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Law Bulletin column: Contract kills quantum meruit claim

PAUL B. PORVAZNIK
Law Bulletin columnist

Published: June 26, 2017

win axioms of contract law include a quasi-contract claim (i.e. quantum meruit) cannot coexist with one for breach of express contract, and to recover for contract “extras” or out-of-scope work, a plaintiff must show the extra work was necessary through no fault of its own.

Easily parroted, the two principles can prove difficult in their application.

The case of Archon v. U.S. Shelter, 2017 IL App (1st) 153409, tries to reconcile the difference between work that gives rise to quantum meruit recovery and work that falls within an express contract’s general subject matter and defeats a quantum meruit claim.

The subcontractor plaintiff installed a sewer system for a general contractor hired by a city. The subcontract gave the city final approval of the finished sewer system. City approval was a condition to payment to the plaintiff. The subcontract also provided that extra work caused by the plaintiff’s deficiencies had to be done at plaintiff’s expense.

The subcontractor sued the general contractor to recover about $250,000 worth of repair work required by the city. The trial court granted summary judgment for the general contractor on both plaintiff’s quantum meruit and extras claim.

On remand from an earlier appeal, the plaintiff dropped its extras claim and went forward solely on its quantum meruit claim. The trial court again found for the general and the sub appealed.

Affirming summary judgment for the general contractor, the 1st District Appellate Court examined when a contractor’s quantum meruit claim for out-of-scope work will fail because the contractor is trying to recover for work that falls within the general subject matter of a given contract.

To recover for quantum meruit (sometimes referred to as quasi-contract or implied contract), the plaintiff must prove (1) it performed a service to benefit a defendant, (2) it did not perform the service gratuitously, (3) defendant accepted the benefits of plaintiff’s services and (4) no contract existed to prescribe payment for the service.

A quantum meruit claim cannot coexist with a breach of express contract: They are mutually exclusive.

Parties to a contract assume certain risks. Sometimes, when they realize their contractual expectations aren’t going to be realized, they resort to quantum meruit recovery as a desperation maneuver.

The law doesn’t allow this. “Quasi-contract is not a means for shifting a risk one has assumed under the contract.” (citing Industrial Lift Truck Service Corp. v. Mitsubishi International Corp., 104 Ill.App.3d 357).

A contractor’s claim for “extras” requires the contractor to prove that (1) the work for which it seeks compensation was outside the scope of a contract and (2) the extra work wasn’t caused by the contractor’s fault.

In a prior appeal, the court found that it wasn’t clear whether the extra work was the result of the plaintiff contractor’s mistake. As a result, the contractor made a strategic decision to abandon its extras claim and instead proceeded on its quantum meruit suit.

At first blush, an extras claim mirrors quantum meruit’s requirement of work that’s not tied to any express contract term.

However, as the court emphasized, there’s a definite legal difference between a claim for extra work and one for quantum meruit. “A claim for quantum meruit lies when the work the plaintiff performed [is] wholly beyond the subject matter of the contract that existed between the parties.”

The key question is whether an express contract covers the same general subject matter as the challenged work. If it does, there can be no quantum meruit recovery as a matter of law.

Applying these principles, the court found that the work for which plaintiff sought to recover in quantum meruit — sewer pipe repairs and replacement — involved the same sewer system involved in the underlying express contract. As a result, plaintiff’s quantum meruit claim failed.

Takeaways

This case provides an interesting illustration of the fine-line distinction between a contractor’s action to recover for extra, out-of-scope work and services that merit quantum meruit recovery.

Contractors should take pains to make it clear in the contract that if they do perform extra work, there is a mechanism in place (i.e. time and materials terms) that quantifies the extras.

Since the sewer repair work fell within the general subject matter of the underlying sewer installation contract, it was easy for the court to find that the express contract encompassed the plaintiff’s work and reject the quantum meruit claim.

In hindsight, the plaintiff should have pressed forward with its breach of express contract claim premised on the extra work it claimed it performed.

Paul B. Porvaznik is an attorney at Davis, McGrath LLC and practices primarily in the areas of commercial litigation, landlord-tenant law, mechanic’s liens and post-judgment enforcement.


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