AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• A subcontractor sued a general contractor for payment for work performed on an elementary school construction project. The subcontractor had reduced its initial bid by $100,000 upon the general contractor's request and began work after a verbal agreement. The subcontractor was paid for the first month of work but ceased work due to a dispute over payment for subsequent work, leading to the lawsuit (paras 2-3).

Procedural History

• District Court of Santa Fe County, Daniel A. Sanchez, District Judge: Found the subcontractor was owed $74,964.05 for work performed but had willfully and materially breached the contract, resulting in damages to the general contractor of $42,448.20. The court awarded the general contractor $42,448.29 (para 1).

Parties' Submissions

• Subcontractor: Argued for payment for work performed, contending that despite any breach, they were entitled to restitution for the value of the benefits conferred by their performance (para 6).
• General Contractor: Contended that the subcontractor's breach negated any obligation for payment and that the subcontractor's work did not constitute a benefit warranting compensation. Additionally, argued that their damages exceeded any benefit conferred by the subcontractor (para 6).

Legal Issues

• Whether the subcontractor's claims were barred by its willful, material, and anticipatory breach of contract (para 6).
• Whether the subcontractor was entitled to restitution for the value of benefits conferred in excess of the damages caused by its breach (para 6).

Disposition

• The Court of Appeals reversed the district court's decision, concluding that the subcontractor was entitled to restitution for the benefit conferred by its work, in excess of the damages, amounting to $32,515.76 (para 19).

Reasons

• Judges Michael D. Bustamante, Cynthia A. Fry, and Roderick T. Kennedy: The panel unanimously agreed that the district court erred by not offsetting the general contractor's damages against the benefit received from the subcontractor's unpaid work. The appellate court adopted the approach set forth in Restatement (Second) of Contracts § 374, which allows a breaching party to obtain restitution for benefits conferred in excess of damages caused by the breach. The court found that the subcontractor conferred a benefit of $74,964.05, against which the general contractor's damages of $42,448.29 should be offset, resulting in a net benefit to the subcontractor of $32,515.76. The appellate court rejected the general contractor's attempt to reframe the issue of damages at the appellate level, emphasizing fairness and adherence to the record and findings of the district court. The court also addressed the equitable nature of restitution and forfeiture, concluding that the district court erred in resorting to equity to deny the subcontractor restitution without justification for such a forfeiture (paras 7-23).