41 Quantum Meruit

• Library: Elements of Civil Causes of Action (SCBar) (2015 Ed.)

41 Quantum Meruit

A. Definition

Quantum Meruit is an equitable doctrine allowing recovery for unjust enrichment.¹ The phrase means "... 'as much as he deserves' and is an expression that describes the extent of the liability on a contract implied in law."² While this definition relates to damages, the term has come to mean a cause of action based on the theory the defendant has received a benefit the retention of which would be unjust if not paid for.³

In Myrtle Beach Hosp. v. City of Myrtle Beach,⁴the court emphasized that quantum meruit, quasi-contract, and implied by law contract are equivalent terms for an equitable remedy.⁵ The court rejected the four-part quantum meruit test⁶ and overruled a number of cases to the extent they relied on that test.⁷ The court instead adopted the three-part test below as applicable to quantum meruit, quasi-contract, and implied by law contract.⁸

B. Elements

(1) a benefit conferred upon the defendant by the plaintiff
(2) realization of that benefit by the defendant
(3) retention by the defendant of the benefit under conditions that make it unjust to retain it without paying its value.⁹

C. Elements Defined

The element of benefit was addressed in a Federal District Court decision concerning bids for contracts. The court concluded that when a subcontractor submits a proposal to a general contractor, the latter is not unjustly enriched when it does not award the subcontract to that subcontractor even though the general contractor benefited from that bid.¹⁰

Earlier case law established that a plaintiff had to have provided the defendant with materials or a valuable service and show the value of the benefit conferred.¹¹ Where a broker sued for a commission, claiming he brought the high bidder to auction, his claim under quantum meruit was denied because in fact the high bidder was his wife and he admitted title was put in her name to protect his claim to a commission.¹² The court implied that since the plaintiff himself was a co-purchaser at auction, he did not provide the services of a broker. An incidental benefit received by the defendant resulting from dealings between the plaintiff and others in which the defendant did not participate and had no control would not render the defendant liable.¹³

In Sauner v. Public Serv. Auth.,¹⁴the South Carolina Supreme Court said that to recover on a theory of restitution the plaintiff must show he or she conferred a non-gratuitous benefit on the defendant. More recently, the Court of Appeals incorporated the word gratuitous into its discussion in a claim for quantum meruit.¹⁵ The plaintiff sought compensation for caregiving services she provided. The court recited the Myrtle Beach formulation of the elements, but added that Sauner "specified that the benefit conferred must be nongratuitous."¹⁶ The court concluded that since the testimony showed the plaintiff's services were gratuitous — apparently based on her love for the person to whom she provided caregiving — her quantum meruit claim had to fail.

Where the plaintiff conferred a benefit on the defendant by advancing it a substantial sum of money, and the defendant "indubitably realized" the benefit by accepting and depositing two checks, retention of the money was inequitable because the defendant never rendered services or money to the plaintiff.¹⁷

Evidence that an elderly aunt acknowledged the sacrifice made by her niece in leaving a teaching job to care for her was relevant to show acceptance of the services rendered.¹⁸

Where, however, the defendants had a right to retain the benefit of improvements made under a lease, there could be no recovery even though the defendant did indeed retain that benefit.¹⁹

The third element involves equitable considerations and will, therefore, be governed by the peculiar facts of each case.²⁰

A claim for quantum meruit will not lie absent evidence of unjust enrichment and that requires a showing of actual damages that resulted from the wrongful retention of benefits by the defendant, not merely nominal damages.²¹

D. Defenses

Actions in quantum meruit are based on the absence of a contract.²² Relief under the theory is therefore not available if an action is based on the existence of a contract.²³

