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Forrest Assoc. v. Passamaquoddy Tribe
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2000 ME 195
Docket: Cum-00-49
Argued: September 5, 2000
Decided: November 3, 2000
Panel:WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, and ALEXANDER, JJ.
FORREST ASSOCIATES
v.
PASSAMAQUODDY TRIBE
DANA, J.
[¶1] Passamaquoddy Tribe appeals from a judgment entered in the
Superior Court (Cumberland County, Mills, J.), following a jury-waived trial,
granting recovery to Forrest Associates on its claims of breach of contract
and unjust enrichment in the amount of $42,449.81. On appeal, the Tribe
contends that no contract existed and that Forrest Associates was not
entitled to recovery in either quantum meruit or unjust enrichment. We
agree and vacate the judgment.
I. CASE HISTORY
[¶2] Forrest Associates is a Maine corporation that provides
management consulting services and engages in market feasibility studies
and project development work. In early 1994, Mark Stickney, a Forrest
employee, and Thomas Tureen, legal counsel and advisor to the Tribe,
discussed whether Forrest Associates could assist the Tribe in the
development of a high stakes bingo operation in Albany Township, Oxford
County, Maine. Forrest conducted a market assessment of the operation and
submitted it, along with a description of Forrest's proposed involvement in
the project, to Tureen in the form of an engagement letter. The letter set
forth Forrest's proposed role in all phases of the project and provided
Forrest's estimate of its fees and expenses. The letter stated that Forrest
agreed to postpone receipt of its fees and expenses for the initial phase of
the project, but noted that "[u]pon completion of this phase of the project,
it is understood that we will be paid in full for Phase One." William Forrest,
founder and chief executive officer of Forrest Associates, testified at trial
that Tureen said that Forrest Associates "would be required to complete this
[initial] phase of the project on spec." That is, "rather than having the tribe
commit to paying the 10 to $15,000 upon completion of the project,
[Forrest Associates] would have to assume that risk and . . . it would be paid
provided the tribe decides to proceed with the project."{1} Forrest asked the
Tribe to sign the engagement letter. The Tribe never did.
[¶3] During this initial phase, Tureen asked Forrest to perform some
minor additional work that included an assessment of additional revenue
opportunities such as off-track betting. Forrest performed the additional
work and drafted a revised market assessment. In July 1994, Tureen told
Forrest that the Tribe wished to proceed with the project and that Forrest
should develop a comprehensive business plan. Forrest then developed a
plan that further defined the scope of the project and contained a
comprehensive financial schedule that addressed anticipated costs,
revenues, and expenses of development. Tureen again told Forrest that if
the Tribe chose to proceed with the project, "the fees that had been
incurred on spec would be paid," and that any subsequent fees would be
paid as the project progressed. Forrest submitted the plan to the Tribal
Council at a meeting in August 1994.
[¶4] The plan was discussed in detail at the August meeting. In
general terms, the plan described Forrest's involvement in each stage of the
development and operation of the enterprise. It also contained construction
and management budgets that included Forrest's historical and prospective
fees. Forrest expected to perform work on the project through August 1995
at a cost to the Tribe of $228,960, with 35-40% of that total representing
Forrest's anticipated profits. The Tribe did not object to either the work
Forrest was to perform or the rates Forrest was to charge.
[¶5] When Forrest presented the plan to the Council, Tureen asked
whether Forrest understood that payment for the initial phase of the project
was on a contingent basis such that Forrest would only be paid if the Tribe
developed the project. William Forrest responded that he understood that
the "recapture of those fees is provided that the project turns into a reality."
William Forrest also indicated that the project needed an immediate
infusion of funds from the Tribe. The Council, however, was reluctant to
make a financial contribution at that time. A Council member then made a
motion "to proceed with pursuing this with Forrest Associates and resolve
the contribution questions for later." Tureen then suggested "that we
proceed in accordance with the plan submitted, which doesn't commit you
[the Tribe] today that you would need money, and then the understanding is
that there will be a more formal agreement with you later." The motion was
approved.
[¶6] The more formal agreement alluded to never materialized.
