor, it was “premature and therefore improper to permit the subcontractor to pursue an indirect equity claim against an owner.” Maloney, 636 So. 2d at 769.

The Court found persuasive and quoted the decision of an Oregon court and stated as follows:

We adopt the majority rule and hold that under facts such as pled here, a material element that must be alleged and proved for a claim of unjust enrichment to succeed is that the remedies against the contractor were exhausted No direct contractual relationship existed between the parties here. For these reasons, a furnisher of materials must exhaust all remedies against the contractor before the “enrichment” can be “unjust”. Maloney, 636 So. 2d at 770 (quoting Tum-A-Lum Lumber v. Patrick 770 P.2d 964 (Or. App. 1989)) (emphasis in original).

Further, the Court in Maloney stated as follows:

Also, we think that before recovery can be had against the landowner on an unjust enrichment theory, the furnisher of the materials and labor must have exhausted his remedies against the person with whom be had contracted, and still has not received the reasonable value of his services. Maloney, 636 So. 2d at 770 (emphasis added).

However, in Commerce P’ship 8098 Ltd. P’ship v. Equity Contr. Co., 695 So. 2d 383, 388 (Fla. Dist. Ct. App. 4th Dist. 1997), the Court did recede a bit from Maloney, but only to the extent that that Maloney can be read to require a statutory lien foreclosure claim as a pre-condition to an equitable claim, or that a non-privity lien foreclosure action as permitted by statute is the exclusive remedy for a subcontractor not in privity with the owner, stating that

“[t]here is language in Maloney which can be read to suggest that we [the Court] imposed a third limitation on the ability of a subcontractor to maintain a quasi contract claim against an owner. Maloney quotes two paragraphs from Construction and Design Law § 8.8C.1(1989), which include the following sentence: First, the subcontractor may not recover an equitable remedy if he has failed his legal remedies, such as a statutory mechanic’s lien. 636 So. 2d at 770. We expressly  recede from this statement in Maloney because it is without support in Florida law.”

Simply put, a subcontractor must plead and prove that 1. “the subcontractor had exhausted all remedies against the general contractor and still remained unpaid” and 2. “that the owner had not given consideration to any person for the improvements furnished by the subcontractor.” However, the subcontractor need not exhaust his legal statutory remedy of lien foreclosure to eventually bring a claim against the Owner in equity.

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