Paffhausen v. Balano - 1998 ME 47, 708 A.2d 269

Rule:

Quantum meruit, also sometimes labelled "contract implied in fact," involves recovery for services or materials provided under an implied contract. Quantum 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.

Facts:

David Paffhausen, a carpenter and artist, asked Elizabeth Balano for permission to renovate a building owned by her. Elizabeth approved David’s request, with the understanding that David would pay her $60.00 per month after he got his business up and running. The building was revamped sufficiently to allow David to host two art shows. After Elizabeth’s death in 1995, her personal representatives offered David one year free of 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. 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. On appeal, David contended that the court erred in concluding that he failed to prove the elements of quantum meruit.

Issue:

Under the circumstances, did David fail to prove the elements of quantum meruit?

Answer:

No.

Conclusion:

On appeal, the court held that the probate court improperly declined the carpenter's quantum meruit claim against the estate. In pertinent part, the court held that the probate court erred in its application of the law to the factual findings and its conclusion that the evidence did not support a recovery in quantum meruit. The court noted that all the law of quantum meruit required David to prove was that he had a reasonable expectation that his work was not gratuitous and that the owner by her words or conduct justified that expectation. Thus, the court held that the evidence supported the claim that David was entitled to recover for the reasonable value of his labor and materials that were used to renovate and improve the building. Accordingly, the court remanded the case for further proceedings.