Kinetic System, Inc. v. IPS-Integrated Project Services, LLC et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Kinetic Systems, Inc.
Case No. 20-cv-1125-SM
v. 	Opinion No. 2024 DNH 035
IPS-Integrated Project Services, LLC
and Lonza Biolgoics, Inc.
O R D E R
Following summary judgment in favor of IPS on at least part
of Kinetic Systems, Inc.’s (“Kinetics”) breach of contract
claims, the court directed Kinetics to identify those breach of
contract claims (Count I), if any, still in dispute.1 	Doc. no.
89, at 24. 	Kinetics identified the unresolved breach of
contract claims and argued that its quantum meruit claim should
be reinstated. 	IPS agreed with the unresolved breach of
contract claims but objected to Kinetics’s request to reinstate
its quantum meruit claim. 	Kinetics filed a reply.
For the reasons discussed below, the breach of contract
claims identified in Count I are unresolved and remain in the
case for trial. 	Kinetics’s request to reinstate its quantum
meruit claim is granted, subject to the process provided below.
1 As the court noted in the prior order, the plaintiff has
referred to itself by different names. 	Doc. no. 89, at 1. To
avoid confusion, the court will consistently refer to the
plaintiff as “Kinetics”.
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I. 	Breach of Contract Claims
Kinetics asserts that its breach of contract claims in
Count I remain unresolved as to disputed back charges, meaning
“the amounts by which IPS reduced [Kinetics’s] claimed amount in
timely change Proposals that resulted in approved Change Orders
or otherwise timely requisitions.” 	Doc. no. 91, at 2.
Specifically, Kinetics disputes IPS’s failure to pay back
charges, which total $2,227,028.98, for Change Order 009 and a
back charge invoice and for reductions in amounts paid on the
Process Subcontract. 	In its response, IPS agreed that the
claims for charges identified by Kinetics (totaling
$2,227,028.98) remain in dispute.
Therefore, Kinetics and IPS appear to agree that there are
two unresolved breach of contract claims in Count I that remain
for trial, which are the amounts stated above and demonstrated
in Exhibits 1 and 2 submitted with Kinetics’s notice.
II. 	Quantum Meruit
Early in the case, the court dismissed Kinetics’s claim for
quantum meruit/unjust enrichment because those equitable
remedies were available “‘only in the absence of an enforceable
contract governing the matter,’” and Kinetics sought payment for
that same work through breach of contract claims. 	Doc. no. 15,
at 8 (quoting Barlo Signs Int’l, Inc. v. GCD Inc., No. 2017-
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0589, 2018 WL 3237974, at *2 (N.H. June 29, 2018)). 	Kinetics
contends that it is now entitled to reinstate its quantum meruit
claim to recover the amounts it sought through the breach of
contract claims that were dismissed on summary judgment.
IPS objects, arguing that Kinetics cannot bring breach of
contract claims and then, when those claims are unsuccessful,
turn to a quantum meruit remedy. 	IPS also argues that Kinetics
waived any potential equitable remedies, including quantum
meruit, under the Subcontractor Partial Waiver and Releases it
signed. 	Finally, IPS argues that Kinetics cannot prove the
elements of quantum meruit because it could not have reasonably
expected payment on change proposals that were submitted late.
A. 	Reinstatement
Kinetics argues that because its contract claim is
unenforceable, due to its own breach of the deadline for change
proposals in the subcontracts, it may now seek a restitutionary
remedy under quantum meruit, relying on R.J. Berke & Co., Inc.
v. J.P. Griffin, Inc., 116 N.H. 760 (1976).2 	There, the New
2 In a footnote in its response and in the body of its
reply, Kinetics argues that its quantum meruit claim is not
barred by its contractual relationship with IPS, under Axenics,
Inc. v. Turner Constr. Co., 164 N.H. 659, 669 (2013), because,
while unjust enrichment is an equitable claim, quantum meruit is
an action at law. 	It is far from clear what effect that
distinction might have in this case, particularly because
Kinetics did not raise the theory in opposition to IPS’s motion
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Hampshire Supreme Court held that “[q]uantum meruit is a
restitutionary remedy intended for use by contracting parties
who are in material breach and thus unable to sue ‘on
contract.’” 	Berke, 116 N.H. at 764. 	More recently, the New
Hampshire Supreme Court explained that in Berke it “held that
quantum meruit is a restitutionary remedy available to a party
that materially breaches a contract, and thus has no contract
remedies.” 	Axenics, Inc. v. Turner Constr. Co., 164 N.H. 659,
670-71 (2013).
IPS contends, however, that the exception provided by Berke
does not apply here because Kinetics was able to sue on the
parties’ subcontracts. 	IPS further contends that Kinetics’s
lack of success on its breach of contract claim does not entitle
it to a second try under a theory of quantum meruit. 	In sum,
to dismiss and did not object to dismissal of the quantum
meruit/unjust enrichment claim against IPS.
Further, Kinetics’s theory is unpersuasive. 	In Berke, the
pleading was amended to add claims both in assumpsit and in
quantum meruit. 	The New Hampshire Supreme Court noted in that
case that “quantum meruit is a restitutionary remedy.” 	116 N.H.
at 762 & 764; see also Doughty v. State Employees’ Ass’n of
N.H., SEIU Local 1984, CTW, CLC, 981 F.3d 128, 138 (1st Cir.
2020) (stating that restitution “is an equitable rather than a
legal remedy”); Collision Comm’ns, Inc. v. Nokia Solutions &
Networks OY, 2023 DNH 100, --- F. Supp. 3d. ---, 2023 WL
5237896, at *13 (D.N.H. Aug. 15, 2023) (“Quantum meruit provides
an equitable remedy for such plaintiffs who are justified in
some recovery notwithstanding their inability to recover in
contract.”). 	For those reasons, the court need not address
Kinetics’s theory for purposes of resolving the reinstatement
issue.
