Webster Design Assocs. v. Nebraska City Tourism ( 2019 )

IN THE NEBRASKA COURT OF APPEALS
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
(Memorandum Web Opinion)
WEBSTER DESIGN ASSOCS. V. NEBRASKA CITY TOURISM
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION
AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).
WEBSTER DESIGN ASSOCIATES, INC., A NEBRASKA CORPORATION, APPELLANT,
V.
NEBRASKA CITY TOURISM & COMMERCE, INC., A NEBRASKA
NONPROFIT CORPORATION, APPELLEE.
Filed August 27, 2019. No. A-18-984.
Appeal from the District Court for Douglas County: SHELLY R. STRATMAN, Judge.
Affirmed.
Alexis S. Mullaney, of Carlson & Burnett, L.L.P., for appellant.
Ryan K. McIntosh, of Brandt, Horan, Hallstrom & Stilmock, for appellee.
RIEDMANN, ARTERBURN, and WELCH, Judges.
RIEDMANN, Judge.
INTRODUCTION
After Webster Design Associates, Inc. (Webster Design), presented evidence in a bench
trial, Nebraska City Tourism & Commerce, Inc. (NCTC), moved to dismiss the amended
complaint filed against it. The district court for Douglas County granted the motion, finding that
Webster Design failed to prove that the parties entered into an oral contract or that it was entitled
to damages on its quantum meruit claim. We affirm.
BACKGROUND
Webster Design is a Nebraska corporation that provides marketing and advertising
services. NCTC is a Nebraska nonprofit corporation comprised of Nebraska City business owners.
Webster Design’s amended complaint alleges that the parties entered into an oral contract for
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Webster Design to provide a comprehensive branding campaign for NCTC but that NCTC failed
to pay in full. The amended complaint also asserts a cause of action for unjust enrichment.
According to the evidence presented at the bench trial, a Webster Design employee, who
is now deceased, traveled to Nebraska City in July 2013 and discovered the city was in the process
of “doing a rebrand.” Thereafter, he began to communicate with the executive director of NCTC
at the time, Tim Pendrell, about Webster Design providing marketing and advertising services.
Webster Design representatives traveled to Nebraska City on various occasions and met with
members from the NCTC, the Nebraska City Area Economic Development Corp., Otoe County
Visitors Committee, and the city of Nebraska City. During one of those presentations in December
2013, Webster Design’s presentation included detailed ideas for brand development, print
collateral, advertising, and event support. The record is unclear what involvement, if any, entities
other than NCTC subsequently had with Webster Design; however, it is clear that Webster Design
continued to communicate with Pendrell and provide advertising services promoting Nebraska
City.
In March 2014, Dave Webster, owner of Webster Design, sent an email to Pendrell
attaching a proposal for Pendrell’s review. The proposal outlined the information that had been
presented in December 2013 and included estimated costs. Webster’s email to Pendrell indicated
that Webster Design had reviewed its progress relative to its investment of approximately $72,000
in time and tried to estimate what still needed to be done to reach the numbers it was presenting.
The proposal showed a total cost for creative services of $150,000 to which Webster Design
applied a 30 percent discount for a total proposed cost of $105,000. It also included a proposed
schedule of fees with an initial payment of $45,000 and 12 monthly payments of $5,000 “due upon
acceptance of proposal.” Webster asked Pendrell to “take a look and let [him] know [Pendrell’s]
thoughts.”
In Pendrell’s response, he asked when the initial payment would be due and indicated that
he would have to do some financial planning to figure out how to pay for the work. Webster replied
that he had sent the proposal to “open a dialogue” and that he was open to restructuring the fee
schedule. At trial, Webster explained that the purpose of the proposal was to provide a breakdown
of the various components of an entire campaign, including prices, and that it was not his
expectation that the March 2014 email was memorializing previously agreed-upon prices; rather,
it was an attempt to open a dialogue.
Emails included in the record establish that throughout late 2013 and 2014, the parties
continuously communicated regarding the advertising and marketing work Webster Design was
completing for NCTC with Pendrell making numerous requests. Thus, in April 2014, Webster
Design opened a separate billing account for work it did for NCTC that it considered to be outside
the scope of the original project. However, Nathan Perry, Webster Design’s creative director,
admitted at trial that some of the work which was billed separately actually was within the scope
of the original project. In addition, he acknowledged that some of the work he did for NCTC was
unsolicited. Perry said that he spent 2 days updating member profiles on the new website. He
testified that Pendrell had not asked him to do so, but it was “value-added” and that he did so to
go “above and beyond” to help NCTC. Perry also took photos of various businesses in Nebraska
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City for the updated website, which Pendrell had not requested, and did so to make the website
even better.
