Case Title: Paffhausen v. Balano

Citation: 1998 ME 47, 708 A.2d 269

Docket Number: 1998-me-47-0

State: maine

Court: Maine Supreme Court

Date: 1998-03-06T00:00:00Z

Document:
Decided March 6, 1998. *270 Joseph Steinberger (orally), Rockland, for appellant. Stephen W. Hanscom (orally), Crandall, Hanscom, Pease and Collins, P.A., Rockland, for appellees. Before WATHEN, C.J., and ROBERTS, CLIFFORD, RUDMAN, DANA and LIPEZ, JJ. CLIFFORD, Justice. [¶ 1] David Paffhausen appeals from an order entered in the Knox County Probate Court (Emery, J.) rejecting his quantum meruit claim against the estate of Elizabeth Balano but allowing recovery for unjust enrichment. Because we conclude that David was entitled to recover pursuant to the theory of quantum meruit, we vacate the judgment. [¶ 2] In March 1990, David, who is a carpenter and an artist, asked Elizabeth Balano for permission to renovate a building owned by her. David had hoped to convert the building into a fine art print shop. The evidence shows that Elizabeth approved David's request, with the understanding that he would pay her $60.00 per month after he "got the business up and running." Over the course of David's extensive renovations,[1] Elizabeth at various times signed notes to various town authorities approving his work and allowing him to procure permits. She also gave him a signed note on December 11, 1991 stating: "To Whom it may Concern David can use my house as long as he needs it."[2] [¶ 3] The building was revamped sufficiently to allow David to host two art shows in 1994 and 1995. After Elizabeth's death in October of 1995, her personal representatives offered David one year of free rent, after which his rent would be $60 per month, but for no definite term. David rejected the offer, presumably because beyond one year he would be a tenant at will, subject to eviction. Throughout the period of David's renovation of the property, Elizabeth or her estate paid all real estate taxes and insurance premiums, and David has paid no rent. [¶ 4] In 1996 David filed a claim against Elizabeth's estate. The estate disallowed the claim. Pursuant to 18-A M.R.S.A. § 3-806, David filed a petition to resolve a disputed claim in the Probate Court. After a hearing, the court rejected David's theory of quantum meruit, but did allow David to recover $12,300 as unjust enrichment based on what the court found to be the value of the improvements to the building. [¶ 5] David contends the court erred in concluding that he failed to prove the elements of quantum meruit. David argues that he and Elizabeth had an understanding that for the renovations he made to the building he reasonably expected to receive, and Elizabeth promised to give, "the use of the building at no or nominal rent" for as long as he needed it, and that this understanding entitles him to recover from the estate in quantum meruit. On appeal, we defer to the trial court on its findings of fact, but review de novo the application of the law *271 to those facts. Estate of Plummer, 666 A.2d 116 , 118 (Me.1995). [¶ 6] We have recently explained the difference between quantum meruit and unjust enrichment. Quantum meruit, also sometimes labelled "contract implied in fact," involves recovery for services or materials provided under an implied contract. See Aladdin Elec. Assoc. v. Old Orchard Beach, 645 A.2d 1142 , 1145 (Me.1994). See also United States ex rel. Modern Elec., Inc. v. Ideal Elec. Sec. Co., 81 F.3d 240, 246 (D.C.Cir.1996) ("[Q]uantum meruit . . . rests on a contract implied in fact, that is, a contract inferred from the conduct of the parties."). Unjust enrichment describes recovery for the value of the benefit retained when there is no contractual relationship, but when, on the grounds of fairness and justice, the law compels performance of a legal and moral duty to pay, and the "damages analysis is based on principles of equity, not contract." Aladdin Elec. Assoc., 645 A.2d at 1145.[3] [¶ 7] Damages in unjust enrichment are measured by the value of what was inequitably retained. Id. In quantum meruit, by contrast, the damages are not measured by the benefit realized and retained by the defendant, but rather are based on the value of the services provided by the plaintiff. See Siciliani v. Connolly, 651 A.2d 386, 387 (Me.1994) (plaintiff's labor rather than enhanced value of property is the proper measure in quantum meruit claim); William Mushero, Inc. v. Hull, 667 A.2d 853 , 855 (Me.1995) (quantum meruit damages are equal to the reasonable value of the services rendered). [¶ 8] A valid claim in quantum meruit requires: "that (1) services were rendered to the defendant by the plaintiff; (2) with the knowledge and consent of the defendant; and (3) under circumstances that make it reasonable for the plaintiff to expect payment." Bowden