FC3 LTD CO v. FOUR WINDS MECHANICAL HTC AC INC MVT LLC (2026)

OPINION

{1} Plaintiff appeals the district court's granting of subcontractor Defendants’ motions to dismiss. The district court initially dismissed Plaintiff's claims of breach of implied warranty and negligence without prejudice. Plaintiff filed an amended complaint with the negligence claims and additional claims for unjust enrichment, and the district court again dismissed them, reasoning that Plaintiff failed to allege a duty for the negligence claim or the nonrecoverable nature of its contract claims before seeking recovery for unjust enrichment from the subcontractor Defendants.

{2} Plaintiff appeals and argues that the original complaint stated a claim for breach of implied warranty, even though Plaintiff was not in privity with the contract between the general contractor and the subcontractors, and that the claims against the subcontractors in the amended complaint were sufficient as a matter of law. We do not reach the implied warranty issue, because Plaintiff abandoned the claim in the amended complaint. Otherwise, we hold that a contract between a property owner and a general contractor does not foreclose negligence and unjust enrichment claims against a subcontractor. Because the claims Plaintiff pleaded in the amended complaint were legally sufficient, we reverse.

BACKGROUND

{3} Plaintiff property owner FC3 Ltd. Co. contracted with J.M. Evans Constructions Co., Inc. (JMEC) to renovate a property owned by Plaintiff. JMEC subcontracted with Defendant Four Winds Mechanical HTC/AC, Inc. (Four Winds), a heating, ventilation, and cooling subcontractor, to supply and install heating and cooling equipment as part of the renovation. JMEC also subcontracted with Defendant MVT Contracting, LLC (MVT), to install exterior stucco and interior plaster. Dissatisfied by the allegedly defective work of Defendants Four Winds and MVT on the renovation, Plaintiff sued, asserting claims for breach of implied warranty, breach of contract, unfair trade practices, and negligence. Upon Defendant Four Winds’ motion, this complaint was dismissed without prejudice. Plaintiff filed an amended complaint, this time omitting a claim for breach of implied warranty but including an additional claim for unjust enrichment. Again upon Defendants’ motions, the district court dismissed the complaint, finding that Plaintiff failed to allege the required element of duty for its negligence claim, since the parties were not in privity. The district court further reasoned that Plaintiff failed to demonstrate that it would not be able to recover from its contract claims against JMEC, which were in arbitration, and therefore was barred from bringing an unjust enrichment claim against Defendants. Plaintiff appeals.

DISCUSSION

{4} Plaintiff asks this Court to reverse the district court's granting of Defendants’ motions to dismiss Plaintiff's claims for breach of implied warranty, negligence, and unjust enrichment. “We review a district court's grant of a motion to dismiss de novo, accepting as true all of the appellant's well-pleaded allegations.” Butler v. Deutsche Morgan Grenfell, Inc., 2006-NMCA-084, ¶ 6, 140 N.M. 111, 140 P.3d 532. We address each claim in turn.

I. Breach of Implied Warranty Claim

{5} In the original complaint, Plaintiff brought a breach of implied warranty claim against Defendants and in response to Defendant Four Winds’ first motion to dismiss, argued that such a claim does not require privity between an owner and a subcontractor. However, after the district court granted the motion to dismiss without prejudice, allowing Plaintiff to amend the complaint, Plaintiff did not re-allege breach of implied warranty in the amended complaint.

{6} Plaintiff accepts that when the district court dismissed Plaintiff's first complaint in response to a motion to dismiss from one subcontractor (Defendant Four Winds), it dismissed Plaintiff's first complaint—and the breach of implied warranty claim—as to all the subcontractors. But Plaintiff asserts that dismissal of Plaintiff's first complaint entitles Plaintiff to appellate review of its breach of implied warranty claim even though Plaintiff did not re-allege it in the amended complaint. Defendant Four Winds disagrees, quoting the following from Griego v. Roybal, 1968-NMSC-077, ¶ 8, 79 N.M. 273, 442 P.2d 585: “Rule [1-015 NMRA] requires a party to set forth in one entire pleading all matters which are necessary to be determined; the failure to re-allege allegations of an original pleading constitutes an abandonment of those allegations not re-alleged.” Id.; see Rule 1-015(E). We agree with Defendant Four Winds and hold that Plaintiff abandoned its breach of implied warranty claim by not re-alleging the claim in its amended complaint. Therefore, we decline to address Plaintiff's claim as to Defendants’ breach of implied warranty.

