HomeStar Property Solutions, LLC v. Safeguard Properties, LLC

Background

HomeStar Property Solutions, LLC worked as an independent contractor for Safeguard Properties, LLC for approximately two years, providing property-preservation services while properties were in foreclosure. HomeStar claimed that Safeguard failed to pay, or underpaid, it for many services, causing financial losses and eventually contributing to HomeStar’s closure. Safeguard denied that account and asserted a separate counterclaim concerning mechanics’ liens.

HomeStar identified 578 allegedly unpaid or underpaid work orders totaling $1,752,435.40 in direct damages. Safeguard’s analysis concluded that it owed HomeStar $129,123.86 for 89 work orders and that the other work orders had been paid, reduced through chargebacks or pricing adjustments, duplicated, or otherwise properly left unpaid. HomeStar conceded some categories but disputed Safeguard’s treatment of many other work orders.

Safeguard moved for summary judgment on HomeStar’s breach-of-contract, unjust-enrichment, promissory-estoppel, and account-stated claims. Summary judgment is a decision without a trial when no material facts are genuinely disputed and the moving party is entitled to judgment under the law.

Breach of contract

The court found genuine disputes of material fact concerning HomeStar’s performance and whether Safeguard breached the parties’ written contracts as to dozens of work orders. The disputes included whether HomeStar provided required photographs, whether work was completed on time, whether pricing reductions were justified, whether work was authorized or performed, whether chargebacks were proper, and whether certain invoices were duplicates. The court stated that deciding the witnesses’ credibility and weighing this evidence were matters for a jury.

The court rejected, however, HomeStar’s separate theory that Safeguard’s alleged slow payments caused lost profits, consequential damages, and business-reputation losses. HomeStar presented no evidence establishing the alleged slow payments and did not identify a contractual payment deadline or similar obligation that Safeguard breached. The court therefore limited HomeStar’s potential recovery beyond the amounts listed on its accounts-receivable spreadsheet: HomeStar would need to prove specific contract breaches, direct and reasonably foreseeable additional losses, and damages calculable with reasonable certainty.

Except for that limitation, the court denied Safeguard’s motion for summary judgment on HomeStar’s breach-of-contract claim.

Promissory estoppel

The court granted summary judgment to Safeguard on HomeStar’s promissory-estoppel claim. HomeStar argued that Safeguard separately promised to pay approximately $1.7 million for the disputed work orders. The court held that the claim was inseparable from HomeStar’s contract claim because the alleged promise concerned the same unpaid or underpaid work orders governed by written contracts. Under the court’s analysis, promissory estoppel could not be used as an alternative way to recover when the parties agreed that written contracts covered the subject matter.

Unjust enrichment

The court granted Safeguard summary judgment on HomeStar’s unjust-enrichment claim. Unjust enrichment is an equitable theory allowing recovery of a benefit retained without legal justification. The court held that the written contracts governed the relevant subject matter and that HomeStar identified no facts distinguishing this claim from its contract claim or showing that its legal remedy was inadequate.

Account stated

The court granted Safeguard summary judgment on HomeStar’s account-stated claim. An account stated is an agreement between a debtor and creditor that a particular balance is accurate and payable. The court held that the undisputed existence of written contracts governing the account barred this alternative theory as a matter of law. It also noted that HomeStar offered no particularized evidence supporting the claim.

Disposition

The court ordered that Safeguard’s motion for summary judgment on HomeStar’s claims was GRANTED IN PART AND DENIED IN PART. The court dismissed HomeStar’s promissory-estoppel, unjust-enrichment, and account-stated claims with prejudice. HomeStar’s breach-of-contract claim, subject to the court’s limitation on damages tied to alleged slow payments, remained for trial. The opinion also noted that the court had previously granted in part Safeguard’s motion concerning its counterclaim and had granted Bank of America’s separate summary-judgment motion; those rulings were made in an earlier order, not in the ruling summarized here.