Supp. To § 1.18 Assumpsit: Implied Assumpsit, Indebitatus or General Assumpsit, Special Assumpsit

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(A) The following cases cite this section or a predecessor section:

(1) Commerce Partnership 8098 L.P. v. Equity Contracting Co., 695 So. 2d 383 (Fla. App. 4th Dist. 1997) (en banc). In subcontractor's action against owner, parties (and lower court) had difficulty characterizing the nature of the claim. The subcontractor's complaint labeled the claim ''quantum meruit.'' The owner sought dismissal of the complaint on the grounds that the claim was for an implied-in-fact contract of which there was no evidence. The motion was denied and the subcontractor concluded its case by arguing the theory of implied-in-law contract or unjust enrichment. The owner objected that this shift in legal theories came too late in the case-only at closing argument. The trial judge lamented ''we are in equity and I have some difficulty with wondering what the issues are and who is going to prove what.''

Drawing extensively on this and succeeding sections of Corbin, the 4th district straightens things out with a good discussion of these two theories of liability. In the end, the claim was seen to be one for unjust enrichment, a theory implied-in-law as a legal fiction to prevent injustice rather than one implied from the manifestations of the parties that they intended a bargain (implied-in-fact). The case had to be remanded on the question whether the owner had paid the general for the work-a key question because if the owner had paid the general then the owner was not unjustly enriched at all. (A similar substantially contemporaneous case from the same jurisdiction is Zalay v. Ace Cabinets, 700 So. 2d 15 (Fla. App. 2d Dist. 1997) ).

It is somewhat surprising that evidence concerning such a basic question had not been adduced at trial, but it shows how these categories continue to distract rather than assist lawyers in framing their arguments. Only somewhat surprising though for numerous cases of unpaid subcontractors suing owners have simply refused relief under any theory and without regard to whether the owner had paid the general. For one thing, the owner's exposure should be no greater than his contract price with the general but allowing the subcontractor to sue the owner in quantum meruit (whether implied-in-fact or implied-in-law) creates the possibility that the sub will recover more than that. Moreover, all liabilities of the parties are defined according to their own contracts, with the sub bargaining with and on the basis of the general's credit rather than the owner's credit. Finally, subs in most jurisdictions also have the remedies of mechanics' liens and subrogation so they will not be left entirely out in the cold by judicial refusal to permit them to recover in restitution against owners. These matters are well discussed and extensive case authority set out in Bennett Heating & Air Conditioning, Inc. v. Nationsbank of Maryland, 674 A.2d 534 (Md. 1996) .

(2) Paffhausen v. Balano, 1998 Me. 47, 708 A.2d 269 (1998) . In which the Supreme Court of Maine continues to bring order to the disordered terminology of quasi contract.

David Paffhausen, a carpenter and an artist, got permission from Elizabeth Balano to renovate a building owned by her, hoping to turn it into a fine art print shop. He was to pay her $60 per month, once he ''got the business up and running.'' David extensively renovated the property, and Elizabeth signed a note to him stating: ''To Whom it may Concern-David can use my house as long as he needs it.'' David put on two art shows in the building. Elizabeth died, and her heirs apparently would not let David use the property. David brought a claim against Elizabeth's estate for quantum meruit. The Probate Court rejected David's theory, on the ground that he failed to show a reasonable expectation of payment. The court awarded him $12,300 instead as unjust enrichment based on what the court found to be the value of his improvements to the building. David appealed, and the Supreme Court of Maine reversed and remanded for a determination of the reasonable value of David's labor and materials.

Quantum meruit, the court began, involves recovery for services or materials provided under an implied contract. Unjust enrichment, by contrast, ''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.' '' ''Damages in unjust enrichment,'' the court explained, ''are measured by the value of what was inequitably retained. In quantum meruit, by contrast, the damages are not measured by the benefit realized and retained by the defendant, but rather are based on the value of the services provided by the plaintiff.'' Confusion, the court said, has resulted from the court's historical use of the term ''quasi-contract'' to describe both unjust enrichment and quantum meruit, when ''quasi-contract'' properly describes unjust enrichment only.

A claim in quantum meruit requires: ''that (1) services were rendered to the defendant by the plaintiff; (2) with the knowledge and consent of the defendant; and (3) under circumstances that make it reasonable for the plaintiff to expect payment.'' ''All that the law required David to prove,'' the court concluded, ''is that he had a reasonable expectation that his work was not gratuitous and that Elizabeth by her words or conduct justified this expectation.'' Elizabeth's note that ''David can use my house as long as he needs it'' fell short of an express contract. Nevertheless, her assurances that when David had the building functioning as a print shop he could pay her $60 per month rent, together with the note, ''compel a finding that 'services were rendered under circumstances consistent with contract relations.' ''

(3) Olson v. Synergistic Techs. Bus. Systems, 628 N.W.2d 142 (Minn. 2001) . On the issue of whether the appellant Olson was entitled to a jury trial on her cause of action based on ''promissory estoppel,'' the majority held that she was not because of the equitable nature of her action. The special concurrence, though agreeing with the decision, declined to concur with the doctrine that all actions in promissory estoppel are invariably equitable. One of the reasons cited by the special concurrence is that the common law action of assumpsit, a doctrinal antecedent to promissory estoppel, provided reliance-based recovery for breach of a promise when the Minnesota Constitution was adopted. Citing this section of Corbin, the concurring opinion reflected that assumpsit, which literally means ''he promised,'' was available for breach of all simple contracts. As the doctrines of assumpsit and promissory estoppel are both legal and equitable doctrines, a case by case approach is needed to determine whether the essence of the action is legal or equitable. If it is equitable, no right to jury exists. However, a right to a jury trial does exist if the essence of the action is deemed to be legal. This case is also noted at §§ 8.1 and 8.12 of this supplement.

