UNJUST ENRICHMENT OR QUANTUM MERUIT CAN APPLY FOR EXTRA-CONTRACTUAL WORK IF THE EXPRESS CONTRACT DOES NOT CONCERN THE SAME SUBJECT MATTER

Can a subcontractor recover from a general contractor for extra-contractual work under an unjust enrichment or quantum meruit theory even though an express contract exists between the parties?   Can a general contractor recover from an owner for extra-contractual work under the same theories even though an express contract exists with the owner?    The case below answers this question in the affirmative IF the express contract does not concern the same subject matter.

In the preceding post, I discussed the case, F.H. Paschen, S.N. Nielsen & Associates, LLC v. B&B Site Development, Inc., 2021 WL 359487 (Fla. 4th DCA 2021), regarding the validity of a dispute resolution provision in a subcontract that allows an architect, engineer, or owner to render a final decision as to the interpretation of the plans, specifications, or contract documents.

This case involved a dispute between a subcontractor and general contractor as to whether the demolition of a 561 square yard asphalt area and replacement with concrete was included in the subcontractor’s scope of work.  The subcontractor performed the disputed work and filed suit against the general contractor.  In addition to suing the general contractor for breach of contract, the subcontractor also asserted equitable claims for unjust enrichment and quantum meruit, claims that generally fail when there is an express contract between the parties.  B&B Site Development, supra, at *6 (“As a general principle, a plaintiff cannot pursue an implied contract theory, such as unjust enrichment or quantum meruit, if an express contract exists.”).

Quantum meruit, known as a contract implied in fact, “imposes liability, in the absence of an express agreement, ‘based on a tacit promise, one that is inferred in whole or in part from the parties’ conduct, not solely from their words.’”  Id. at *6 (citation omitted).

Unjust enrichment, known as a contract implied in law, is also not based on the finding of an express agreement, and requires proof that “(1) the plaintiff has conferred a benefit on the defendant; (2) the defendant has knowledge of the benefit; (3) the defendant has accepted the benefit conferred; and (4) the circumstances are such that it would be inequitable for the defendant to retain the benefit without paying the fair value of it.”  Id. (citation omitted).

As the B&B Site Development Court explained, there are circumstances where such equitable theories, or implied contract theories, will apply even though there is an express contract between the parties. “Reliance upon a theory of implied contract is barred only if an express contract concerns the same subject matter as the implied contract.”  B&B Site Development, supra, at *7 (discussing cases where implied in contract theories applied for subcontractor to recover extra-contractual work).

Those equitable theories, or implied in contract theories, applied in this case to support a judgment in favor of the subcontractor against the general contractor for the extra-contractual work:

The GC and the Sub entered into a construction contract. While the Sub performed under the contract, the GC requested and accepted a change to the scope of work, an extra that the GC erroneously claimed was included within the work described in the subcontract. Under these circumstances, “the law implies an obligation to pay the reasonable costs thereof in addition to the stipulated sum named by the parties in the original agreement.

The GC is also liable under a theory of unjust enrichment. The Sub conferred a benefit on the GC in the form of asphalt removal and replacement that was required under the master contract but not the subcontract. The GC accepted the benefit and the circumstances are such that it would be inequitable for the GC to retain the benefit without paying fair value for it. As the trial court ruled, “it would be both inequitable and unjust to allow [the GC] to retain the benefit without paying [the Sub] fair value for it, because it was [the GC’s] unilateral mistake and breach of the General Contract that created the problem.”

The existence of the subcontract did not defeat recovery under either implied contract theory of recovery, as the subcontract did not cover removal and replacement of the existing asphalt.

B&B Site Development, supra, at *7-8

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

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