Much of the work Webster Design did was completed prior to the December 2013
presentation at which various entities had been present. According to David Day, Webster
Design’s expert witness, doing creative work for a potential client for purposes of soliciting its
business is called speculative work. He explained that doing speculative work is common in his
industry but he does not do it because it is unethical, in his opinion.
Webster testified at trial that he believed Webster Design and NCTC had a contract as of
November 2013. He was asked what the terms of the agreement were, and he stated, “Well, we
were asked to do work and we did it. It was quite that simple.” He was asked if the parties had
discussed costs at that point, and he said he “couldn’t tell you that” and that there was no discussion
or agreement of costs in writing.
Lisa Healy is an account director for Webster Design and was the account manager of the
NCTC project. She opined at trial that a contract between the parties was formed the week after
Webster Design sent the proposal to NCTC in March 2014. She did not believe that a contract
existed before that time or that there was a contract in the fall of 2013.
At trial, Healy was shown a document received into evidence which includes the heading
“Campaign Budget as of 4/8/2014.” Healy described the document as a spreadsheet Pendrell
brought to a meeting with her to show the amount NCTC had budgeted to pay Webster Design for
its work. The amount shown under cash outflow for “advertising creative” on the spreadsheet
shows a total of $104,995, and the total ending cash balance depicted shows a deficit of $81,845.
Tammi Thompson was the secretary and treasurer of NCTC in 2013 and its vice president
in 2014. She explained that NCTC’s board of directors did not approve Webster Design’s initial
proposal, but she agreed that NCTC hired Webster Design to create a new website and logos.
Contrary to Healy’s explanation, Thompson testified that the spreadsheet was a document Pendrell
provided to NCTC’s board of directors to show that if NCTC was to proceed with Webster
Design’s full proposal, it would “end up $81,845 in the hole.”
Webster Design sent an invoice to NCTC in April 2014 for $35,000 and a second invoice
in June 2014 for $11,285. NCTC paid both invoices for a total payment, including taxes, of
$49,524.95. Webster Design billed NCTC an additional $62,819.70, which NCTC never paid.
Thus, Webster Design commenced this action.
After Webster Design presented its evidence and rested at trial, NCTC moved to dismiss
the amended complaint. NCTC argued that Webster Design had failed to meet its burden of
proving that the parties entered into an enforceable contract. The district court recognized the
ongoing relationship between the parties but found that the evidence of when a contract was
formed and the terms of any contract was unclear and/or contradictory. The court determined that
there was an agreement between the parties for Webster Design to recreate NCTC’s website, but
the evidence was unclear as to the terms, cost, scope, or any specifics of an agreement beyond that.
Similarly, with respect to the quantum meruit claim, the court found that the evidence was unclear
as to exactly what work was delivered and what that work meant in the scope of what it cost,
particularly when so much of the work was done prior to the initial presentation. As a result, the
district court granted NCTC’s motion to dismiss. Webster Design appeals.
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ASSIGNMENTS OF ERROR
Webster Design assigns that the district court erred in (1) finding that the terms of the
agreement were insufficient to form an oral contract, (2) finding that its contract with NCTC
extended only to the creation of a website, and (3) denying its quantum meruit claim.
STANDARD OF REVIEW
A motion to dismiss in a nonjury trial is equivalent to a motion for directed verdict in a
jury trial. R.J. Miller, Inc. v. Harrington, 260 Neb. 471, 618 N.W.2d 460 (2000). When considering
a motion to dismiss in a nonjury trial, a court must resolve every controverted fact in the
nonmoving party’s favor and give that party the benefit of every reasonable inference to be drawn
therefrom. Id. When a trial court sustains a motion to dismiss, it resolves the controversy as a
matter of law and may do so only when the facts are such that reasonable minds can draw only one
conclusion. Id.
When reviewing questions of law, an appellate court resolves the questions independently
of the lower court’s conclusions. Cullinane v. Beverly Enters. - Neb., 300 Neb. 210, 912 N.W.2d
774 (2018).
ANALYSIS
Oral Contract.
In its first two assignments of error, Webster Design asserts that the district court erred in
finding that the evidence presented at trial was insufficient to prove the formation of a contract
between Webster Design and NCTC beyond an agreement regarding NCTC’s website. Webster
Design argues that the parties had a sufficient understanding of the scope of the advertising
campaign, the products required, and the method of payment based on their oral arrangements in
the fall of 2013 to create an enforceable contract whereby Webster Design would create brand
standards, advertising services, print media, and other products at an hourly rate to fit within a
budget of $105,000. We disagree.
