It is common in construction litigation for contractors suing owners to assert a right to recover damages for more than just a breach of contract. Two of the most popular legal theories beyond breach of contract are “unjust enrichment” and “quantum meruit.” Although distinct, they share some elements, which often leads to confusion between them. As our federal court has noted, “New Hampshire cases do not clearly differentiate between theories of unjust enrichment and quantum meruit.” Eastern Electric Corp. v. FERD Construction Inc., 2005 WL 3447957 at *3 n.1 (D.N.H. Dec. 15, 2005) (citing cases). Let’s try to tease them apart.
“Unjust enrichment” is exactly what it sounds like – recognition by the courts that when one party has benefited from another party’s services, justice often demands that they be paid for. “In the absence of a contractual agreement, a trial court may require an individual to make restitution for unjust enrichment if he has received a benefit which would be unconscionable to retain.” Petrie-Clemons v. Butterfield, 122 N.H. 120, 127 (1982). Sometimes this theory applies even if the services in question were never expressly requested by the beneficiary.
This “absence of a contractual arrangement” prerequisite has historical roots. Unjust enrichment is what lawyers refer to as an “equitable” remedy, distinguished from a “legal” remedy (such as for breach of contract). Many years ago there were separate courts of law and courts of equity (or courts of “chancery,” to use the term then in vogue), and a disappointed suitor in the law courts could turn to the equity courts for another shot at recovery. With the merger of law and equity in modern times – at least in the Superior Court (Circuit Courts lack equity jurisdiction and cannot entertain unjust enrichment claims, Barlo Signs International, Inc. v. GCD, Inc., 2018 WL 3237974 (N.H. Sup. Ct., June 29, 2018)) – the principle that legal remedies are favored over equitable ones has survived. So, if the parties have a contract addressing their rights and obligations with respect to payment for the work in question, equitable remedies like unjust enrichment are unavailable.
Quantum meruit – Latin for “as much as is deserved” – is slightly different. It provides a basis for recovery when a valid contract exists but for some reason can’t be successfully invoked, such as where the unpaid party is himself in breach, or is unable to satisfy a contractual condition to payment, or (my favorite) where extra work beyond the contract scope is performed but a formal change order does not get signed.
Unjust enrichment and quantum meruit have different theoretical roots. The law distinguishes implied-in-fact contracts, i.e., true contracts in which an actual agreement of the parties is inferred from circumstantial evidence, and implied-in-law contracts, which are legal fictions designed to prevent injustice. Morgenroth & Associates, Inc. v. Town of Tilton, 121 N.H. 511, 514 (1981). Unjust enrichment fits snugly into the implied-in-law category. Id. But our federal court has said “Quantum meruit, also sometimes labelled ‘contract implied in fact,’ involves recovery for services or materials provided under an implied contract.” Universal Am-Can, Ltd. v. CSI-Concrete Systems, Inc., 2012 WL 579167 at *9 (D.N.H. Feb. 22, 2012) (citation omitted). This suggests that quantum meruit is not an equitable remedy at all, as some courts – although not our Supreme Court as yet – have recognized. See Dinan v. Alpha Networks, Inc., 60 A.3d 792 (Me. 2013) (“Quantum meruit is a legal, not an equitable, remedy and thus is distinct from the theory of unjust enrichment.”).
Quantum meruit and unjust enrichment have different measures of damages. “While ‘[d]amages in unjust enrichment are measured by the value of what was inequitably retained[,][i]n quantum meruit, by contrast, the damages ... are based on the value of the services provided by the plaintiff.’” General Insulation Co. v. Eckman Construction, 159 N.H. 601, 612 (2010) (citation omitted). Sometimes these two measures will yield identical results. R. Zoppo Co., Inc. v. City of Manchester, 122 N.H. 1109, 1113-14 (1982) (“evidence of the plaintiff's expenditures may be considered as circumstantial evidence of the value of the benefit conferred upon a defendant.”).
Still confused? Trust me, you’ve got lots of company!
“Unjust enrichment” is exactly what it sounds like – recognition by the courts that when one party has benefited from another party’s services, justice often demands that they be paid for. “In the absence of a contractual agreement, a trial court may require an individual to make restitution for unjust enrichment if he has received a benefit which would be unconscionable to retain.” Petrie-Clemons v. Butterfield, 122 N.H. 120, 127 (1982). Sometimes this theory applies even if the services in question were never expressly requested by the beneficiary.
This “absence of a contractual arrangement” prerequisite has historical roots. Unjust enrichment is what lawyers refer to as an “equitable” remedy, distinguished from a “legal” remedy (such as for breach of contract). Many years ago there were separate courts of law and courts of equity (or courts of “chancery,” to use the term then in vogue), and a disappointed suitor in the law courts could turn to the equity courts for another shot at recovery. With the merger of law and equity in modern times – at least in the Superior Court (Circuit Courts lack equity jurisdiction and cannot entertain unjust enrichment claims, Barlo Signs International, Inc. v. GCD, Inc., 2018 WL 3237974 (N.H. Sup. Ct., June 29, 2018)) – the principle that legal remedies are favored over equitable ones has survived. So, if the parties have a contract addressing their rights and obligations with respect to payment for the work in question, equitable remedies like unjust enrichment are unavailable.
Quantum meruit – Latin for “as much as is deserved” – is slightly different. It provides a basis for recovery when a valid contract exists but for some reason can’t be successfully invoked, such as where the unpaid party is himself in breach, or is unable to satisfy a contractual condition to payment, or (my favorite) where extra work beyond the contract scope is performed but a formal change order does not get signed.
Unjust enrichment and quantum meruit have different theoretical roots. The law distinguishes implied-in-fact contracts, i.e., true contracts in which an actual agreement of the parties is inferred from circumstantial evidence, and implied-in-law contracts, which are legal fictions designed to prevent injustice. Morgenroth & Associates, Inc. v. Town of Tilton, 121 N.H. 511, 514 (1981). Unjust enrichment fits snugly into the implied-in-law category. Id. But our federal court has said “Quantum meruit, also sometimes labelled ‘contract implied in fact,’ involves recovery for services or materials provided under an implied contract.” Universal Am-Can, Ltd. v. CSI-Concrete Systems, Inc., 2012 WL 579167 at *9 (D.N.H. Feb. 22, 2012) (citation omitted). This suggests that quantum meruit is not an equitable remedy at all, as some courts – although not our Supreme Court as yet – have recognized. See Dinan v. Alpha Networks, Inc., 60 A.3d 792 (Me. 2013) (“Quantum meruit is a legal, not an equitable, remedy and thus is distinct from the theory of unjust enrichment.”).
Quantum meruit and unjust enrichment have different measures of damages. “While ‘[d]amages in unjust enrichment are measured by the value of what was inequitably retained[,][i]n quantum meruit, by contrast, the damages ... are based on the value of the services provided by the plaintiff.’” General Insulation Co. v. Eckman Construction, 159 N.H. 601, 612 (2010) (citation omitted). Sometimes these two measures will yield identical results. R. Zoppo Co., Inc. v. City of Manchester, 122 N.H. 1109, 1113-14 (1982) (“evidence of the plaintiff's expenditures may be considered as circumstantial evidence of the value of the benefit conferred upon a defendant.”).
Still confused? Trust me, you’ve got lots of company!
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