Archive for April 2017

Quantum Meruit A Limited Refuge for Contractors

April 19, 2017

pipesIn the recent Illinois Appellate Court decision in Archon Construction Company, Inc. v. U.S. Shelter, L.L.C., et al., the Court clarified when a quantum meruit claim is proper in a construction dispute. The Court held that if an express contract governs the same general subject matter as the challenged work, a quantum meruit claim is barred as a matter of law.

In Archon, U.S. Shelter hired Archon Construction Co. to install a sanitary sewer system in the city of Elgin, Illinois. The contract incorporated plans and specifications, which called for installation of PVC or ductile iron piping. The contract also required that prior to completion, the city approve and accept the system. Archon submitted its plans to U.S. Shelter, which included the use of PVC pipe. U.S. Shelter approved the plans and Archon commenced construction. After Archon completed its work, the city undertook a televised visual inspection of the system and determined that repairs were needed before it would accept the system. Specifically, the city required that the repairs include “replac[ing] with ductile iron the main, T’s and service lines up to a depth of 10’.” This was the first time that ductile iron was required on the project.

Archon performed the repairs and replacement work and sent U.S. Shelter a bill totaling $247,432.41 for its time and materials performing the additional work required by the city. U.S. Shelter refused to pay and this lawsuit ensued. Initially Archon pursued a multi-count complaint against U.S. Shelter, including counts of breach of contract for failure to pay for extra work or, in the alternative, quantum meruit. Archon eventually voluntarily dismissed its contract-based claims for extra work and pursued only quantum meruit.

In doing so, Archon tried and failed to take advantage of a path to recovery for those who perform work without the protections of an express contract. Quantum meruit is the refuge of plaintiffs who perform work for which no express contract exists. It is axiomatic, therefore, that the existence of an express contract regarding the work performed precludes any possibility of success on a quantum meruit claim.

Archon pursued its quantum meruit claim on the theory that the work it performed – namely the installation of ductile iron instead of its previously approved PVC pipe – was outside the terms of its contract with U.S. Shelter. In short, Archon attempted to walk the thin line between work being “outside the scope of the contract” (one of the elements for an extras claim) and there being no express contract governing the work.

The Illinois appellate court made short work of this semantic maneuvering by articulating a clearer test for evaluating a quantum meruit claim when an express contract exists between the parties: does the express contract govern the same general subject matter as the challenged work? If the answer is yes, a quantum meruit claim is barred as a matter of law. Here, the work performed related to the same general subject matter as the work described and specified in the express contract – namely the installation of an acceptable sanitary sewer system. The fact that Archon had to replace previously approved and installed PVC pipe with ductile iron was arguably an “extra” but not outside the purpose of the express contract: delivering an acceptable sanitary sewer system.

This case indicates that courts are hesitant to allow quantum meruit actions to proceed when a party under a contract performs a service that is not precisely covered by the contract, but is within the general ambit of the contract’s purpose. Plaintiffs are most likely to prevail under quantum meruit when either (1) no express contract exists between the parties or (2) an express contract exists but explicitly excludes a type of work that plaintiff ends up performing during the course of the job. Thus, courts generally will not entertain extra-contractual claims where an express contract governing the work exists unless the court has a good reason to do so, like contractual exclusion of a specific type of work that a party ends up performing, or a party performing work wholly unrelated to the underlying contract.


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