Cite as Livaie v. Weilbacher,11 FSM Intrm. 644 (Kos. S. Ct. Tr. 2003)

[11 FSM Intrm. 644]

CIVIL ACTION NO. 95-02

Trial: June 5, 9, 25, 2003
Decided: July 2, 2003

APPEARANCES:

[11 FSM Intrm. 645]

HEADNOTES

Contracts – Formation

A contract is a promise between two parties for the future performance of mutual obligations. For the promise to be enforceable, there must be an offer, acceptance, consideration and definite terms. Livaie v. Weilbacher, 11 FSM Intrm. 644, 647 (Kos. S. Ct. Tr. 2003).

Contracts – Formation

When the parties did not agree upon the amount, location, scope, timing or deadline to complete the land filling and were aware of the missing elements as they agreed to meet again to work out the details, but the parties did not meet again to finalize the details, one of the four elements necessary for an enforceable contract, definite terms, remained missing from the parties' understanding. Livaie v. Weilbacher, 11 FSM Intrm. 644, 647-48 (Kos. S. Ct. Tr. 2003).

Contracts; Remedies – Restitution

When the parties have failed to make an enforceable contract due to the lack of definite terms, the court may use its equity power to grant a remedy under the doctrine of restitution. Restitution is a remedy which returns the benefits already received to the party who gave those benefits. Livaie v. Weilbacher, 11 FSM Intrm. 644, 648 (Kos. S. Ct. Tr. 2003).

Remedies – Restitution

Restitution is a doctrine by which the court returns the benefits received by one party. Livaie v. Weilbacher, 11 FSM Intrm. 644, 648 (Kos. S. Ct. Tr. 2003).

Remedies – Restitution

When the plaintiff is entitled to restitution for the value of landfill hauled from his property, he will be paid at the market value per cubic yard. Livaie v. Weilbacher, 11 FSM Intrm. 644, 648 (Kos. S. Ct. Tr. 2003).

COURT'S OPINION

YOSIWO P. GEORGE, Chief Justice:

This matter was called for trial on June 5, 2003. Trial was continued on June 9, 2003. Closing arguments were heard on June 25, 2003. The parties also filed their closing arguments in writing. Canney L. Palsis represented the Plaintiff. Defendant was represented by Chang B. William. The following persons testified at trial: Hairom Livaie, Baobao Weilbacher, Ambrose A. Palsis, Lyndon Weilbacher, Palikkun I. Sigrah, Joince Nena and Lorenzo Sovilla. Following the trial and closing arguments, I took this matter under advisement. This Memorandum sets for the Court's decision and reasoning on this matter.

I. Findings of Fact.

This case involves claims of breach of contract, conversion and unjust enrichment by the Plaintiff. The Defendant has presented counterclaims of breach of contract and detrimental reliance. The claims and counterclaims all related to the Defendant's use of Plaintiff's land at Saolung, Utwe for quarry purposes, for excavation and use of fill materials in portions of the circumferential road.

The Plaintiff is the owner of parcel 026-U-04, also called Saolung, located in Utwe Municipality,

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Kosrae State. Defendant Baobao Weilbacher, also known as Paulino Weilbacher, is the owner and president of Kosrae White Sand Construction Company. Kosrae White Sand Construction Company was awarded a contract by the Kosrae State Government to construct the Kosrae Circumferential Road Segment 5 Project, from Isra, Utwe to Walung. The contract was executed in early June 2001. Pursuant to the terms of the contract, the Defendants were required to construct a dirt road, 4.23 miles in length, 30 feet wide with clearing, grubbing, drainage, hauling and placement of sub-grade fill materials and sub-base materials. The Defendants were also specifically required to lease and develop a quarry site at no cost to Kosrae State Government.

Sometime in early 2001, the Plaintiff and Weilbacher met at Plaintiff's residence in Utwe to discuss to Defendants' offer to lease Plaintiff's land for quarry purposes. Shortly thereafter, the parties again met, this time at the Weilbacher's workplace. Later during this second meeting, the parties traveled to and viewed the potential quarry site, parcel 026-U-04, at Saolung. At this second meeting, the Plaintiff agreed to allow the Defendant to use Saolung as a quarry for the road project. In exchange, Weilbacher agreed to provide landfill materials for another parcel owned by the Plaintiff at Palusrik, Utwe. At that meeting, the parties did not discuss the details or the timing of the landfill at Palusrik. The parties agreed to meet again to finalize the details of their agreement. After the meetings, the Plaintiff applied for a Development Review Permit for the quarry site. Weilbacher arranged to have hauling and construction equipment brought to Kosrae from off-island. The parties' promises were not reduced to writing.