To create a contract, there must be both an offer and an acceptance; there must also be a
meeting of the minds or a binding mutual understanding between the parties to the contract. Stitch
Ranch v. Double B.J. Farms, 21 Neb. Ct. App. 328, 837 N.W.2d 870 (2013). A fundamental and
indispensable basis of any enforceable agreement is that there be a meeting of the minds of the
parties as to the essential terms and conditions of the proposed contract. Id. A binding mutual
understanding or meeting of the minds sufficient to establish a contract requires no precise
formality or express utterance from the parties about the details of the proposed agreement; it may
be implied from the parties’ conduct and the surrounding circumstances. Id.
In limited circumstances, the parties’ failure to specify an essential term does not prevent
the formation of a contract. Id. The Restatement (Second) of Contracts provides that the actions of
the parties may show conclusively that they have intended to conclude a binding agreement, even
though one or more terms are missing or are left to be agreed upon. Stitch Ranch v. Double B.J.
Farms, supra. Sometimes, a court can also ascertain the meaning of a party’s promise by referring
to the parties’ course of dealing with each other, or a general reasonableness standard. Id. The
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circumstances must still show that the parties manifested an intent to be bound by a contract. Their
manifestations are usually too indefinite to form a contract if the essential terms are left open or
are so indefinite that a court could not determine whether a breach had occurred or provide a
remedy. Id.
It is a fundamental rule that in order to be binding, an agreement must be definite and
certain as to the terms and requirements. It must identify the subject matter and spell out the
essential commitments and agreements with respect thereto. Id.
A party seeking to enforce a contract has the burden of establishing the existence of a valid,
legally enforceable contract. MBH, Inc. v. John Otte Oil & Propane, 15 Neb. Ct. App. 341, 727
N.W.2d 238 (2007). Thus, in the present case, Webster Design had the burden to prove that the
parties formed a contract.
There is no doubt that the parties had an ongoing, working relationship, and, as the parties
concede and the district court found, NCTC agreed to pay Webster Design to create a new website.
However, with respect to the formation of a valid, legally enforceable contract, such that NCTC is
responsible for payment beyond the approximately $49,000 it already paid, the evidence is unclear
as to when an offer was made, when any offer was accepted, and the essential terms of any contract.
The initial presentations, at least through the end of 2013, involved not only NCTC, but
also the Nebraska City Area Economic Development Corp., Otoe County Visitors Committee, and
the city of Nebraska City. When Webster Design presented its ideas to NCTC’s board of directors
in December 2013, it appears that the other entities were also present. And as stated previously,
Webster Design had completed a large amount of work by that point, without having been
requested by anyone to do so. Webster Design did not submit a proposal including its ideas and
associated costs to NCTC until March 2014. Webster testified at trial that it was not his expectation
that the proposal was memorializing agreed-upon prices that had already been discussed, but
rather, that the proposal was sent to “open a dialogue.” Consistent with this belief, the proposal
itself includes a proposed schedule of fees, which provides for an initial payment of $45,000 and
12 monthly payments of $5,000 “due upon acceptance of proposal.”
However, Webster also opined at trial that the parties entered into an enforceable contract
as of November 2013. When asked to detail the terms of that agreement, Webster responded that
Webster Design was “asked to do work and we did it. It was quite that simple.” He was asked if
costs had been discussed at that point, and he said that he “couldn’t tell you that” and that there
was no discussion or agreement of costs in writing. Emails exchanged among Webster Design
employees, including Webster, Healy, and Perry, in November and December 2013 reveal that at
that point, even they were uncertain as to the budget for the NCTC project. And, as stated above,
Webster Design’s presentations were made to not only NCTC, but also to other entities associated
with Nebraska City.
In contrast to Webster’s testimony, Healy opined at trial that a contract between the parties
was formed the week after Webster Design sent the proposal in March 2014. She did not believe
that a contract existed before that time or that there was a contract in the fall of 2013.
Thompson testified that NCTC’s board of directors did not accept or approve the initial
proposal, which was presented in December 2013 and sent to NCTC in March 2014. She
additionally explained that prior to the time the board of directors received the proposal, costs had
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not been discussed. She explained that the budget spreadsheet was “something that [Pendrell] had
put together” and provided to NCTC’s board of directors to show that if NCTC were to proceed
with the full proposal from Webster Design, NCTC would “end up $81,845 in the hole.”
