Whatever the contract says will likely be what matters

But I thought ... bla, bla.
But it was my understanding ... yada, yada... 

Express contract controls over implied contract claim and claim that terms were orally modified where express contract contained integration clause and barred parol evidence inconsistent with the terms stated in the written (fee) agreement.   

EXPRESS CONTRACT TAKES PRECEDENCE  

"If the parties have expressly stated the terms of their agreement, they have created an express contract and are bound by it to the exclusion of conflicting implied terms." Malallah v. Noble Logistic Servs., Inc., No. 14-08-01030-CV, 2010 WL 343487, at *2, (Tex. App.-Houston [14th Dist.] Feb. 2, 2010, pet. denied) (quoting Emmer v. Phillips Petroleum Co., 668 S.W.2d 487, 490 (Tex. App.-Amarillo 1994, no writ)) (internal quotation marks omitted); see also David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008) (per curiam) (declining to hold that a written attorney-fee agreement which specified only hourly rates may be modified by evidence of an oral capping agreement).

SOURCE: HOUSTON COURT OF APPEALS - 14-12-00088-CV – 3/14/2013 

 

 

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 AS A THEORY OF RECOVERY 

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).

EXPRESS CONTRACT PRECLUSION OF EQUITABLE CLAIM

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.)).
  
STANDARD OF REVIEW ON APPEAL
  
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).

SOURCE: OPINION FROM HOUSTON COURT OF APPEALS - - 12/8/2011

When can a Plaintiff recover in quantum meruit? When not?

When is quantum meruit available as a theory of recovery, when not?

EXPRESS CONTRACT VS. QUASI-CONTRACTUAL EQUITABLE THEORIES


Equitable theories are generally not available when the Plaintiff's claim involves contractual obligations, but there are exceptions to the express-contract preclusion of alternative non-contract theories. 

THE NATURE OF QUANTUM MERUIT AS A THEORY OF RECOVERY

Quantum meruit is an equitable and alternative theory of recovery intended to prevent unjust enrichment. See In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 740 (Tex. 2005). A cause of action for quantum meruit arises when a plaintiff establishes that it has provided a valuable service to the defendant, the defendant accepted the service, and the defendant had reasonable notice that the plaintiff expected to receive compensation. See Excess Underwriters at Lloyd’s v. Frank’s Casing Crew & Rental Tools, Inc., 246 S.W.3d 42, 49 (Tex. 2008). 
However, while a party may seek alternative relief under contract and quasi-contract theories, it generally cannot recover under quantum meruit when there is a valid contract covering the services or materials furnished and no exception applies. In re Kellogg Brown & Root, 166 S.W.3d at 740. 

THREE RECOGNIZED EXCEPTIONS TO PRECLUSION OF QM BY EXPRESS CONTRACT

The Texas Supreme Court has recognized only three exceptions to the general rule that an express contract bars recovery under quantum meruit: (1) “when a plaintiff has partially performed an express contract but, because of the defendant’s breach, the plaintiff is prevented from completing the contract”; (2) “when a plaintiff partially performs an express contract that is unilateral in nature”; and (3) in a construction contract, when a breaching plaintiff may recover the reasonable value of services less any damages suffered by the defendant if the defendant accepts and retains the benefits arising from the plaintiff’s partial performance. See Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988).

SOURCE: Houston Court of Appeals - 01-10-00042-CV - 8/4/11

When is quantum meruit recovery available even if there was a valid contract?

CONTRACT CLAIM vs. RECOVERY ON COMMON-LAW THEORY OF QUANTUM MERUIT

What is a Quantum Meruit Claim?
    
Quantum meruit is an equitable theory of recovery which is based on an implied agreement to pay for benefits received.  Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992); Iron Mountain Bison Ranch, Inc. v. Easley Trailer Mfg., Inc., 42 S.W.3d 149, 159 (Tex.App.—Amarillo 2000, no pet.). 

Elements of a viable quantum meruit claim:

To establish a claim for quantum meruit damages in Texas, a plaintiff must prove that it (1) provided valuable services or materials, (2) for the benefit of the defendant, (3) that were accepted by the defendant, and (4) the defendant had reasonable notice that the plaintiff expected compensation for the services or materials.  Heldenfels Bros., Inc., 832 S.W.2d at 41; Iron Mountain Bison Ranch, 42 S.W.3d at 159-60.

Express contract generally precludes recovery in quantum meruit, but there are exceptions    

The right to recover in quantum meruit is based upon a promise implied by law to pay for beneficial services rendered and knowingly accepted.  Davidson v. Clearman, 391 S.W.2d 48, 50 (Tex. 1965).  However, when a valid express contract covers the services or materials upon which recovery is sought, recovery in quantum meruit will not be permitted.  Truly, 744 S.W.2d at 936.  But, the existence of an express contract does not preclude recovery in quantum meruit for the reasonable value of services rendered and accepted which are not covered by the contract.  Black Lake Pipe Line Co. v. Union Constr. Co., 538 S.W.2d 80, 86 (Tex. 1976), overruled on other grounds by Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989).