The Development Review Permit for the Saolung quarry site was granted on July 19, 2001. By August 2001, the Defendants were ready to commence the construction of the road. Initially the Defendants improved the Saolung parcel to be used as the quarry site. This improvement consisted of leveling and filling the land so that the excavation and hauling equipment could enter and leave the quarry site. Following improvement to the quarry site, the actual quarry and hauling activities began. Shortly after beginning hauling of the Saolung quarry materials to the project site, Weilbacher was informed by the Division of Construction and Engineering that the fill materials excavated from Saolung did not meet the project scope quality requirements. The Defendant then built a screen to improve the quality of the quarry materials. The cost of the screen was $2,000. The screen was then used to separate fill materials that could be used for the road project. Approximately 25% of the excavated material, after screening, met the project scope requirements and was suitable for use in the road project.

The excavation, screening and hauling of the quarry materials to the road project site continued for several months. However, the Defendant did not complete any landfilling at Plaintiff's land Palusrik. The Plaintiff called Weilbacher to inquire about the status of the landfilling. The parties agreed to meet discuss the issues.

In December 2001, the parties had a chance unplanned meeting at the IBC bar in Lelu. They eventually discussed the quarry and landfilling issues. Plaintiff claimed that their agreement had been breached as the Defendants had failed to landfill his property at Palusrik. Plaintiff demanded that Weilbacher pay him $10,000 for the past use of the Saolung quarry, or alternatively pack up and leave the quarry site. Weilbacher disagreed with the Plaintiff's demand to pay $10,000 for past use of Saolung, but did agree to pay Plaintiff that amount if he could continue to use the quarry site for the entire 2.5 mile length of the road project. Weilbacher promised to compensate the Plaintiff for the fill materials that had been hauled from Saolung. Following the December 2001 meeting, the Defendants made no payment, but continued using the Plaintiff's land.

In March or May 2002, the Plaintiff went to the Saolung quarry site and shut it down. The Defendants removed all their equipment from the quarry site, except for the screen, which could not

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be removed because the Plaintiff had blocked the quarry access road. The Defendants' screen is still located on Plaintiff's land. After Defendants' ejection from the quarry site by the Plaintiff, Defendants' backhoe sat idle, unused for 2 days. Defendants' hauling trucks were idle for 20 days due to lack of materials to haul. At the time of Plaintiff's shutdown of the quarry site, the Defendants had utilized Saolung quarry materials for approximately 1 mile of the road project.

During the time that materials were hauled from the Saolung quarry site, from August 2001 until March or May 2002, approximately five days per month were dry "good" days when excavation, screening and hauling were completed. The Plaintiff claimed that a total of 600 loads of fill materials were hauled from the quarry. Defendant claimed that a total of only 150 loads of fill had been hauled, due to the limitations imposed by bad weather and due to the additional screening which was required to be completed in order to meet the project specification requirements. The Division of Construction & Engineering accepted the Saolung quarry materials as common fill. In the bid documents, the cost of $1.50 per cubic yard of common fill was specified. However, the market price on Kosrae during the relevant time period for common fill was $2.00 per cubic yard.

Mr. Lorenzo Sovilla was qualified as an expert witness in civil engineering. Based upon the engineering calculations of Mr. Lorenzo Sovilla, which relied upon area and slope information provided by the Plaintiff, approximately 3040 cubic yards of fill were excavated from the Saolung quarry site. Of this amount, Weilbacher testified that after screening the excavated materials, only 25% of the excavated materials, or 760 cubic yards, were usable as common fill, meeting project specifications. Only the materials meeting project specifications were removed from the quarry site and hauled to the road project site. The remaining 75% of excavated materials, which did not meet specifications after screening, remained at the Saolung quarry site.

Due to Defendants' failure to landfill his land at Palusrik, the Plaintiff made arrangements for the landfilling with Utwe Municipal Government and Kosrae State Public Works Department. Plaintiff purchased landfill materials from Vanston Wakuk. The total cost of landfill materials and equipment rental was $800.

In June 2002, Plaintiff's counsel wrote to Weilbacher to demand payment for the fill materials which had been removed from the quarry site. No payment was made and this lawsuit followed.