Furthermore, the evidence presented at trial was unclear as to exactly what work NCTC
agreed to have Webster Design complete and how the work was to be billed. According to
Thompson, NCTC accepted only a small portion of Webster Design’s full proposal, which
included redoing the website and creating new logos. It is undisputed, however, that the work
Webster Design completed for NCTC went beyond a website and logos. Webster and Perry
acknowledged that going into the December 2013 presentation, much of the work for which NCTC
would be billed had already been done. Yet, according to Day, doing such speculative work is
considered unethical. The exact extent of the work that was completed at that point is unclear, but
based on the contents of presentation, Webster Design had already completed a significant amount
of work. Moreover, Perry acknowledged that some of the work he did, such as updating member
profiles on the new website and taking photos of various Nebraska City businesses, was not
requested by NCTC, but rather, he did it to go “above and beyond” in order to help NCTC.
Additionally, the manner in which NCTC would be billed for Webster Design’s work was
not clear. The March 2014 proposal includes several different categories of work and the total
costs for each, but there was no indication of whether the work would be billed hourly or as a flat
fee and any corresponding amount other than a total amount for each category. Webster Design
argues on appeal that the parties agreed that Webster Design would work at an hourly rate to fit
within a total budget of $105,000. There is no evidence in the record to show that the parties agreed
to any certain rate per hour, and Webster Design’s timesheet for its work for NCTC displays
different hourly rates for different employees’ work.
This lack of clarity as to scope of work and costs became evident when, during the course
of the parties’ relationship, Webster Design began to claim that certain work was outside the scope
of the original project. In an April 2014 email, Perry questioned where Webster Design’s
commitment to NCTC ended, indicating that the scope of work was not clear even to Webster
Design’s creative director. Ultimately, Webster Design began to bill such work separately. Yet at
trial, Perry agreed that some of the work that Webster Design billed separately as being outside
the scope of the original project was, in fact, included in the proposal, and thus, it actually was
within the scope of the original project.
A fundamental and indispensable basis of any enforceable agreement is that there be a
meeting of the minds of the parties as to the essential terms and conditions of the proposed contract.
Gibbons Ranches v. Bailey, 289 Neb. 949, 857 N.W.2d 808 (2015). Although Webster Design
presented evidence that the parties agreed that Webster Design would complete some work for
NCTC, it did not present sufficient evidence to prove a meeting of the minds of the parties as to
the essential terms and conditions of a contract, such as what work would be completed, when it
would be completed, what the cost would be, and on what terms NCTC would have to pay for the
work. Accordingly, the district court did not err in finding that Webster Design failed to meet its
burden of proving the creation of a contract and that Webster Design was entitled to additional
payment from NCTC beyond what it already paid.
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Quantum Meruit.
Webster Design alleges that the district court erred in concluding that it was not entitled to
recover additional compensation from NCTC based on the principles of quantum meruit. Based
on our review, we affirm the decision of the district court.
Generally, the principle of quantum meruit is a contract implied in law theory of recovery
based on the equitable doctrine that one will not be allowed to profit or enrich oneself unjustly at
the expense of another. Tracy v. Tracy, 7 Neb. Ct. App. 143, 581 N.W.2d 96 (1998). The issue of
unjust enrichment is a question of fact. Id.
Where benefits have been received and retained under circumstances that it would be
inequitable and unconscionable to permit the party receiving them to avoid payment therefor, the
law requires the recipient to pay the reasonable value of the services. Id. To give rise to an implied
contract to pay, the services must have been rendered in expectation that the other party would
pay. In turn, the other party must have accepted the services with knowledge of that expectation.
Id.
Here, again, the evidence is unclear as to exactly what work was completed, what work
NCTC expected to pay for, and the cost and/or value of the work that was delivered. As we
explained above, much of the work Webster Design completed was done prior to the December
2013 presentation, and that presentation was made to multiple entities. The evidence was
conflicting as to what work NCTC ultimately requested and agreed to pay for. Further, there were
times where Webster Design offered to “take a stab” at something for NCTC and went “above and
beyond” to help NCTC; thus, it is unclear as to whether NCTC was charged for that work or
expected that it would pay for that type of work.
Finally, although NCTC paid Webster Design a total of approximately $49,000, the
evidence is not clear as to what work that sum covered. In other words, the evidence did not
establish what work NCTC requested be performed and the value of that work. Nor did it establish
what work Webster Design contends was delivered but not paid for, or the value of that work.
Thus, the district court did not err in concluding that Webster Design did not sufficiently prove
that it was entitled to additional compensation on a theory of quantum meruit.
CONCLUSION
We conclude that the district court did not err in finding that the evidence presented at trial
was insufficient to meet Webster Design’s burden of proving the creation of a contract and that
NCTC was unjustly enriched by Webster Design’s work. As a result, the court did not err in
granting NCTC’s motion to dismiss. We therefore affirm the court’s decision.
AFFIRMED.
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