Nevertheless, Forrest continued to work on the project by soliciting bids
from engineers, researching and obtaining presentations from architects,
and locating financing for the project. In November 1994, however, the
Tribe told Forrest that it would not provide any short-term funding and that
weather considerations would soon stop work on the project for the winter.
William Forrest testified that he did not believe Forrest performed any work
for the Tribe after 1994. The Tribe never paid Forrest for any work, and the
facility was never built.
[¶7] In 1996, the Tribe obtained a financing commitment for the
project from Snake River Financing, Ltd. The Tribe contends that it did not
use any of Forrest's work product in obtaining the financing, and that in fact
the two projects were substantially dissimilar. Forrest, however, contends
that the development costs were virtually the same as the costs in its
proposal, and that the Tribe had continued access to the Forrest proposal
when making all design decisions for the Snake River facility. Despite the
Tribe's financing agreement with Snake River, the facility has not been built
because opponents of the project successfully challenged regulatory approval
on the ground that the facility would not be erected on "Indian land." We
affirmed in Kimball v. Land Use Regulation Comm'n, 2000 ME 20, 745 A.2d
387.
[¶8] In 1997, Forrest brought this suit. The Superior Court
(Cumberland County, Mills, J.) granted the Tribe's motion for summary
judgment on the ground that both the alleged contract and Forrest's claims
for quantum meruit were barred by 25 U.S.C. § 81 (1983) because they dealt
with services to the Tribe relative to their lands and the contract was not
approved by the Secretary of the Interior and the Commissioner of Indian
Affairs. We vacated and remanded because section 81 does not apply to an
agreement concerning land not held in trust by the United States. See
Forrest Assocs. v. Passamaquoddy Tribe, 1998 ME 240, ¶ 18, 719 A.2d 535,
539. On remand, judgment was entered in favor of Forrest on theories of
breach of contract and unjust enrichment or quantum meruit in the amount
of $42,449.81. After the Tribe unsuccessfully moved for Findings of Fact
and Conclusions of Law pursuant to M.R. Civ. P. 52(b), this appeal followed.
II. BREACH OF CONTRACT
[¶9] The establishment of a contract requires that the parties
mutually assent "to be bound by all its material terms; the assent must be
manifested in the contract, either expressly or impliedly; and the contract
must be sufficiently definite to enable the court to determine its exact
meaning and fix exactly the legal liabilities of the parties." VanVoorhees v.
Dodge, 679 A.2d 1077, 1080 (Me. 1996) (quoting Roy v. Danis, 553 A.2d
663, 664 (Me. 1989)). The Tribe contends that no contract existed because
the evidence fails to establish both the parties' intention to be bound and
the specific terms of the purported contract. The intent of the parties in
entering a contract, whether a contract exists, and whether a breach has
occurred are all questions of fact that we review for clear error. See
Spottiswoode v. Levine, 1999 ME 79, ¶ 15, 730 A.2d 166, 172;
VanVoorhees, 679 A.2d at 1080; June Roberts Agency, Inc. v. Venture
Props., Inc., 676 A.2d 46, 48 (Me. 1996) (quoting Bates v. Anderson, 614
A.2d 551, 552 (Me. 1992)).
[¶10] Forrest presented the plan to the Council at the August
meeting. The plan was discussed in detail. The plan described Forrest's
duties and obligations for the project, established a payment schedule for
Forrest's fees, and further outlined the scope of the project's development
and operation. At the conclusion of the meeting, however, the Tribe voted
to move forward with planning for the project with the caveat that any
responsibility of the Tribe to contribute its resources for work already
performed would be revisited in a more formal agreement at a later date.
This evidence establishes that the Tribe did not intend to be bound by the
vote alone. In effect, therefore, all that existed between the parties was an
agreement to work towards an agreement. Such an agreement is
unenforceable. See Ault v. Pakulski, 520 A.2d 703, 704-05 (Me. 1987).
