Quantum Meruit for Calculating and Presenting Damages in a Construction Claim

When a contractor’s costs exceed its contract amount on a construction project due to owner-caused impacts, the contractor can choose from several damages methods in seeking equitable compensation.

If the claimant can show 1) entitlement to recover for the other party’s wrongful conduct, and 2) damage incurred because of that wrongful conduct, the claimant may recover even though the amount of the damage is uncertain or is based on estimates. There are several methods currently in use for the calculation of recoverable damages.

Previous blog posts address the Total Cost, Modified Total Cost, and Jury Verdict methods. This post will focus on Quantum Meruit. Future blog posts will discuss the A/B Estimate, Delta Estimate, and Discrete Damages/Cost Variance Analysis methods.

For various reasons, a contractor may be unable to recover damages under the original contract. When this occurs, the contractor may pursue recovery under a quasi-contractual remedy known as “Quantum Meruit,” which simply means “as much as one deserves.” Such situations may occur when the contract is found to be unenforceable or when the contractor performs extra work that the original contract does not cover. Where Quantum Meruit recovery is sought, the contractor will set forth its determination of the reasonable value of the benefit conferred upon the owner. The court will usually consider all competent evidence of actual contractor expenditures in determining that reasonable value.

A contractor may recover under a theory of Quantum Meruit if it can prove substantial performance on the construction contract and an endeavor on its part in good faith to perform fully under the contract. An intentional departure from the requirements of the contract is per se not in good faith unless 1) the defendant at least in part caused the failure, or 2) the departure is so trifling it is de minimis. Additionally, a party seeking recovery under Quantum Meruit that has been terminated wrongly need not prove substantial performance of the entire contract, but it must prove substantial performance and an intention to completely perform up until the date of termination.

Quantum Meruit may apply when an express contract is abandoned. Courts will seek a remedy such that the contractor is to be paid the reasonable value of its work. The rules governing when an abandonment of contract occurs to enable recovery in Quantum Meruit include:

Rescission by abandonment requires mutual assent of the parties.¹

An abandonment may be accomplished by express mutual consent or by implied consent through the actions of the parties.²

A contract will be treated as abandoned when the acts of one party, inconsistent with its existence, are acquiesced in by another…. Where acts and conduct are relied upon to constitute abandonment, however, they must be positive, unequivocal, and inconsistent with intent to be further bound by the contract.³

Uncommunicated subjective intent by one party to abandon is not sufficient to release the obligations.⁴

If there is no special agreement, the builder’s compensation is the reasonable value of the services rendered and the materials furnished by him; and this is so, also, where the building plan is abandoned to such an extent that it is impossible to trace the contract in the work done.⁵

In C. Norman Peterson Co. v. Container Corp.,⁶ Quantum Meruit was used to calculate the reasonable value of the work performed by the contractor resulting from numerous change orders and contract abandonment. The California state court found that the scope of work had changed due to an excessive number of changes and invoked the Cardinal Change doctrine to allow recovery on a Quantum Meruit basis.

There are three prerequisites to establishing abandonment of contract and obtaining recovery in Quantum Meruit:

1. There was “substantial” change in the work;
2. The change was not covered by the contract or contemplated by the parties; and
3. The contractor should not have anticipated or discovered the change.

Typically, under Quantum Meruit recovery, value is calculated in terms of the contractor’s cost of performance rather than by some other measure, such as the increase in value of the owner’s property.⁷ Even when the contract is not abandoned, a contractor can recover in Quantum Meruit for extra work outside the scope of the contract.

¹         City of Del Rio v. Ulen Contracting Corp., 94 F.2d 701, 704 (5th Cir. 1938). Accord, California Civil Code §1689 (a).

²         Schwartz v. Shelby Constr. Co., 338 S.W.2d 781, 788 (Mo. 1960).

³         H.T.C. Corp. v. Olds, 486 P.2d 463, 466 (Colo. App. 1971).

⁴         Modern Builders, Inc. of Tacoma v. Manke, 27 Wash. App. 86, 615 P.2d 92 (1980).

⁵         Obert v. Ede, 38 Wis.2d 240, 156 N.W.2d 422, 424 (1968), quoting 17A Corpus Juris Secundum, Contracts §367(1), p. 374.

⁶         See C. Norman Peterson Co. v. Container Corp. of Am., 218 Cal. Rptr. 592 (Cal. Ct. App. 1985).

⁷         See City of Portland ex rel. Donohue & Fleskes Corp. v. Hoffman Constr. Co., 236 Ore. 739, 596 P.2d 1305, 1309, 1313 Fn. 22 (1979).

ADDITIONAL RESOURCES

Blog

Discover industry insights on construction disputes and claims, project management, risk analysis, and more.

MORE

Articles

Articles by our engineering and construction claims experts cover topics ranging from acceleration to why claims occur.

MORE

Publications

We are committed to sharing industry knowledge through publication of our books and presentations.

MORE