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M.G. Dyess, Inc. v. MarkWest Liberty Midstream & Resources, L.L.C.

2022 COA 108. No. 20CA1742. Right to Jury Trial—Trial by Jury or the Court—Advisory Jury—Contracts—Quantum Meruit.

September 15, 2022

MarkWest Liberty Midstream & Resources, L.L.C. (MarkWest) processes and transports natural gas. It entered into three contracts with M.G. Dyess (Dyess) to install thousands of feet of pipeline. Each contract applied to a “spread”a particular length of pipelineand each spread was assigned a lump sum payment amount and a mechanical completion date after which liquidated damages would accrue if the spread remained incomplete. Dyess sued MarkWest for breach of contract, negligent misrepresentation, fraudulent nondisclosure, fraud, promissory estoppel, and quantum meruit. MarkWest counterclaimed for liquidated damages under the contract and a declaratory judgment. The jury rejected all of Dyess’s claims except quantum meruit, for which it awarded $26,039,641 in damages. It also awarded MarkWest $4.5 million in liquidated damages based on its breach of contract counterclaim. MarkWest made an oral motion to treat the jury’s quantum meruit verdict as advisory and asked the trial court to decide the issue. The court ordered additional briefing, and in response, MarkWest filed a CRCP 52 motion asking the court to make findings of fact and conclusions of law regarding the quantum meruit claim. The court accepted the jury’s “advisory verdict” insofar as the jury found that MarkWest was liable under a quantum meruit theory, but it concluded that the evidence did not support the amount awarded and accordingly reduced the damages to $934,436. The court then entered judgment on the jury verdict as modified by its CRCP 52 order. Dyess subsequently filed a motion for judgment notwithstanding the verdict (JNOV) on MarkWest’s breach of contract counterclaim, asserting that it had achieved mechanical completion before the final mechanical completion dates, which it claimed MarkWest had extended. The court did not rule on the motion, and it was therefore deemed denied. Both parties later filed CRCP 59(c)(4) motions to amend the judgment to include pre- and post-judgment interest. These motions were also deemed denied.

On appeal, Dyess argued that the trial court erred when it reduced the amount of damages awarded on its quantum meruit claim. A plaintiff may bring a quantum meruit claim when substantial changes occurred that the parties did not contemplate and the contract does not cover, and that resulted in extra work or caused substantial loss to one party. Where the claimant has requested monetary damages, the quantum meruit claim is legal, and the claimant is entitled to a jury trial under CRCP 38(a). Here, Dyess asked for simple money damages via a quantum meruit claim. Under Colorado precedent and persuasive precedent from other jurisdictions, Dyess’s claim was legal, not equitable. Therefore, the trial court erred by deeming the claim equitable and treating the jury’s verdict as advisory. While a new jury trial is not required because the jury rendered a verdict in Dyess’s favor on its quantum meruit claim, a trial court may not unilaterally reduce the amount of damages awarded in a binding jury verdict under Rule 52. The court erred by reducing the damages, and the error was not harmless because Dyess was deprived of the right to have a judgment in the amount of $26,039,641 entered in its favor.

Dyess also argued that the trial court erred by denying its motion for JNOV on MarkWest’s counterclaim for breach of contract because there was no reasonable basis for the jury to conclude that Dyess did not achieve mechanical completion on all three spreads by the final mechanical completion dates. Here, it was reasonable for the jury to infer that (1) MarkWest never extended the mechanical completion dates for some spreads, (2) Dyess did not achieve mechanical completion of any spread by the agreed-upon mechanical completion dates, and (3) MarkWest did not waive liquidated damages. Given the conflicting evidence, a reasonable person could have reached the same conclusion as the jury, so the trial court did not err.

Both parties asserted that the trial court erred by denying them pre- and post-judgment interest. The parties disagree about when prejudgment interest began accruing on MarkWest’s liquidated damages claim, but not about the date when prejudgment interest began accruing on Dyess’s quantum meruit claim. Based on the plain language of the applicable statutes, all monetary amounts awarded in this case are subject to statutory pre- and post-judgment interest.

The judgment was reversed insofar as the trial court reduced the amount of damages awarded to Dyess on its quantum meruit claim and failed to award pre- and post-judgment interest. The judgment was affirmed insofar as the trial court accepted the jury’s liability verdict on the quantum meruit claim and denied Dyess’s motion for JNOV as to MarkWest’s counterclaim. The case was remanded for further proceedings.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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