II. Legal Analysis.

A contract is a promise between two parties for the future performance of mutual obligations. For the promise to be enforceable, there must be an offer, acceptance, consideration and definite terms. Malem v. Kosrae, 9 FSM Intrm. 233 (Kos. S. Ct. Tr. 1999). In early 2001, the parties reached a general understanding of the promises to be completed by each party. However, the parties fulfilled only three of the four elements necessary for an enforceable contract. The Plaintiff promised to provide his land, Saolung, for use as a quarry by the Defendant in exchange for landfilling to be provided by the Defendant at Plaintiff's land at Palusrik. Consideration was present in the form of land, fill materials, hauling and landfilling services. However, the parties failed to agree upon definite terms for landfilling Plaintiff's land at Palusrik. The Plaintiff had hoped and expected that at the end of each good working day, the Defendants would deliver one load of fill materials per truck to Plaintiff's land at Palusrik. However, Plaintiff's hope and expectation remained just that. The parties did not agree upon the amount, location, scope, timing or deadline to complete the landfilling at Palusrik. Indeed the parties were aware of the missing elements, as they agreed to meet again to work out the details. However, the parties did not meet again to finalize the details of the landfilling. Therefore, one of the four elements necessary for an enforceable contract, definite terms, remained missing from the parties' understanding. Accordingly, I conclude that the parties' discussions and understanding reached in early

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2001 is not an enforceable contract.

Where the parties have failed to make an enforceable contract due to the lack of definite terms, the Court may use its equity power to grant a remedy under the doctrine of restitution. Restitution is a remedy which returns the benefits already received to the party who gave those benefits. Jim v. Alik, 4 FSM Intrm. 198 (Kos. S. Ct. Tr. 1989). Here, the parties failed make an enforceable contract due to the lack of definite terms. Therefore, this Court now applies the doctrine of restitution to return the benefits already received by the Defendant. Plaintiff provided benefits to the Defendant by providing his land Saolung for quarry purposes. The Defendant excavated fill materials from Saolung, and then used a portion of those excavated materials, after screening, to haul for placement in the road project.

The Plaintiff is entitled to restitution for the value of the fill materials which were hauled from the Saolung site for use in the road project. The Defendants are liable to the Plaintiff under the equitable doctrine of restitution for the value of the fill materials hauled from the Saolung site and utilized in the road project.

III. Damages.

Plaintiff seeks payment for the Defendant's use of the Saolung quarry site and removal of fill materials, which took place from August 2001 until mid 2002. Plaintiff seeks the amount of $10,000 or alternatively, the market value of the fill materials excavated, $2.00 per cubic yard for 3040 cubic yards for a total of $6,080. Furthermore, Plaintiff also seeks reimbursement of the $800 he spent for landfill costs for Palusrik.

Defendants agree to pay for the materials that were hauled out for use in the road project. Defendants agree to pay for 25% of the 3040 cubic yards that were excavated at Saolung. The 25%, or 760 cubic yards, represents the actual amount of fill materials that met specifications after screening and that were hauled to the road project site. Alternatively, Defendants urge that the $10,000 price was applicable only if the Saolung quarry materials were utilized for the entire 2.5 mile segment of the road project. Since the quarry materials were only utilized for 1 mile, or 40% of the road project, Defendants argue that they should only be held responsible for a portion of the Plaintiff's demand.

Restitution is a doctrine by which the Court returns the benefits received by one party. Here, the Plaintiff is entitled to the value of the fill materials hauled from the Saolung site and utilized in the road project. The amount of fill material excavated from the Saolung site was calculated to be 3040 cubic yards by Mr. Lorenzo Sovilla. This is the best reasonable estimate of the volume of excavated fill material that was presented to this Court. After screening, 25% of the excavated materials met the project specifications as common fill for use in the road project. Therefore, a total of 760 cubic yards of common fill was hauled from Saolung and utilized at the road project site. The market value of the common fill was established at $2.00 per cubic yard. Therefore, the Defendant utilized fill materials valued at $1,520 from Saolung for use in the road project. Plaintiff is entitled to restitution from the Defendant in the amount of $1,520.

IV. Conclusion.

Plaintiff is entitled to restitution from the Defendants for the value of the fill materials taken from Saolung quarry for use in the road project. The market value of the fill materials is $1,520. The parties' breach of contract claims are rejected, as discussed above. The remaining claims and counterclaims are also rejected as without merit. A judgment shall be entered concurrently with the Memorandum.