II. Negligence Claim

{7} In Plaintiff's view, “[t]he proposition that a subcontractor owes no duties to owners and that they enjoy unconditional immunity for their negligent conduct would place subcontractors in a uniquely protected class contrary to fundamental public policy.” Defendants respond that Plaintiff failed to establish a tort duty, in large part because Plaintiff's claims are contract claims that fail absent privity of contract between the parties.

{8} It is within this Court's purview to determine whether a duty exists. See Lopez v. Devon Energy Prod. Co., L.P., 2020-NMCA-033, ¶16, 468 P.3d 887 (“New Mexico courts have long held that duty is a matter of law to be determined by the court.”). Additionally, “New Mexico law recognizes that there exists a duty assigned to all individuals requiring them to act reasonably under the circumstances according to the standard of conduct imposed upon them by the circumstances.” Calkins v. Cox Est., 1990-NMSC-044, ¶ 11, 110 N.M. 59, 792 P.2d 36. “Duty may be based on common law, statutory law, or general negligence standard.” Thompson v. Potter, 2012-NMCA-014, ¶ 19, 268 P.3d 57.

{9} Defendants argue that the nature of their relationship with Plaintiff established no duty and that Plaintiff may only seek recourse for damages from the party with whom Plaintiff had a contractual relationship, the general contractor (JMEC). Defendant Four Winds directs us to recent law from our Supreme Court establishing that our determination of duty “involves an analysis of the relationship of the parties, the plaintiff's injured interests and the defendant's conduct to determine whether the plaintiff's interests are entitled to protection.” Waterbury v. Nelson, 2024-NMSC-020, ¶ 12, 557 P.3d 96 (internal quotation marks and citation omitted). In that vein, Defendant Four Winds asserts that the “existence of a valid avenue for relief against JMEC further supports the district court's dismissal” and effectively exonerates Defendants from liability, at least liability to Plaintiff directly. Similarly, Defendant MVT contends that Plaintiff failed to established that they owed Plaintiff a duty of care, asserting that Plaintiff “couched” a breach of contract claim in terms of tort law and instead alleged facts that could support only a contract claim. In Defendant MVT's view, Plaintiff alleges a duty that does not exist in New Mexico law. And the cases Plaintiff relies on relate to categories of tort law that are absent from this case: contractual professional negligence, negligent misrepresentation, and subsequent purchaser construction defect.

{10} We address these arguments in turn, beginning with the contention that Plaintiff's contractual relationship with JMEC is the only avenue through which Plaintiff can recover for Defendants’ alleged wrongs. That Plaintiff had a contract with JMEC explicating JMEC's responsibilities and establishing JMEC's duties related to subcontractors such as Defendants does not preclude Plaintiff from seeking compensation directly from subcontractors—with whom no contract exists—for their allegedly negligent acts. See Stotlar v. Hester, 1978-NMCA-067, ¶ 10, 92 N.M. 26, 582 P.2d 403 (explaining that privity of contract is not “recognized as a factor when considering liability on a negligence theory” (internal quotation marks and citation omitted)). Nor would doing so be a violation of the contract between JMEC and Plaintiff; Plaintiff complied with the terms of that contract by not entering into contracts with subcontractors and by bringing its claims against JMEC through arbitration, as required. Thus, Plaintiff has pleaded claims that do not arise from any contract with Defendants and do not violate any other contract. As a result, Plaintiff is not required to bring the claim in contract and may proceed in tort, if the elements of a tort claim are sufficiently pleaded. See In re Consol. Vista Hills Retaining Wall Litig., 1995-NMSC-020, ¶ 28, 119 N.M. 542, 893 P.2d 438 (requiring parties with equal bargaining power to bring contract and not tort claims in order to limit damages “to those within the contemplation and control of the parties in framing their agreement” (internal quotation marks and citation omitted)).

{11} This leads us to the crux of Defendants’ and the district court's reasoning for dismissing Plaintiff's complaint: one sentence in Tarin's v. Tinley isolated from the context in which it applies. See 2000-NMCA-048, ¶ 12, 129 N.M. 185, 3 P.3d 680. That sentence reads, “Absent privity, a subcontractor owes no duty to a property owner.” Id. The district court relied on Tarin's in finding that Plaintiff failed to allege the required element of duty between the parties who were not in privity. See id. Defendant Four Winds encourages us to affirm this conclusion, arguing that Plaintiff attempted to circumvent its obligation to show that it was an intended beneficiary of the contract or prove some other right to seek the contract's enforcement, as required by Tarin's. Defendant Four Winds also asserts that Plaintiff's allegations against them stemmed from actions that fell within Defendant Four Winds’ scope of work, as if to say that when harmful actions fall within a defendant's scope of work a claim for damages from those actions must necessarily arise from a contractual duty as opposed to from common law negligence.