Thus, the Superior Court's conclusion that a contract arose between the
parties at the August meeting is clearly erroneous because no competent
evidence exists in the record to support that determination.{2}
III. QUANTUM MERUIT
[¶11] Quantum meruit describes the extent of liability under a quasi-
contract theory and therefore involves the "recovery for services or
materials provided under an implied contract." Bowden v. Grindle, 651
A.2d 347, 350 (Me. 1994) (quoting Aladdin Elec. Assocs. v. Town of Old
Orchard Beach, 645 A.2d 1142, 1145 (Me. 1994)). To sustain a claim in
quantum meruit, a plaintiff must establish that "(1) services were rendered
to the defendant by the plaintiff; (2) with the knowledge and consent of the
defendant; and (3) under circumstances that make it reasonable for the
plaintiff to expect payment." Carvel Co. v. Spencer Press, Inc., 1998 ME 74,
¶ 12, 708 A.2d 1033, 1036. Determinations concerning these factors are
questions of fact and are reviewed for clear error. Paffhausen v. Balano,
1999 ME 169, ¶ 9, 740 A.2d 981, 983.
[¶12] Forrest has failed to establish that it possessed a reasonable
expectation of payment. The evidence demonstrates that Forrest provided
its services "on spec." Forrest conceded that payment was contingent on
the project turning into a reality. That reality never occurred. Accordingly,
Forrest is not entitled to a recovery in quantum meruit because it cannot
establish a reasonable expectation of payment.
[¶13] In addition, Maine law provides that the Tribe enjoys the same
privileges and immunities as a municipality.{3} Municipalities are not liable
for the payment of unauthorized services. See A.F.A.B., Inc. v. Town of Old
Orchard Beach, 639 A.2d 103, 105 (Me. 1994) (citing Watts Detective
Agency v. Inhabitants of County of Sagadahoc, 137 Me. 233, 242, 18 A.2d
308, 316 (1941)). Consequently, we have been reluctant to impose quantum
meruit liability on municipalities when the services rendered were not
authorized by the municipality. See Watts, 137 Me. at 242, 18 A.2d at 316.
Cf. Cottle Enters., Inc. v. Town of Farmington, 1997 ME 78, ¶ 17, 693 A.2d
330, 335-36 (rejecting developer's estoppel claim against municipality
because town sewer superintendent lacked authority to bind the
municipality by his letter to the developer regarding the town's sewage
system capacity). In the present case, the evidence establishes that
Tureen's requests were the catalyst for Forrest's work on the project prior
to the August meeting. The evidence also demonstrates, and the Superior
Court properly concluded, that Tureen, in making those requests, lacked
the authority to bind the Tribe. Accordingly, Forrest may not recover in
quantum meruit because Tureen, though an agent of the Tribe, nevertheless
lacked the authority to bind the Tribe by his requests.
IV. UNJUST ENRICHMENT
[¶14] To sustain a claim for unjust enrichment, a claimant must
establish "that it conferred a benefit on the other party . . . that the other
party had 'appreciation or knowledge of the benefit' . . . and . . . that the
'acceptance or retention of the benefit was under such circumstances as to
make it inequitable for it to retain the benefit without payment of its value.'"
Howard & Bowie v. Cloutier & Briggs, 2000 ME 148, ¶ 13, 759 A.2d 707, ---
(quoting June Roberts Agency, Inc., 676 A.2d at 49). Unjust enrichment,
therefore, permits recovery "for the value of the benefit retained when
there is no contractual relationship, but when, on the grounds of fairness
and justice, the law compels performance of a legal and moral duty to pay
. . . ." Paffhausen v. Balano, 1998 ME 47, ¶ 6, 708 A.2d 269, 271. Trial
court determinations on the elements of unjust enrichment are factual
issues that will not be set aside as clearly erroneous unless there is no
competent evidence in the record to support them. See Howard & Bowie,
2000 ME 148, ¶ 13, 759 A.2d at ---.
[¶15] In the present case, it is unclear which theory the Superior
Court relied on in granting Forrest's recovery. The judgment concludes that
the Tribe "was aware of [Forrest's] work and has retained the benefit of that
work," thereby referencing the elements of unjust enrichment, yet then
relies on a case decided in quantum meruit in support of its conclusion. See
Matthews v. Neal, Greene & Clark, 338 S.E.2d 496, 498 (Ga. Ct. App.