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IPS asserts that Kinetics’s breach of contract claims under the
subcontracts bar Kinetics’s claim under quantum meruit.
As noted above, the New Hampshire Supreme Court has long
recognized that a plaintiff may seek a remedy under quantum
meruit, despite a contractual relationship between the parties,
when the plaintiff cannot recover under the contract. 	Berke,
166 N.H. at 764. 	The question IPS raises is whether a plaintiff
can sue for breach of contract and, when that claim is
unsuccessful, bring a claim for quantum meruit. 	The
circumstances in Berke are instructive on that question.
There, the defendant, Griffin, was the general contractor
and the plaintiff, Berke, was a subcontractor on a project to
construct a sewage treatment plant in Newmarket, New Hampshire.
116 N.H. at 761. 	The construction project was dogged by issues,
including an underestimate of the amount of ledge to be removed,
the adequacy of each party’s performance, personality clashes,
and staffing problems, that delayed the project. 	Id. 	After
completing a substantial part of the work under the subcontract,
Berke walked off the job. 	Id. at 762. 	The parties negotiated a
letter agreement under which Berke returned to complete the
contract work under certain conditions. 	Id. 	Problems
persisted, however, and Griffin ordered Berke to stop work and
leave the project site. 	Id. 	Griffin then hired other
subcontractors to complete the project. 	Id.
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Berke sued Griffin, bringing claims for breach of contract
and quantum meruit, and Griffin brought counter claims against
Berke.3 	Id. 	The trial court found that both parties had
substantially breached the contracts and concluded that neither
party could recover under the original subcontract. 	Id. at 763.
The court then determined that Berke breached the letter
agreement and that Griffin was justified in ordering Berke to
stop work and leave, which entitled only Griffin to damages
under the letter agreement. 	Id. 	Nevertheless, applying quantum
meruit, the court awarded Berke the fair market value of the
materials and labor furnished to Griffin, with certain
adjustments, that resulted in a net balance to Berke. 	Id.
On appeal, the New Hampshire Supreme Court held that
quantum meruit provided a restitutionary remedy in that
situation, where Berke was unsuccessful on its breach of
contract claim because of its own material breach. 	Id. 	The
court concluded that Berke did not act in bad faith and was
entitled to recover under quantum meruit. 	Id. 	The court
further held “the issue of waiver is irrelevant insofar as
Berke’s recovery is not on the contract but in quantum meruit.
In the absence of some explicit understanding between the
3 Berke initially brought “a bill in equity seeking payment
under the bond issued to Griffin.” 	Berke, 116 N.H. at 762.
Berke later amended its pleadings “adding counts in assumpsit
and quantum meruit.” 	Id.
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parties that quantum meruit for extras would be barred . . .,
they were properly included in the calculation of the gross
benefit conferred.” 	Id. at 765.
Taken in context, the New Hampshire Supreme Court did not
limit a quantum meruit recovery to those circumstances where no
enforceable contract existed and the plaintiff did not seek a
remedy under the contract. 	Instead, the court affirmed an award
of damages under a quantum meruit claim, even though an
enforceable contract existed and the plaintiff had alleged a
breach of contract claim, because the plaintiff could not
enforce payment under the contract due to its own breach.
Although Kinetics’s breach in this case was its failure to
submit timely change proposals, rather than conduct that
resulted in its being dismissed from the job, the same result
pertains - Kinetics, like Berke, cannot enforce the payment
provisions under the contract. 	Therefore, under Berke, Kinetics
is still entitled to seek a remedy through a quantum meruit
claim, and the court grants its request to reinstate the quantum
meruit claim that was previously dismissed.
The court notes that Kinetics originally alleged a combined
claim for quantum meruit and unjust enrichment against IPS as
Count II. 	Doc. no. 1-2, at 8-9. 	Based on its current filings,
Kinetics seeks to reinstate only the quantum meruit portion of
that claim against IPS and, for that reason, is deemed to have
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waived any claim for unjust enrichment. 	Therefore, only the
quantum meruit claim against IPS is reinstated. 	See Collision
Commc'ns, 2023 WL 5237896, at *13 (providing elements of quantum
meruit cause of action).
B. 	Merits and Defenses
IPS also briefly argues that the court should not reinstate
the quantum meruit claim because Kinetics waived the claim and
because Kinetics cannot prove the claim on the merits. 	Kinetics
responded briefly. 	Whether Kinetics can prove the claim and
whether IPS has defenses that would preclude it cannot be
decided in this context. 	For that reason, IPS will be afforded
an opportunity to move for summary judgment with appropriate
briefing and responses, but is not required to do so.
Conclusion
For the foregoing reasons, the remaining parts of the
breach of contract claim (Count I) are Kinetics’s claims for
back charges, which total $2,227,028.98, for Change Order 009
and a back charge invoice and for reductions in amounts paid on
the Process Subcontract, as supported by Exhibits 1 and 2 to
document no. 91.
In addition, Kinetics’s quantum meruit claim against IPS
(Count II) is reinstated.
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IPS is granted an opportunity to file a motion for summary
judgment on the quantum meruit claim within fourteen days of the
date of this order. 	If a motion for summary judgment is filed,
Kinetics will have fourteen days from the date of filing to file
a response. 	IPS then may file a reply within five days, and
Kinetics may file a surreply within five days.
SO ORDERED.
______________________________
Steven J. McAuliffe
United States District Judge
April 18, 2024
cc: 	Counsel of Record
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