{12} Put simply, Defendants attempt to shoehorn Plaintiff's negligence claim into a breach of contract claim, and then use Tarin's to invalidate it. Tarin's concerned a claim for breach of contract, not a claim for negligence. It therefore comes as no surprise that for the Tarin's plaintiff to recover, it needed to show some kind of contractual relationship from which a duty arose—something that would have been wholly unnecessary were the claim for common law negligence, as it is here. Here, Plaintiff never sought to show that it was an intended beneficiary of the contract, nor did it need to, since its negligence claim relies on a duty separate from that established by a contract. See Thompson, 2012-NMCA-014, ¶ 19, 268 P.3d 57 (“Duty may be based on common law, statutory law, or general negligence standard.” (emphasis added)).

{13} In response to the district court's reliance on Tarin's, Plaintiff emphasizes on appeal the long-held law that privity of contract has no place in negligence theory. See Steinberg v. Coda Roberson Const. Co., 1968-NMSC-055, ¶¶ 5, 7, 79 N.M. 123, 440 P.2d 798. Plaintiff thus argues that even without a contract between Plaintiff and Defendants, Plaintiff was still entitled to bring a claim against them for negligence. Defendant Four Winds attempts to deflect Steinberg’s holding by noting that the parties in Steinberg—a defendant home builder who sold a home to a buyer, who later sold the home to the plaintiff—were different from the parties here, a subcontractor and property owner. See id. ¶¶ 1-2. In this attempt to distinguish Steinberg, Defendant Four Winds implies that a duty-bearing relationship existed between the home builder and the second buyer because the second buyer alleged it was a third-party beneficiary to the contract between the home builder and the first buyer, but that no such relationship exists in this case. But that argument is both inaccurate and inapplicable: inaccurate because no beneficiary status was argued or addressed in Steinberg and inapplicable because it is not a contractual duty Plaintiff alleges with Defendants to begin with—whether as a third-party beneficiary or otherwise—but rather a common law duty under the doctrine of negligence. Furthermore, the relationship between the home builder and the second buyer in Steinberg established a duty because the second buyer was a member of the class of prospective homebuyers for whom the defendant built the house, and our Supreme Court held that “as a matter of legal effect the home may be considered to have been intended for the plaintiff[ ].” Id. ¶ 9. The relationship between the home builder and the second buyer in Steinberg, though different, is nonetheless analogous to that of Defendants and Plaintiff because the building project in both cases could be considered to have been intended for the plaintiffs, and in neither case was privity of contract required in order for a claim of negligence to stand.¹ We disagree with Defendants that Steinberg is meaningfully distinguishable from this case and apply its holding that “[p]rivity of contract no longer [is] recognized as a factor when considering liability on a negligence theory” to the facts of this case. Id. ¶ 7.

{14} Finally, Defendant MVT's contention that Plaintiff's negligence claim is legally deficient because Plaintiff never established a duty of care ignores the notice pleading laws of this state, where “it is sufficient that defendants be given only a fair idea of the nature of the claim asserted against them sufficient to apprise them of the general basis of the claim; specific evidentiary detail is not required at this stage of the pleadings.” Petty v. Bank of N.M. Holding Co., 1990-NMSC-021, ¶ 7, 109 N.M. 524, 787 P.2d 443. “[A]ll well-pleaded factual allegations in the complaint [are taken] as true,” and “all doubts [resolved] in favor of sufficiency of the complaint.” Delfino v. Griffo, 2011-NMSC-015, ¶ 9, 150 N.M. 97, 257 P.3d 917. As Defendant notes, “[N]otice pleading does not require that every theory be denominated in the pleadings—general allegations of conduct are sufficient, as long as they show that the party is entitled to relief and the averments are set forth with sufficient detail so that the parties and the court will have a fair idea of the action about which the party is complaining and can see the basis for relief.” See Schmitz v. Smentowski, 1990-NMSC-002, ¶ 9, 109 N.M. 386, 785 P.2d 726.

