## Facts

- A general contractor hired a subcontractor to perform site and concrete work on an elementary school project based on a bid later reduced by \$100,000 at the general contractor’s request.
- The general contractor verbally accepted the bid, and the subcontractor began work.
- The general contractor paid the subcontractor’s first monthly invoice in full.
- The subcontractor performed additional work from August 1 through September 7 and submitted invoices seeking payment, but the general contractor did not pay the revised invoice.
- The subcontractor stopped work before completing the concrete portion of the subcontract.
- The district court found (1) the value of the subcontractor’s unpaid work was \$74,964.05, and (2) the general contractor incurred net additional expenses of \$42,448.20 attributable to the subcontractor’s failure to complete the concrete work (after mitigation).
- Despite these findings, the district court concluded the subcontractor’s willful, material, anticipatory breach barred any recovery and entered judgment for the general contractor for \$42,448.20 without offsetting the unpaid work value.

## Issues

1. Whether a breaching subcontractor may recover restitution for the value of benefits conferred that exceed the loss caused by the breach under Restatement (Second) of Contracts § 374.
2. Whether the trial court erred by awarding the general contractor its net damages without offsetting those damages against the value of the subcontractor’s unpaid work.

## Decision

- The New Mexico Court of Appeals reversed the district court.
- The court held the trial court erred by failing to offset the general contractor’s net damages (\$42,448.20) against the value of the subcontractor’s unpaid work (\$74,964.05).
- The court held that, under Restatement (Second) of Contracts § 374, a party in breach may obtain restitution for benefits conferred in excess of the loss caused by the breach.
- Applying the district court’s findings, the subcontractor was entitled to restitution equal to the excess of benefit over harm (approximately \$32,515.85, subject to minor arithmetic/clerical rounding in the record).
- The court rejected alternative damages methodologies not supported by the district court’s findings or the evidentiary record.
- The court found no equitable basis (such as fraud or unconscionable conduct) to justify total forfeiture of the value conferred.

## Legal Principles

- A breaching party may recover restitution for the benefit conferred on the non-breaching party to the extent that benefit exceeds the loss caused by the breach.
- Restitution in this setting is a contract remedy recognized by modern contract doctrine (including Restatement (Second) of Contracts § 374), not limited to equitable unjust-enrichment analysis.
- When a court has findings for both (1) the value of the breaching party’s unpaid performance and (2) the non-breaching party’s damages attributable to the breach, the proper remedy requires offsetting damages against value conferred to prevent overcompensation.
- Willful, material, or anticipatory breach does not automatically impose total forfeiture of unpaid value absent findings justifying forfeiture on equitable grounds.

## Conclusion

The court required an offset between the general contractor’s proven breach-related damages and the value of unpaid work received, holding that a breaching subcontractor may obtain contract restitution for the net benefit conferred under Restatement (Second) of Contracts § 374.


Eker Brothers, Inc. v. Rehders, 150 N.M. 542, 263 P.3d 319 (Ct. App. 2011)