However, South Carolina courts appear now to treat breach of contract and quantum meruit claims as alternative, rather than inconsistent, remedies. The Court of Appeals has made this assertion,²⁴ and based it on language in Earthscapes Unlimited, Inc. v. Ulbrich.²⁵ The plaintiff in Earthscapes was a landscaping company that provided services to the defendant. When the defendant refused to pay, the plaintiff sought to foreclose a mechanic's lien, alleging breach of contract and in the alternative, seeking judgment under quantum meruit. The parties had an oral agreement for the work.²⁶ The trial court found there was a contract between the parties, but noted that absent its ruling on the mechanic's lien, it would have found against the defendant for the same amount of money under the quantum meruit claim. The Supreme Court said it was unnecessary to determine whether there was an express contract or the mechanic's lien statutes applied because it would affirm on the quantum meruit claim. The court added in a footnote that although "... the circuit court did find there was a contract between the two parties ... it never awarded damages because of a breach of that contract. Rather, the circuit court chose the theory of quantum meruit as an alternate remedy."²⁷ The Court of Appeals quoted that language in support of its conclusion that breach of contract and quantum meruit claims can be alternative remedies. It could, however, be argued that since the Supreme Court declined to determine whether there was an express contract, the footnote language is mere dicta. Where some terms of a contract are agreed upon and a complete contract does not exist, an action in quantum meruit may be maintained and the terms of the contract so far as they were agreed upon may properly be alleged.²⁸ A plaintiff may be able to recover where the defendant denies the very existence of the agreement at issue and the plaintiff amends the complaint to assert an alternative cause of action in quantum meruit.²⁹ And, where a contract cannot be enforced because of the Statute of Frauds and has been repudiated by the defendant, the plaintiff may recover under quantum meruit.³⁰

As a general rule equitable relief is available when there is no adequate remedy at law. A statute may provide that adequate legal remedy and thus serve to prevent an equitable one.³¹

Where the plaintiffs claimed they conferred a benefit on the defendant company by bringing and prosecuting the action on its behalf and could, therefore, recover their litigation expenses under quantum meruit the court found that no valid claim for recovery had been stated since if the plaintiffs were successful, ERISA provided the court could award reasonable attorney's fee and costs of the action. The federal law preempted the claim for quantum meruit recovery.³²

The statute of limitations applicable to actions on a "contract, obligation, or liability, express or implied" is three years for actions arising on or after April 5, 1988, and six years for those arising before that date.³³ A plaintiff argued in federal court that the appropriate statute of limitations period for an unjust enrichment claim was ten years.³⁴ The defendant responded that the unjust enrichment claim was simply derivative of a breach of contract action, which is governed by the three-year statute of limitations. The court did not resolve the debate because it found the plaintiff's action had not lapsed under an alternative shorter limitation.³⁵

E. Remedies

The measure of recovery for quantum meruit is the reasonable value of the performance³⁶which is the amount for which the materials or services would have been purchased at the time and place of performance.³⁷ The successful plaintiff may recover prejudgment interest in a claim for quantum meruit.³⁸

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Notes:

^[1]Columbia Wholesale Co., Inc. v. Scudder May N.V., 312 S.C. 259, 440 S.E.2d 129 (1994). See also Earthscapes Unlimited, Inc. v. Ulbrich, 390 S.C. 609, 703 S.E.2d 221 (S.C. 2010) (action based on theory of quantum meruit sounds in equity).

^[2]Webb v. First Federal Savings & Loan Ass'n of Anderson, 300 S.C. 507, 388 S.E.2d 823, 827 (Ct. App. 1989).

^[3]Webb v. First Federal Savings & Loan Ass'n of Anderson, 300 S.C. 507, 388 S.E.2d 823, 827 (Ct. App. 1989).

^[4] Myrtle Beach Hosp. v. City of Myrtle Beach , 341 S.C. 1, 532 S.E.2d 868 (2000).

^[5]See also Regions Bank v. Wingard Properties, Inc., 394 S.C. 241, 715 S.E.2d 348 (Ct. App. 2011) (referring to unjust enrichment based on quantum meruit, quasi-contract, and...