BY THE COURT
form a binding contract, there must be a meeting of the minds
on all essential elements. Contract formation requires an
unconditional and positive acceptance. A conditional
acceptance is really a counteroffer and no contract is
acceptance of a contract must mirror the terms of the offer.
A conditional acceptance is a counteroffer that rejects the
one party has knowledge of a term required by another party
and continues to do business with that party without
objection, the facts may establish that the party impliedly
agreed to the term.
Under the Kansas Fairness in Public Construction Contract
Act, found at K.S.A. 16-1901 et seq., the term
"contract" means a contract or agreement concerning
construction made and entered into by and between an owner
and a contractor, a contractor and a subcontractor, or a
subcontractor and another subcontractor.
implied-in-fact contract has the same legal effect as an
express contract. Parties may be bound as firmly by implied
contracts as by those expressed in words, oral or written.
The law implies, from circumstances and the silent language
of the parties' conduct and actions, contracts and
promises as forcible and binding as those made by express
words or through the medium of written memorials.
Prejudgment interest can be awarded to both express and
Kansas Fairness in Public Construction Contract Act requires
a contractor pay its subcontractors on any properly completed
and undisputed request for payment within 7 business days of
receipt of payment by the owner. K.S.A. 16-1903(f). If the
contractor fails to pay its subcontractors within such
timeframe, the contractor shall pay 18 percent interest on
the undisputed amount. K.S.A. 16-1903(g).
a court resolves a case based on quantum meruit, it finds
that no contract existed. In such a case, the law creates a
contract to prevent unjust enrichment. In contrast, an
implied-in-fact contract has the same legal effect as an
is fundamental that equitable remedies are generally not
available if there is an adequate remedy at law.
from Johnson District Court; Gerald T. Elliott, judge.
Michael L. Entz, of Entz & Entz, P.A., of Topeka, for
Jeffrey M. Hensley and Theodore C. Beckett III, of Beckett
& Hensley, L.C., of Kansas City, Missouri, for appellee.
Malone, C.J., Hill and Atcheson, JJ.
an appeal by Murray & Sons Construction Company of the
trial court's holding that it had breached an
implied-in-fact contract with Lindsey Masonry Company by not
paying for all of the services performed. Along with the
contract payments, the trial court awarded interest, costs,
and attorney fees as authorized by the Kansas Fairness in
Public Construction Contracts Act. Our review of the
extensive record leads us to conclude that we must affirm the
judgments of the trial court.
no signed contracts, a general contractor and a masonry
company work together on several public school projects.
Blue Valley School District decided to build four buildings:
the Blue Valley Elementary School #22, the New Highlands
Elementary School, Blue Valley Southwest High School Sports
Field Buildout, and Blue Valley Middle School #10. Over a
span of several months, the school district sought and
received separate bids on each project. Murray & Sons bid
on the projects as the general contractor and asked Lindsey
Masonry to submit bids on the projects for the masonry work
Valley picked Murray as the general contractor on each of
these projects and Lindsey became Murray's masonry
subcontractor for all four buildings. A pattern of business
then developed between the two companies as the work
progressed. For each building project, Lindsey submitted to
Murray a written proposal that included the names of the
parties, the identification of the project, the price, the
scope of work, exclusions from the scope of work, and the
identification of the plans, specifications, and drawings
that applied to each.
Lindsey's proposals indicated that the parties would
later sign an AIA Document A-401 Standard Form Agreement
between Contractor and Sub-Contractor. (This form is supplied
by The American Institute of Architects.) The proposals also
contained language regarding the timing of payments and
listed the percentage of retainage to be withheld.
that, Murray would include the price from each of
Lindsey's proposals in its bids to Blue Valley.
Murray was awarded the contract on each project, it asked
Lindsey to be the masonry subcontractor. Lindsey then sent
Murray a schedule of values for each project. The schedule of
values, essentially, is a price list that sets out each
masonry task to be performed. Lindsey used the schedule of
values when it prepared its pay applications to Murray and,
in turn, Murray used the same schedule of values when it
prepared its pay applications to Blue Valley.
each successful bid on each project, Lindsey signed and sent
an AIA form subcontract to Murray to sign. In return, Murray
sent a signed AGC subcontract form to Lindsey for its
signature. (This is a contract form supplied by the
Associated General Contractors of Kansas, Inc.) Neither party
signed the form contracts sent by the other company. As far
as we can tell from this record, no written agreements were
ever signed by both parties, except for some specific change
orders signed in the midst of construction.
