Thursday, December 8, 2011

Express contract as a bar to recovery under alternative quantum meruit theory

In the presence of a valid contract covering the transaction, recovery on an equitable theory such as quantum meruit is generally not available, but there are limited exceptions.


Quantum meruit “is founded [on] the principle of unjust enrichment.” Bashara v. Baptist Mem’l Hosp. Sys., 685 S.W.2d 307, 310 (Tex. 1985). Unjust enrichment is an implied-contract theory stating one should make restitution when it would be unjust to retain benefits received. Walker v. Cotter Props., Inc., 181 S.W.3d 895, 900 (Tex. App.—Dallas 2006, no pet.).

Unjust enrichment allows recovery “when one person has obtained a benefit from another by fraud, duress, or the taking of an undue advantage.” Heldenfels Bros., Inc. v. Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992). It is “based upon the promise implied by law to pay for beneficial services rendered and knowingly accepted.” In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 740 (Tex. 2005) (internal quotation marks omitted).


But an express contract between the parties precludes a plaintiff from recovering for services rendered in quantum meruit if the contract covers those services or materials and if no exception to the general rule applies. See Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 683–84 (Tex. 2000); Pepi v. Galliford, 254 S.W.3d 457, 462 (Tex. App.—Houston [1st Dist.] 2007, pet. denied); see also Woodard v. Sw. States, Inc., 384 S.W.2d 674, 675 (Tex. 1964) (“Recovery on an express contract and on quantum meruit are inconsistent.”).

The equitable remedy of quantum meruit is therefore unavailable when an express contract covers the subject matter at issue—the party seeking compensation has a legal remedy under the contract. See id. (citing Heldenfels Bros., 832 S.W.2d at 41); see also Hester v. Friedkin Cos., Inc., 132 S.W.3d 100, 106 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (holding that express contract bar applies not just when plaintiff is seeking to recover in quantum meruit from party with whom it expressly contracted, but also when plaintiff is seeking to recover “from a third party foreign to the original contract but who benefitted from its performance”) (quoting Iron Mountain Bison Ranch Inc. v. Easley Trailer Mfg., Inc., 42 S.W.3d 149, 160 (Tex. App.—Amarillo 2000, no pet.)).
Both the existence of an express contract and federal preemption are affirmative defenses to [party's] state law quantum meruit claim. See Tricon Tool & Supply, Inc. v. Thumann, 226 S.W.3d 494, 500 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) (noting that express contract is affirmative defense to quantum meruit claim); Harrill v. A.J.’s Wrecker Serv., Inc., 27 S.W.3d 191, 194 (Tex. App.—Dallas 2000, pet. dism’d w.o.j.) (observing that preemption is affirmative defense (citing Kiefer v. Cont’l Airlines, Inc., 882 S.W.2d 496, 497–98 (Tex. App.—Houston [1st Dist.] 1994), aff’d, 920 S.W.2d 274 (Tex. 1996))). A party that asserts an affirmative defense bears the burden of proving it. Tricon Tool & Supply, 226 S.W.3d at 501. In the absence of specific jury findings on these affirmative defenses, we consider whether [party] has established each element of its defense conclusively and whether reasonable minds could not differ as to the truth of the controlling facts. See Brown v. Zimmerman, 160 S.W.3d 695, 702 (Tex. App.—Dallas 2005, no pet.); Brown v. Shores, 77 S.W.3d 884, 885 n.2 (Tex. App.—Houston [14th Dist.] 2002, no pet.). In reviewing the express contract issue, we note the jury’s findings that [party] failed to pay for medical services under the plan but was excused from doing so.

SOURCE: HOUSTON COURT OF APPEALS - 01-09-00591-CV - 12/8/2011

Christus Health d/b/a Uniform Services Family Health Plan, Appellant v. Quality Infusion Care, Inc.,

We hold that the trial court erred in awarding judgment in favor of Quality on the jury’s quantum meruit finding because the express contract rule bars a quantum meruit recovery here as a matter of law, given the jury’s implied findings that a contract existed, and express finding that Christus’s failure to comply was excused—coupled with evidence that Quality failed to seek pre-authorization for treatment, as the agreement required. See Pepi Corp., 254 S.W.3d at 462–63; see also Bado Equip. Co., Inc. v. Bethlehem Steel Corp., 814 S.W.2d 464, 473 (Tex. App.—Houston [14th Dist.] 1991, no writ) (holding that summary judgment was proper on unjust enrichment claim brought by seller of cranes [against purchaser, constructor of rig, corporation that subsequently purchased rig, and second corporation which, along with constructor, was joint owner of corporation that purchased rig] because of express contract covering goods); Econ. Forms Corp. v. Willams Bros. Constr. Co., Inc., 754 S.W.2d 451, 458–59 (Tex. App.—Houston [14th Dist.] 1988, no writ) (holding general contractor not liable in quantum meruit for unpaid party who had lease agreement with subcontractor covering materials provided by party because express contract covered materials).


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