November 1, 2007

Quantum Meruit Claim Allowed For What Is Typically A Change Order Issue

By Tim Gordon

Specialized Grading v. Goodland (Colo. App. 2007)

The Court of Appeals holds that a subcontractor can maintain a quantum meruit claim against the general contractor for alleged extras caused by the general’s failure to dewater, despite the fact that the parties have a written contract. The general rule is that a quasi-contract claim cannot lie where the parties have an express contract. But this rule does not apply if the conduct complained of is subsequent to, and not covered by, the express terms of the contract.

Below is a summary of the subcontractor’s quantum meruit claim:

The quantum meruit claim was premised on extra work occasioned by the failure of the contractor to have the site dewatered prior to the arrival of the subcontractor. The subcontractor alleged that saturated soil is more difficult to cut, is heavier to move, and is unusable as fill without first being allowed to dry. In addition, the subcontractor alleged that it participated in dewatering the site so it could perform its earth-moving operations.

The general contractor argued that the parties’ subcontract, including the change order clause, should cover the situation, and the trial court agreed. According to the trial court, the subcontractor should have brought a breach of contract claim, but the trial court later shut down that avenue as well. The Court of Appeals reversed. According to the Court:

The subcontract here provided that (1) the City could make changes in the work by issuing modifications to the general contract; (2) the contractor may order the subcontractor in writing to make changes in the work within the general scope of the subcontract; and (3) in the event of (1) or (2), the subcontractor could claim additional costs within such time and in a form to permit the contractor to make appropriate claims to the City. However, neither (1) nor (2) occurred. The City did not change the plans, the specifications, or the terms of the general contract, and the contractor did not issue any written changes in the work to the subcontractor.

. . .

Here, the extra work claimed was not occasioned by changes, errors, or lack of clarity in the plans, design, or specifications for the project. The subcontractor could not have reasonably anticipated that the contractor would breach its contractual obligations if, indeed, it did so.

Witnesses, whether for the contractor or subcontractor, testified that the failure to dewater the site would have caused the subcontractor delay and additional expense. Further, the contractor and subcontractor both engaged in dewatering activities, including digging drainage ditches, digging sumps, and installing pumps after the subcontractor commenced work. Therefore, the contractor was aware of the problem and the subcontractor’s efforts to remedy it. It is also apparent, and the contractor concedes as much, that the dewatering was not within the scope of the subcontractor’s work.

The opinion leaves some uncertainty. After stating that the general contractor “breached the contract” by not dewatering, the Court of Appeals then held that the subcontractor could maintain a quantum meruit claim against the general for this alleged breach of an express contract. Still, pleading in the alternative seems to be the prudent approach for change order or unforeseen conditions claims.

Finally, the Court of Appeals also affirmed the trial court’s admittance of, as lay-opinion testimony, the testimony of the subcontractor’s employees concerning the percentage of work they had performed and the volume of earth moved prior to termination. According to the Court, this is not expert testimony.

Read slip opinion