Opinion ID: 498428
Heading Depth: 2
Heading Rank: 1

Heading: The quantum meruit award

Text: 18 It is well established that an action in quantum meruit is available to a subcontractor to recover from a breaching contractor under the Miller Act. 2 Wunderlich Contracting Co. v. United States, 240 F.2d 201 (10th Cir.), cert. denied, 353 U.S. 950, 77 S.Ct. 861, 1 L.Ed.2d 859 (1957); Southern Painting Co. of Tenn. v. United States, 222 F.2d 431, 433 (10th Cir.1955); see also United States ex rel Coastal Steel Erectors, Inc. v. Algernon Blair, Inc., 479 F.2d 638 (4th Cir.1973). Recovery in quantum meruit is measured by the reasonable value of the subcontractor's performance. Southern Painting, 222 F.2d at 433-34, (citing United States ex rel Susi Contracting v. Zara Contracting Co., 146 F.2d 606, 610 (2d Cir.1944)). The standard for measuring the reasonable value of the subcontractor's performance is frequently defined as the amount for which such services could have been purchased from one in the plaintiff's position at the time and place the services were rendered. Coastal Steel, 479 F.2d at 641, (citing United States ex rel F.E. Robinson Co. v. Alpha-Continental, 273 F.Supp. 758, 777 (E.D.N.C.1967), aff'd 404 F.2d 343 (4th Cir.1968), cert. denied, 395 U.S. 922, 89 S.Ct. 1774, 23 L.Ed.2d 239 (1969)). The value of the services provided is not limited by the contract price. Thus, [t]he impact of quantum meruit is to allow a promisee to recover the value of services he gave ... irrespective of whether he would have lost money on the contract and been unable to recover in a suit on the contract. Coastal Steel, 479 F.2d at 641. 19 This standard is clearly applicable to the Sanchez claim. The trial court found that Sanchez underbid the subcontract and would have lost money if the subcontract had been completed. Accordingly, the court granted Sanchez' quantum meruit claim and calculated the reasonable value of the services rendered. Sanchez appeals the award as inadequate, arguing that the district court improperly calculated the value of the services rendered prior to the termination of the subcontract by Western. 20 The trial court found that the reasonable value of the earthwork subcontract was $475,000. It should be noted that Western disputes that finding, arguing that the Sanchez bid (less than $300,000) and later bids by CJC and Metcalf 3 demonstrate a lower value. The trial court's finding is not clearly erroneous and we will not disturb it. The trial court also found that Sanchez completed 40% of the earthwork subcontract, apparently relying on the testimony of Morrison, who was Sandia's surveyor, and Hugg, who was hired by Western to cross-section Sanchez' work and estimate the percentage of earthwork completed. Sanchez disputes that finding. First, Fred Sanchez testified that he had completed approximately 70% of the earthwork. Second, Sanchez argues that the estimates of Hugg and Morrison were merely guesswork, and that the data compiled by the two surveyors can be interpreted to show a much higher completion percentage. Again, there is evidence in the record to support the district court's finding and it is not clearly erroneous. 21 The court then determined that the reasonable value of the work performed by Sanchez was 40% of $475,000, or $190,000. Sanchez argues that the court's methodology underestimated the value of his work because the percentage of earth moved does not necessarily equate with the costs incurred. In other words, [w]hile the job may be only forty percent (40%) complete in terms of volume of total earth to be moved into place, it may be already eighty percent (80%) complete in terms of the cost of moving such earth. Brief for Sanchez at 9. Sanchez argues that the actual costs incurred by Sanchez (estimated at $360,902.50) are a better measure of the value of the work done. Although the district court's reasoning is not completely clear, we believe that the court could not properly rely on Sanchez' unit prices to determine the reasonable value of the work because the testimony indicated that Sanchez was (1) not always moving earth in the most efficient manner; and (2) not always moving it to the right place. Thus, the amount of earth moved and the time required by Sanchez does not provide a reliable estimate of the value of that performance to Western. We see no reason to alter the value of Sanchez' performance as calculated by the district court. 22 Finally, the district court reduced the award to Sanchez by deducting $40,000 as the cost of correcting errors made by Sanchez. Sanchez argues that this adjustment was incorrect. After reviewing the claims made by Sanchez, we find (1) the trial court's finding that Sanchez' work was defective in some respects is not clearly erroneous; (2) similarly, the trial court's estimate that correcting those errors cost Western $40,000 is not clearly erroneous; and (3) the theory of the award to Sanchez--quantum meruit--requires that the court deduct the cost of corrective work to properly arrive at the value of performance. 4 See W.F. Magann Corp. v. Diamond Mfg. Co., Inc., 775 F.2d 1202, 1208 (4th Cir.1985) (a threshold requirement for recovering quantum meruit damages is that the defendant receive the benefit of the plaintiff's performance. Otherwise, the defendant cannot be unjustly enriched.); Leo Spear Constr. Co. v. Fidelity and Casualty Co. of New York, 446 F.2d 439, 443-44 (2d Cir.1971) (deductions for corrective work in quantum meruit recovery); Restatement (Second) of Contracts Sec. 373 comment d (1979) (the party in breach is liable only to the extent that he has benefited from the injured party's performance.). 23 Sanchez also argues that the trial court erred by not increasing the award by the value of extra rock excavation. The trial court did find that the plans prepared by Sandia significantly underestimated the rock excavation to be done on the project and that Sanchez did excavate much more rock than called for by the plans. However, these findings were, in part, the basis for the court's quantum meruit award. Sanchez was unable to recover for the extra rock excavation under the contract because it failed to seek a change order as required by the terms of the contract. 5 Under a quantum meruit theory, Sanchez may recover the reasonable value of the work performed. As noted earlier, in this context, the award is measured by the value of the work to Western, not the costs incurred by Sanchez. This is a difficult question, because the trial court's estimate of the reasonable value of the earthwork subcontract may not have included the extra rock excavation. However, after a careful review of the record, we are unable to find a clear error by the trial court. Although the trial court did not explicitly find that the extra rock excavation was included in its estimate of the value of the earthwork subcontract, such a finding is implicit. 24 Finally, Sanchez relies on a contract theory to suggest an alternative damage award. Western demonstrates that under a properly calculated contract damage award, the award to Sanchez would actually be reduced. We find no merit in Sanchez' contract claim. Similarly, we reject Sanchez' claim that $30,000.00 in profits should be added to the court's quantum meruit award. The evidence supports the trial court's finding that Sanchez would have made no profit on the contract.