1985).{4} As noted above, evidence in the record does not support Forrest's
recovery in quantum meruit. In addition, the evidence in the record fails to
establish that Forrest conferred a benefit on the Tribe. Although Forrest
created the comprehensive plan and presented it to the Tribe, there is no
evidence that the Tribe benefitted from either the presentation or the
information contained in the plan. To the contrary, the evidence
demonstrates that Forrest made an elaborate marketing proposal to the
Tribe that was ultimately rejected. Such evidence fails to satisfy the central
element of proving a benefit conferred. Accordingly, the Superior Court
erred in holding the Tribe liable for unjust enrichment.
The entry is:
Judgment vacated.
Attorneys for plaintiff:
Christopher C. Taintor, Esq., (orally)
Paul F. Driscoll, Esq.
Norman, Hanson & DeTroy
P O Box 4600
Portland, ME 04112-4600
Attorneys for defendant:
Melissa A. Hewey, Esq., (orally)
Gregory W. Sample, Esq.
Drummond Woodsum & MacMahon
P O Box 9781
Portland, ME 04104-5081
FOOTNOTES******************************** {1} . The Tribe contends that
the Superior Court erred by admitting Tureen's statements. We review the
trial court's evidentiary rulings for clear error and an abuse of discretion.
See Maine Shipyard & Marine Ry. v. Lilley, 2000 ME 9, ¶ 20, 743
A.2d 1264, 1269; Saucier v. Allstate Ins. Co., 1999 ME 197, ¶ 29, 742
A.2d 482, 491 (stating that we "will only vacate an evidentiary ruling
if the trial court committed a clear abuse of discretion"). M.R. Evid.
801(d)(2)(D) provides that "a statement is not hearsay if . . . it
is offered against a party and is . . . a statement by the party's agent
or servant concerning a matter within the scope of the agency or employment,
but not to the principal or employer, made during the existence of the relationship."
Id. Authorized statements made by the agent to a third person, therefore,
are considered admissions of the principal. See Richard H. Field & Peter
L. Murray, Maine Evidence § 801.7 at 413 (2000 ed.). The record established
that Tureen served as the Tribe's long-time legal counsel, that Tureen met
with Forrest throughout the initial phase of the project and that Forrest
performed work at Tureen's request, and that Tureen told Forrest that the
Tribe wanted to proceed with the project. Competent evidence exists in the
record to support these factual determinations, and thus they are not clearly
erroneous. Consequently, the Superior Court did not abuse its discretion
by admitting Tureen's statements. {2} . Forrest contends in its cross-appeal
that it is entitled to recover lost profit damages resulting from the Tribe's
breach of contract. Because we conclude that no contract arose between the
parties, however, Forrest is not entitled to recovery. {3} . See 30 M.R.S.A.
§ 6206(1) (1996). Section 6206 provides, in pertinent part, that "the
Passamaquoddy Tribe and the Penobscot Nation, within their respective Indian
territories, shall have, exercise and enjoy all the rights, privileges,
powers and immunities . . . and shall be subject to all the duties, obligations,
liabilities and limitations of a municipality . . . ." Id. {4} . In
Matthews, defendant/homeowner retained plaintiff/architectural firm to prepare
plans for an addition to a farmhouse. See Matthews, 338 S.E.2d at 497. Although
the parties never entered into a formal agreement with respect to the costs
of the project, the parties did correspond regarding the firm's potential
fees. See id. The plaintiff eventually submitted plans to the defendant's
satisfaction, but the high overall cost prevented further action on the
project. See id. at 497-98. As a consequence, the addition was never built
and plaintiff never received payment for its services. See id. at 498. Plaintiff
commenced an action to recover in quantum meruit, and the Georgia Court
of Appeals held that the firm was entitled to recover the reasonable value
of the services in preparing and furnishing the plans and specifications
that were retained by the defendant. See id.
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