## Facts

- Bailey-Allen Co., Inc., a general contractor, contracted to build the Kurzets’ residence.
- About three months into the project, the home was framed and the roof partially completed, described as roughly 10% of the contract work.
- The Kurzets became dissatisfied with Bailey-Allen’s supervision and its failure to provide proof of insurance.
- The trial court found Bailey-Allen materially breached first by failing to provide insurance proof and sufficient project supervision, and found the Kurzets did not breach.
- Despite Bailey-Allen’s material breach, the trial court awarded Bailey-Allen $15,500 in quantum meruit/unjust enrichment, calculated largely as approximately 10% of the contract price.
- The trial court also awarded the Kurzets damages against Bailey-Allen for defects and unnecessary materials: $1,800 (retaining wall), $2,000 (concrete steps), and $559 (unnecessary materials).
- The Kurzets appealed the quantum meruit/unjust enrichment award and the associated prejudgment and postjudgment interest; they also sought statutory attorney’s fees as prevailing parties on lien/bond claims.

## Issues

1. Whether a contractor found to be the first material breacher may recover in quantum meruit/unjust enrichment, and whether an award may be measured by a percentage of the contract price rather than proof of the actual benefit conferred and retained.
2. Whether prejudgment and postjudgment interest were properly awarded on the quasi-contract recovery.
3. Whether the Kurzets, as prevailing parties on statutory lien and bond claims, were entitled to attorney’s fees and how fees should be handled on remand.

## Decision

- Reversed the quantum meruit/unjust enrichment award to Bailey-Allen and remanded for analysis and findings under the unjust enrichment standard stated in *Davies v. Olson*.
- Reversed the prejudgment interest award tied to the reversed quasi-contract judgment.
- Reversed and remanded the postjudgment interest ruling, directing that any postjudgment interest run only from the date of any new judgment entered on remand.
- Reversed and remanded for entry of attorney’s fees to the Kurzets under the Mechanics’ Lien Statute, and for consideration of fees under the Construction Bond Statute.

## Legal Principles

- A party in material breach generally cannot enforce the contract, but may seek restitution in limited circumstances to prevent unjust enrichment of the nonbreaching party.
- Unjust enrichment requires findings that (1) a benefit was conferred, (2) the defendant appreciated the benefit, and (3) the defendant accepted and retained the benefit under circumstances making nonpayment inequitable.
- Restitution for unjust enrichment must be grounded in evidence of the actual benefit conferred and retained, not mechanically derived from the contract price or percentage of completion.
- When an underlying judgment is reversed, prejudgment interest based on that judgment must be reversed; any postjudgment interest after remand runs from the date of the new judgment, if any.
- Statutory fee-shifting for prevailing parties on mechanics’ lien and bond claims requires the trial court to award and evaluate attorney’s fees under the applicable statutes.

## Conclusion

The court required a benefit-based, evidence-supported unjust enrichment analysis for any restitution to a breaching contractor, rejected a contract-percentage measure of recovery, reversed the associated interest awards, and ordered statutory attorney’s fees determinations favoring the prevailing homeowners on the lien and bond claims.


Bailey-Allen Co. v. Kurzet, 876 P.2d 421 (Utah Ct. App. 1994)