SOURCE: Amarillo Court of Appeals - 07-10-00332-CV - 7/18/11

The trial court’s findings of fact make it clear that the extra work exceeded the scope of the work covered by the express contracts.  Specifically, the trial court found that the work covered by the express contracts could be performed “with the use of ‘glove bags’ that do not involve area containment and donning of hazmat suits.”  However, the extra work that was requested by Scheuerer “included removal of carpet, which did require these extra precautions.”  Appellants’ argument simply states that the express contracts covered “asbestos abatement to be conducted by Appellee” and that, because the express contracts covered asbestos abatement, AMS is precluded from recovery in quantum meruit based on the provision of any asbestos abatement services.  Appellants’ argument, however, wholly fails to address the trial court’s finding that the scope of the asbestos abatement covered by the express contracts was exceeded by the extra work as evidenced by the necessity that AMS take the specified extra precautions.  Finding that there is significant evidence in the record to support the trial court’s finding that the extra work exceeded the scope of the express contracts, we are bound by the trial court’s factual finding.  See McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986) (when a finding of fact is unchallenged, it is binding on an appellate court unless the contrary is established as a matter of law or there is no evidence to support the finding).  Consequently, we overrule appellants’ ninth issue.

SOURCE: Amarillo Court of Appeals - 07-10-00332-CV - 7/18/11

Express contract precludes quantum meruit, unjust enrichment claim

EXPRESS CONTRACT AND QUASI-CONTRACTUAL THEORIES OF RECOVERY INCOMPATIBLE AND MUTUALLY EXCLUSIVE

[R]ecovery under the theory of quantum meruit is prohibited if an express contract covers the services or materials for which the claimant seeks recovery. Gentry v. Squires Constr., Inc., 188 S.W.3d 396, 402-03 (Tex. App.-Dallas 2006, no pet. ).

Here, the jury found the parties had an agreement that covered the services and materials in this case. In its responsive brief, Builders Carpet asserts that Truly v. Austin, 744 S.W.2d 934, 937 (Tex. 1988), provides for an exception that allows “a breaching plaintiff to recover in quantum meruit” in building or construction contracts. Here, however, the jury found Builders Carpet did not breach the contract; consequently, the exception does not apply. Because Builders Carpet cannot recover under a quantum meruit theory as a matter of law, the jury's answers to those questions were immaterial and should have been disregarded. See Spencer v. Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994) (“A question is immaterial when it should not have been submitted, or when it was properly submitted but has been rendered immaterial by other findings.”); Basic Cap. Mgmt. v. Dynex Comm'l, Inc., 254 S.W.3d 508, 513 (Tex. App.-Dallas 2008, pet. granted ) (same).

Generally speaking, when a valid, express contract covers the subject matter of the parties' dispute, there can be no recovery under a quasi-contract theory, such as unjust enrichment. Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000); DeClaire v. G & B Mcintosh Family Ltd. P'ship, 260 S.W.3d 34, 49 (Tex. App.-Houston [1st Dist.] 2008, no pet.). This is because parties should be bound by their express agreements, and when a valid agreement already addresses the matter, recovery under an equitable theory is generally inconsistent with the express terms of the agreement. Conoco, 52 S.W.3d at 684; see also Edwards v. Mid- Continent Office Distribs., L.P., 252 S.W.3d 833, 837 (Tex. App.-Dallas 2008, pet. denied) (“The doctrine of unjust enrichment applies the principles of restitution to disputes that are not governed by a contract between the parties.”).

The Texas Supreme Court, however, has recognized an exception to this rule when overpayment was made under a valid contract. Sw. Elec. Power Co. v. Burlington N. R.R. Co., 966 S.W.2d 467, 469-70 (Tex. 1998).

SOURCE: 05-08-01149-CV (Dallas Court of Appeals) (3/16/10)

Implied contract vs. express contract

IMPLIED-IN-FACT CONTRACT 

Whether an implied contract exists is determined from the parties' actions and conduct. See Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros. Welding Co., 480 S.W.2d 607, 609 (Tex. 1972); Harrison v. Williams Dental Group, P.C., 140 S.W.3d 912, 916 (Tex. App.-Dallas 2004, no pet.); Ervin v. Mann Frankfort Stein & Lipp CPAs, L.L.P., 234 S.W.3d 172, 182 (Tex. App.-San Antonio 2007, no pet.). 

An implied contract exists when the facts and circumstances show a mutual intention to contract. See Haws & Garrett Gen. Contractors, 480 S.W.2d at 609; Harrison, 140 S.W.3d at 916; Lection v. Dyll, 65 S.W.3d 696, 704 (Tex. App.-Dallas 2001, pet. denied); Weynand v. Weynand, 990 S.W.2d 843, 846 (Tex. App.-Dallas 1999, pet. denied); see also Ervin, 234 S.W.3d at 183.

Where the existence of the agreement is disputed, whether the parties reached an agreement is a question of fact. See Preston Farm & Ranch Supply, Inc. v. Bio-Zyme Enters., 625 S.W.2d 295, 298 (Tex. 1981); Haws & Garrett Gen. Contractors, 480 S.W.2d at 609; Live Oak Ins. Agency v. Shoemake, 115 S.W.3d 215, 218 (Tex. App.-Corpus Christi 2003, no pet.).
 
However, as a general rule, the existence of an express contract covering the same subject matter precludes finding the existence of an implied contract, whether in fact or in law. See Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990); Woodard v. Sw. States, Inc., 384 S.W.2d 674, 675 (Tex. 1964); Threadgill v. Farmers Ins. Exch., 912 S.W.2d 264, 268 (Tex. App.-Dallas 1995, no writ). “Where the parties expressly state the terms of an agreement, they create an express contract and are bound by it to the exclusion of conflicting implied terms.” Smith v. State, 96 S.W.3d 377, 384 (Tex. App.-Amarillo 2002, pet. ref'd) (citing Haws & Garrett Gen. Contractors, 480 S.W.2d at 609; Woodard, 384 S.W.2d at 675).

SOURCE: Notley v. Sterling Bank, No. 05-07-00891-CV,  2008 WL 4952835(Tex.App.-Dallas Nov. 21, 2008, no pet.).