{15} With this in mind, Plaintiff adequately alleged its claims and provided Defendants fair notice of the basis for those claims. Plaintiff's complaint also sufficiently alleged a duty, with language like the following: Defendants “and its employees owed [Plaintiff] a duty to exercise reasonable care, skill, attention and judgment and to act free of negligence in the performance of their work on the [p]roject.” The complaint does not mention the contract in relation to the subcontractors; however, it alleges the elements of negligence required: duty, breach, and damages. See Thompson, 2012-NMCA-014, ¶ 18, 268 P.3d 57 (“It is axiomatic that a negligence action requires that there be a duty owed from the defendant to the plaintiff; that based on a standard of reasonable care under the circumstances, the defendant breached that duty; and that the breach was a cause in fact and proximate cause of the plaintiff's damages.” (internal quotation marks and citation omitted)). We therefore hold Plaintiff's complaint sufficient to fulfill the notice pleading requirements of this state as well as to establish a duty for its negligence claim. We reverse the district court's contrary determination.

III. Unjust Enrichment Claim

{16} Plaintiff's final claim centers on unjust enrichment. Plaintiff alleged that Defendants were unjustly enriched at Plaintiff's expense when they were paid for their defective work. The district court dismissed this claim on the grounds that Plaintiff did not allege that it cannot recover from the general contractor, citing as authority a federal case. See Abraham v. WPX Energy Prod., LLC, 20 F. Supp. 3d 1244, 1276 (D.N.M. 2014) (holding that the existence of a contract between the plaintiff and a different party “does not automatically bar the unjust enrichment claim, but the plaintiff cannot pursue the unjust enrichment claim unless there is something—bankruptcy, statutes—prohibiting the plaintiff from pursuing the contract claim”). The district court reasoned that “New Mexico law allows a plaintiff to pursue an unjust enrichment claim when the claim is the subject of a contract between the plaintiff and a different party, but not when the plaintiff can obtain relief by pursuing the contract claim.”

{17} Plaintiff responds on appeal that it is not barred from pursuing a claim for unjust enrichment against the subcontractor Defendants, at least at the pleading stage of a case, just because it has asserted claims against the general contractor, especially when the case against the general contractor has not commenced and the outcome is unknown. See Starko, Inc. v. Presbyterian Health Plan, Inc., 2012-NMCA-053, ¶ 91, 276 P.3d 252 (holding that the fact that a plaintiff is the party to a contract with the defendant “does not foreclose a claim for unjust enrichment”), rev'd on other grounds sub. nom., Starko, Inc. v. N.M. Hum. Servs. Dep't, 2014-NMSC-033, ¶ 42, 333 P.3d 947. As Plaintiff sees it, that New Mexico law explicitly does not bar a claim for unjust enrichment when there is a contract between a plaintiff and a defendant means that New Mexico law likewise does not bar a claim for unjust enrichment claim when there is a contract between a plaintiff and a third party, such as between Plaintiff and JMEC here. Furthermore, in response to the district court's reliance on Abraham, Plaintiff argues that because the present case is only at the pleading stage, dismissing the unjust enrichment claim is premature since it is yet uncertain whether Plaintiff will be able to recover from its arbitration proceedings against JMEC.

{18} Defendant Four Winds responds that Plaintiff is merely “hedg[ing] against its uncertain recovery in the arbitration with JMEC” and that such “is not a valid basis for awarding equitable relief.” Similarly, Defendant MVT asserts that Plaintiff's cited cases do not support its unjust enrichment claim and that Plaintiff's discontent with the district court's reliance on a nonprecedential case, Abraham, is unfounded because Plaintiff at no point showed how Abraham was wrong. See 20 F. Supp. 3d at 1276. Defendant MVT continues, repeating Defendant Four Winds’ argument and adding that there is nothing barring Plaintiff's breach of contract claim against JMEC and that Plaintiff never alleged it could not recover from JMEC in this case, as it needed to in order to pursue an unjust enrichment claim against Defendants per Abraham.