Murray authorized Lindsey to begin work on each project and
Lindsey did so. Lindsey periodically submitted pay
applications to Murray and received periodic payments from
Murray. As the buildings progressed, Murray submitted pay
applications to the owner and received payments from Blue
Valley. After payment, Lindsey would return partial lien
waivers that reflected the amount of the payment.
the working relationship between Murray and Lindsey
deteriorated, and Lindsey walked off the Blue Valley #10 job
before completing the masonry work. Later, Lindsey filed a
lawsuit seeking money from Murray. In its lawsuit, Lindsey
claimed damages for money due on each of the projects,
asserting alternative theories of recovery based on breach of
contract, promissory estoppel, and quantum meruit. Murray
denied liability and asserted counterclaims against Lindsey
on each project.
parties submitted the case to the judge.
trial, both Lindsey and Murray agreed about the identity of
the parties, the scope of work, and the original price, as
modified by the fully executed change orders for each
project. They did not agree on anything else.
end, the trial court found that the evidence failed to
establish an express contract between the two companies.
Instead, the court concluded that there was an
implied-in-fact contract on each project for Lindsey to
perform the masonry work described in the scope of work in
exchange for the compensation set out in Lindsey's
proposal and schedule of values. The implied-in-fact contract
contained no specific time for payment. The court made
specific findings about each project. We list a brief summary
Blue Valley #22 project, the district court found that the
parties agreed to a revised total compensation of $1, 036,
848 for the masonry work. Lindsey completed all of its work
on the project, but received only $1, 020, 568 from Murray.
The court found Murray in breach of contract for its failure
to pay Lindsey the remaining balance of $15, 916 and granted
judgment in that amount.
court denied Murray's counterclaim for $5, 511 for the
cost to repair a damaged portion of a roof. The court found
that the parties' conduct established an agreement that
any changes in the work would be made by written change
orders signed by both parties. Since Murray had submitted a
change order for the roof repair and Lindsey had not signed
it, Lindsey was not liable under the counterclaim. The
district court awarded Lindsey interest, costs, and attorney
fees under the Kansas Fairness in Public Construction
Contract Act found at K.S.A. 16-1901 et seq. (not to
be confused with the Kansas Fairness in Private Construction
Contract Act found at K.S.A. 16-1801 et seq.)
New Highlands project, the district court found that the
parties agreed to a revised total compensation of $1, 014,
358. Lindsey completed its work, but $83, 794 remained
unpaid. The district court found Murray in breach of contract
for failure to pay that amount.
district court found Lindsey in breach of contract for not
installing some steel rebar in the storm shelter walls on
that project. Murray was entitled to recover $55, 250 from
Lindsey to remediate the rebar omission. In addition, Murray
was entitled to recover $5, 957 in damages to remediate some
subsequent damage to the water proofing and a protection
court set off Murray's damages against Lindsey's
damages, resulting in a net judgment of $22, 587 awarded to
Lindsey. In addition, the court awarded Lindsey interest,
costs, and attorney fees under the Act.
Sports Field Buildout project, the district court found that
the parties agreed to a price of $123, 590. The court found
that $12, 565 remained due to Lindsey and awarded judgment in
that amount plus interest, costs, and attorney fees under the
Act. The court denied Murray's counterclaim for $4, 166
in damages for weather-related time extensions.
this project was in progress, the parties' relationship
ruptured. On the Blue Valley #10 project, the district court
found that the parties agreed to a revised price of $1, 727,
922. On October 27, 2010, Lindsey stopped work on the project
and walked off the job when the masonry work was 65 percent
court found that Lindsey stopped work because Murray
repeatedly stated to Lindsey that it was not going to pay
Lindsey. The court also found that Murray's act of
shutting off the water and removing the water meter meant
that Lindsey could no longer mix mortar to do the masonry
project, Murray did not pay Lindsey on its pay applications
for work done in August, September, and October 2010. Those
applications total $490, 188.72. The court found that Lindsey
was not responsible for damages that Murray incurred when
Lindsey walked off the job because the expenses were actually
due to Murray's breach. Murray was, however, entitled to
$55, 998 for indemnification of expenses incurred when the
project was shut down temporarily due to an accident
involving a Lindsey employee. The district court set off the
$55, 998 against the $490, 118.72 for a net judgment of $424,
190.72 awarded to Lindsey. The district court also awarded
Lindsey interest, costs, and attorney fees under the Act.
raises five issues in this appeal. The general contractor
by beginning work, Lindsey accepted Murray's AGC form
contract. It refers to this as acceptance by performance.
the court erred by refusing evidence that the two companies
agreed to many things on the Blue Valley #10 project.
the Kansas Fairness in Public Construction Contracts Act is
inapplicable to implied-in-fact contracts.
the court erred by not considering alternative equitable
theories of recovery.
the court's findings are not supported by substantial
competent evidence and should be set aside.
address the issues in that order.
