By: Alexander A. Miuccio Published: September 2013

Subcontractor Allowed Recrovery Based On Quantium Meruit and Unjust Enrichment

Where there is no written or oral contract between the parties, a contractor cannot recover for work performed based on a breach of contract. His recourse is to sue under the legal theories of quantum meruit or unjust enrichment to recover the value of the labor and materials. To recover on a claim of quantum meruit, a claimant must establish the performance of services in good faith, which were accepted, and for which it reasonably expected to be compensated, and the reasonable value of the services. To recover under the claim of unjust enrichment, a claimant must show that the recipient of the work benefitted at the contractor’s expense, and that equity and good conscience require restitution to the contractor.

In the recent case of ACC Concrete Corp. v Core Continental Construction, LLC, a subcontractor recovered the value of its work performed based on claims of quantum meruit and unjust enrichment.

Background

ACC Concrete, an excavation contractor, provided excavation and foundation work pursuant to an oral contract as a subcontractor to Core Continental for a project owned by Marigold, LLC. During the performance of the excavation work ACC encountered rock. However, because the parties did not anticipate encountering rocks, there was no discussion as to what ACC’s charge would be for rock removal. ACC proceeded with the work based upon Core Continential’s reassurances that ACC would be paid. The amount of that payment, and whether payment would come from Core Continental or Marigold, however, were not discussed. Further, the change orders that ACC sent to Core Continental were never signed by either Core Continental or Marigold.

ACC sued both Core Continental and Marigold to recover for the cost of the rock removal. ACC asserted a breach of contract claim and quasi-contractual quantum meruit and unjust enrichment claims. All parties moved for summary judgment. Core Continental and Marigold relied on the fact that there was no specific agreement relating to the extra rock removal work. ACC sought relief based on breach of contract and on the quasi-contractual theories of quantum meruit and unjust enrichment.

Decision

The Court dismissed ACC’s breach of contract claim, holding that there was no contract because the parties had failed to agree on the essential terms. However, the court found that ACC had established the elements of its quasi-contractual claims. As to the quantum meruit claim, the Court held that ACC demonstrated that it performed its services in good faith, Core Continental had accepted those services, ACC reasonably expected to be compensated for those services, and that the rate ACC charged represented a reasonable value of its services sufficient to recover on its claim. As to ACC’s unjust enrichment claim, the Court held that ACC had demonstrated that Core Continental was enriched at ACC’s expense such that it was inequitable and unconscionable to allow Core Continental to retain the benefit of ACC’s services without payment. The court also found that Core Continental had induced ACC’s performance by assuring ACC that it would be paid for the extra rock work.

Comment

While the best practice is to get the agreement in writing, a contractor can nevertheless recover on one of the quasi-contractual theories when it can establish the essential elements of its claim. A person would be unjustly enriched if he received a benefit and did not pay for it when fairness required that payment be made. Quantum meruit can be used to address situations where no contract exists or where a contract exists but for some reason is unenforceable. In such cases courts may imply a contract to avoid an unjust result. 

About the author:  Mr. Miuccio is a partner of the law firm of Welby, Brady & Greenblatt, LLP and General Counsel to the Construction Industry Council of Westchester & Hudson Valley, Inc.  Gregory J. Spaun, an associate with the firm, assisted with the preparation of this article.

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