{19} We acknowledge the nonprecedential but persuasive nature of Abraham. In doing so, however, we must mention other similarly situated case law that is likewise on point. In the Order Denying Motion to Dismiss, United States for use of Sierra Canyon Constr., LLC v. Markel Ins. Co., (No. 1:21-cv-00974-PJK-SCY), 2022 WL 541032, at *2 (D.N.M. Feb. 23, 2022), for example, the same federal district court reasoned that New Mexico courts “have consistently employed unjust enrichment remedies (and appear not to have adopted such a pleading rule[ that a party may not recover on an unjust enrichment theory when an enforceable contract remedy exists])”; from this, the court concluded “that it [was] premature to terminate the unjust enrichment claim at this early stage of the litigation”—denying a motion to dismiss for failure to state a claim. Id. The court further supported this decision by explaining that “[r]ecovery [was] uncertain on either the contract or unjust enrichment claim.” Id.; see Farmer v. Walmart, Inc., 729 F. Supp. 3d 1202, 1236-37 (D.N.M. 2024) (order) (declining to apply Abraham and instead relying on the holding in Sierra that a claim for unjust enrichment should not be dismissed at the pleading stage even if the plaintiff has a separate contract claim: “[P]ermitting a plaintiff to plead an unjust enrichment claim in the alternative to remedies at law is permissible.”).

{20} As both Abraham and Sierra acknowledge, New Mexico courts have “long recognized actions for unjust enrichment.” Ontiveros Insulation Co. v. Sanchez, 2000-NMCA-051, ¶ 11, 129 N.M. 200, 3 P.3d 695. “To prevail on such a claim, one must show that: (1) another has been knowingly benefitted at one's expense (2) in a manner such that allowance of the other to retain the benefit would be unjust․ The theory has evolved largely to provide relief where, in the absence of privity, a party cannot claim relief in contract and instead must seek refuge in equity.” Id. ¶ 11.

{21} This is true perhaps especially at the early stages of proceedings, where a party is entitled to advance alternative claims. See Rule 1-008(E)(2) NMRA (“A party may set forth two or more statements of a claim or defense alternatively or hypothetically, either in one count or defense or in separate counts or defenses.”). Additionally, New Mexico adheres to liberal notice pleading standards, as discussed above. See Petty, 1990-NMSC-021, ¶ 7, 109 N.M. 524, 787 P.2d 443.

{22} Taken together, this New Mexico law provides a sure enough footing upon which to reverse the district court's granting of Defendants’ motion to dismiss. Neither the existence of a contract between Plaintiff and JMEC nor Plaintiff's failure to show that claims against JMEC are not recoverable foreclose Plaintiff from pleading to recover an equitable remedy from subcontractor Defendants. Although Defendant Four Winds argues that Plaintiff must first pursue its contractual remedies against JMEC before asserting an unjust enrichment claim against Defendants, New Mexico jurisprudence supports Plaintiff's course thus far, recognizing that “equity is reluctant to permit a wrong to be suffered without remedy.” See Ontiveros, 2000-NMCA-051, ¶ 13, 129 N.M. 200, 3 P.3d 695 (internal quotation marks and citation omitted). New Mexico does not automatically foreclose unjust enrichment claims, even when the basis of the claim is also the subject of a contract with another party. See id. ¶¶ 20-22.

CONCLUSION

{23} In conclusion, we make two additional observations. This opinion addresses claims at the pleading stage in a complicated litigation involving multiple parties with varying relationships—contractual and otherwise—and multiple proceedings. Our holding is limited to the legal and factual sufficiency of Plaintiff's pleadings against Defendants. We express no opinion about the merits of the claims and have not evaluated the allocation of responsibility for damages or the election of remedies. We affirm the district court's dismissal of the claim for breach of implied warranty; we reverse the district court's dismissal of the negligence and unjust enrichment claims.

{24} IT IS SO ORDERED.

FOOTNOTES

1.   This is true even in light of NM-Emerald, LLC v. Interstate Development, LLC, 2021-NMCA-020, ¶¶ 15-16, 488 P.3d 707, which, as Defendants point out, distinguishes Steinberg. There, this Court held that unlike the second buyer in Steinberg, who was a member of the class of prospective homebuyers for whom the defendant built the house, the Emerald plaintiff was a commercial entity with “equal bargaining power” to the defendant builder and based on an assignment of interest, “in privity with the builder through a construction loan contract.” Id. ¶ 16. Thus, Plaintiff bears greater similarity to the plaintiff in Steinberg than to the plaintiff in Emerald, because the former two were not in privity of contract with the defendants and both were members of the class that was intended to receive the defendant's services. We therefore disagree with Defendants’ assertion that Emerald renders Steinberg inapposite here.

HANISEE, Judge.

WE CONCUR: JACQUELINE R. MEDINA, Chief Judge KATHERINE A. WRAY, Judge