Lindsey bound by the AGC contract instead of an
implied-in-fact contract as the court found?
district court found that the evidence simply failed to
establish an express contract consisting of either the terms
of Lindsey's AIA form or Murray's AGC form on any of
the four projects because there was no evidence that the
parties expressed their mutual assent orally or in writing to
the terms by which Lindsey would work. The district court
found that the sequence on one or more of the projects of
Murray sending its proposed AGC contract to Lindsey, Murray
telling Lindsey to begin work, and then Lindsey beginning
work, did not establish mutual assent to the terms of the AGC
contract. Murray argues the court's interpretation of the
facts is wrong.
contends that the district court failed to properly apply
Kansas contract law and asks us to remand the case. In
Murray's view, an express contract was formed because
Lindsey accepted the terms of Murray's AGC contract by
commencing performance and submitting required
preconstruction documents such as a schedule of values and
proof of insurance in compliance with the terms of the AGC
review of some fundamental points of contract law is helpful
at this stage. Whether a contract has been formed depends on
the intent of the parties and is a question of fact.
U.S.D. No. 446 v. Sandoval, 295 Kan. 278, 282, 286
P.3d 542 (2012). To form a binding contract, there must be a
meeting of the minds on all essential elements. Contract
formation requires an unconditional and positive acceptance.
A conditional acceptance is really a counteroffer and no
contract is formed. Sandoval, 295 Kan. at 282.
acknowledge that parties may be bound by the terms of a
contract, "even though they do not sign it, where their
assent is otherwise indicated, such as by accepting and
acting upon the contract, or by ratifying the contract, or by
the acceptance by one of the performance by the other."
17A Am. Jur. 2d, Contracts § 172, p. 184.
relies primarily on the holding in Gunnison v.
Evans, 136 Kan. 791, 794, 18 P.2d 191 (1933), to support
its position. The Gunnison court held that an offer
of a unilateral contract, in which the offeror makes a
promise, may be accepted by compliance with the request in
the offer. The ruling relies upon Restatement (First) of
Contracts § 56, comment a. We note that the Restatement
also provides: "An offer can be accepted by the
rendering of a performance only if the offer invites such an
acceptance." Restatement (Second) of Contracts § 53
(1981; online 2016).
facts in Gunnison reveal a much simpler set of
expectations of the parties than what is present in this
case. Lee Gunnison promised, in a writing dated October 9,
1928, that Fred Evans and family could occupy Gunnison's
home as long as they wished. Gunnison reserved a room for his
own use and he would have board and meals for no charge.
Evans was to pay the gas, light, and water. In September
1929, Gunnison notified Evans to leave within 30 days. The
district court found that the Evans family had, from the time
they moved in,
"'furnished [Gunnison] with free board and meals,
free lodging, free gas, light and water at all times that the
same were desired, requested or accepted by the plaintiff,
and the defendants stand ready, able and willing at the
present time to accord the plaintiff all of the privileges
reserved by him in said writing . . .'" 136 Kan. at
Supreme Court held that the writing contained an offer in the
form of a promise by Gunnison that the Evans family could use
and occupy his home as long as they desired, on stated terms.
The writing did not ask for a return promise by Evans such as
"[w]e promise to allow you to use your own room, promise
to furnish you meals without charge, and promise to pay gas,
light and water bills." 136 Kan. at 794. Rather, the
writing/offer called for forbearance with respect to the room
and performance of specified tasks. The court held that the
Evans family accepted the offer by "actual performance
of the conditions embodied in" the offer. 136 Kan. at
Gunnison sets out the basic rule that acceptance may
be accomplished by performance, it is distinguishable from
this case for two reasons. First, the AGC subcontract was not
offered as a unilateral contract. Murray's transmittal
letter specifically requested a return promise-that Lindsey
sign and return a copy of the contract. Lindsey did not
comply with the request of the offer. Second, Lindsey did not
perform the terms of the AGC subcontract and was not ready
and willing to.
is a difference between the few discrete acts that Gunnison
asked Evans to perform-allow Gunnison to use his room,
furnish meals, pay the gas, light, and water bills-and the
lengthy AGC subcontract. There is simply not sufficient
evidence in the record to establish an acceptance by
performance as stated in Gunnison.
along this line, Murray contends that Lindsey's submittal
of the required preconstruction documents, such as a schedule
of values and proof of insurance, is sufficient evidence of
acceptance by performance. But there was no evidence that
Lindsey was assenting to the AGC subcontract when it
submitted those documents.
Lindsey testified that he submitted his insurance certificate
and W-9 after the owner awarded Murray the general contract.
Jon Lindsey also testified that he prepared a schedule of
values upon a request by Gene Murray. Gene would call and
tell him how to break it down. The several schedules of
values that Lindsey submitted were all on AIA forms.
cannot ignore the fact that the evidence shows that Lindsey
sent a signed AIA subcontract to Murray after or on the same
date that Murray sent the AGC subcontract. This action
indicates that Lindsey rejected the AGC subcontract and
submitted a counteroffer. The testimony was unclear about
when the subcontracts were exchanged. The evidence on each