v. Grindle, 651 A.2d 347 , 351 (Me.1994). *272 [¶ 9] While the formalities of an express contract are not a prerequisite to recovery in quantum meruit, there must be a reasonable expectation on the part of the claimant to receive compensation for his services and a "concurrent intention" of the other party to compensate him. Estate of White, 521 A.2d 1180 , 1183 (Me.1987). Similarly, we have said that an implied promise is made to a person "when the surrounding circumstances make it reasonable for him to believe that he will receive payment . . . from the other." Bourisk v. Amalfitano, 379 A.2d 149 , 151 (Me.1977). Danforth v. Ruotolo, 650 A.2d 1334 (Me.1994), described this test of reasonableness as requiring "proof that services were rendered under circumstances consistent with contract relations." Id. at 1335. It must appear that the one who rendered the services expected compensation and that the one who received or benefitted from the services so understood, and by her words or conduct justified the expectation. Colvin v. Barrett, 151 Me. 344, 348, 118 A.2d 775 (1955). Quantum meruit may lie when "there was not a clear accession on both sides to one and the same terms," if services are provided "under circumstances that negative the idea that the services were gratuitous." Id. at 349, 118 A.2d 775 (citations omitted). When such a party to whom services are rendered "knows it and permits it and accepts the benefit, he is bound to pay a reasonable compensation therefor." Id. See also Ideal Elec. Sec. Co., 81 F.3d at 246 (requiring "circumstances which reasonably notified the person that the plaintiff, in performing such services, expected to be paid"); Montes v. Naismith and Trevino Constr. Co., 459 S.W.2d 691, 694 (Tex.Civ.App.1970) (". . . under such circumstances as reasonably notified the person sought to be charged that the plaintiff, in performing such services was expecting to be paid by the person sought to be charged"). [¶ 10] Although the decision of the Probate Court reflects thoughtful attention to the details of the case, the court nevertheless erred in its application of the law of quantum meruit to its factual findings and in its conclusion that the evidence does not support a recovery in quantum meruit.[4] The court did find that extensive services were rendered by David to renovate the building, and that Elizabeth "approved of his desire to transform her building into a print shop/art gallery." The court, however, erroneously concluded that David failed to show a reasonable expectation of payment. The court determined that there was no "contemporaneous understanding between the parties," and concluded there was no evidence that Elizabeth intended to reimburse David for his expenses. The court would not allow David recovery in quantum meruit unless he proved Elizabeth's intention to compensate him fully for all of his labor and expenses to convert the building either through cash reimbursement or use of the building for as long as he wished for a nominal rent. All that the law of quantum meruit requires David to prove, however, is that he had a reasonable expectation that his work was not gratuitous and that Elizabeth by her words or conduct justified this expectation.[5]Colvin v. Barrett, 151 Me. at 348, 118 A.2d 775 . *273 [¶ 11] Elizabeth's note that "David can use my house as long as he needs it" falls short of an express contract. Yet the court's findings of Elizabeth's "full consent and support" for David's renovations, and that Elizabeth told David that "when he had it functioning as a print shop he could pay her $60.00 a month rent," and the other evidence, including Elizabeth's written statement that David could "use my house as long as he needs it," compel a finding that "services were rendered under circumstances consistent with contract relations." Danforth v. Ruotolo, 650 A.2d at 1335. David's reasonable expectation of a right to use the building for at least a substantial period of time for a below-market rental in exchange for the improvements to the building that he made with Elizabeth's approval is different in kind from the legal and moral duty to pay for the value of improvements that equity imposes in the unjust enrichment context.[6] The evidence as found by the court supports David's claim that he is entitled to recover in quantum meruit for the reasonable value of his labor and the materials that went into the improvements to the building. [¶ 12] On remand, the court must determine the reasonable value of David's labor and the materials that were used to renovate and improve the building, William Mushero, Inc. v. Hull, 667 A.2d 853 (1995), offset by the value of David's use of the building. The entry is: Judgment vacated. Remanded to Probate Court for further proceedings consistent with the opinion herein.