Commerce Partnership v. Equity Contracting

Dispute

A subcontractor brought a suit against an office building owner for the cost of work performed. The office building owner claimed that they had paid the contractor for the overall project, but the contractor did not pay the subcontractor. The subcontractor sued the owners under the theory of quantum meruit, which it and the court took to mean a quasi contract or contract implied in law, but which the owners took to mean a contract implied in fact.

Owner’s motion for dismissal on the grounds that there was no contract implied in fact was denied by the trial court. The owner claimed it had paid out more than the original contracted price. The trial court entered judgment in favor of the subcontractor, and the owner appealed.

Rule of law

A contract implied in fact is an enforceable contract inferred in whole or in part by the parties’ actions. A quasi contract, or contract implied in law, is a legal fiction, an obligation created by the law without regard to expressions of assent, and was adopted to provide a remedy in situations of unjust enrichment. A quasi contract requires that the plaintiff conferred a benefit on the defendant, the defendant had knowledge of the benefit, the defendant accepted the benefit, and it would be inequitable for the defendant to retain it without paying for it. The most significant requirement for a recovery on quasi contract is that the enrichment be unjust, and a plaintiff cannot recover if the defendant gave any consideration to any party for the enrichment.

Arguments

The defendant argued it had paid substantial money to the contractor as well as to several subcontractors. It also argued, without relevance, that there was no contract implied in fact.

The plaintiff argued the defendant had not made payments for the enrichment received and that they deserved payment under a theory of quantum meruit, or a contract implied in law.

Conclusions

The appellate court held that the trial court had erred by treating the question of payment by the defendant as an affirmative defense rather than as an element of the quasi contract claim. The burden of proof was on the plaintiff to plead and prove that the defendant had not made payments to any party for the benefits conferred on the property. Reversed and remanded for trial.

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