(4) Mogavero v. Silverstein, 142 Md. App. 259, 790 A.2d 43 (Md. Ct. Spec. App. 2002) . The plaintiff was a retired contractor who alleged an agreement to help the defendant ''with the construction end of [a building] project'' for which the plaintiff alleged he was to receive a five percent fee. The court affirmed the lower court's summary judgment for the defendant since the plaintiff's alleged agreement was fatally vague. The plaintiff sought a quantum meruit recovery for work and labor done. Citing Corbin at § 1.18, the court suggested that quantum meruit may refer to either an implied-in-fact contract which is a genuine contract or an implied-in-law contract which is not a contract but a quasi-contractual device constructed by courts to avoid unjust enrichment by providing a restitutionary remedy. While the evidence did not support any finding of an implied-in-fact contract, the plaintiff could prove an implied-in-law contract. The measure of damages for such a claim, however, is the gain or unjust enrichment to the defendant rather than any loss suffered by the plaintiff. Since the plaintiff failed to prove any such gain or benefit to the defendant, the court affirmed the lower court's summary judgment of the quasi contract count of the complaint.

(5) Roberson v. Wal-Mart Stores, 44 P.3d 164 (Ariz. Ct. App. 2002) . The plaintiff, employed by Wal-Mart as a ''pharmacist-in-charge,'' was fired following a loud in-store argument with another Wal-Mart employee. Wal-Mart's ''Performance Coaching'' was designed to assist associates in the correction and modification of their behavior in order to continue their employment with the company. Employees were to have the benefit of coach and counsel, a verbal reminder, a written reminder and a ''decision-making day'' prior to termination to decide if they wished to continue in Wal-Mart's employ. Roberson was coached but refused to sign a written plan for improvement and was fired without being given a ''decision-making day'' as set forth in the Coaching procedures. He sued for, inter alia, breach of an implied employment contract and breach of the implied covenant of good faith and fair dealing.

The court noted that employment contracts of indefinite duration are generally terminable-at-will but limitations on the right of either party to terminate the relationship can be express or implied. Corbin is cited as authority that an implied-in-fact contract is inferred by statements or conduct of the parties and becomes an enforceable express term. Such terms can be found in employer's policy statements, disciplinary procedures, personnel manuals, etc., but such statements are contractual only when they express promissory intent from which an employee can reasonably infer commitment on the part of the employer. Here, however, Wal-Mart expressed clear, comprehensive and redundant disclaimers in employment applications, the employee handbook, the pharmacy operations manual, and the store manual that no contract was formed and that Wal-Mart made no legally binding commitment. Accordingly, the appellate court concluded Roberson was an at-will employee. Though conceding a point made by the dissent that once an employer establishes a policy or procedure, through a manual or otherwise, it cannot then selectively abide by it, the court noted that employees can have no reasonable expectation of job security when the employer clearly and unambiguously expresses that such policies or procedures are not part of the employment contract and their employment remains at-will.

(6) Webster Indus. v. Northwood Doors, Inc., 234 F. Supp. 2d 981 (N.D. Iowa 2002) . The plaintiffs alleged that the defendants failed to pay for goods and services provided. They sought recovery under various theories including actions on account, quantum meruit and account stated. The defendants removed the case to federal court and entered a motion to dismiss various counts, including the quantum meruit claims, for failure to state a claim upon which relief could be granted. They argued that express contract claims preclude quantum meruit claims. The court found that the plaintiffs' recharacterization of their quantum meruit claims as quantum valebant claims was proper since they alleged in their complaint that ''goods were delivered upon actions implying mutual assent but were not paid for.'' The court relied on a previous case citing Corbin for the definition of quantum valebant but indicated a preference for the term ''implied-in-fact'' contract rather than quantum valebant or quantum meruit. Regardless of the nomenclature, the court denied this portion of the motion holding that, although one who pleads only an express contract cannot recover on an implied contract theory, Iowa precedent and rules of civil procedure as well as federal rules of civil procedure allow for express and implied contract claims to be pled in the alternative. Recovery, however, can be had only under one theory.

(7) Realmark Devs., Inc. v. Ranson (Ransom), 588 S.E.2d 150 (W. Va. 2003) . Citing Corbin at former § 20, the court held that unjust enrichment is an action at law and, therefore, can be tried before a jury.

This case is fully discussed at § 1.20.

(8) Waite Dev., Inc. v. City of Milton, 866 So. 2d 153 (Fla. Dist. Ct. App. 2004) . In pursuit of the development of their land that was contiguous to the defendant-city's boundaries, the plaintiffs filed a petition for voluntary annexation, stating that, as construction of the subdivision roads were completed, the city would provide water, sewer, and natural gas lines to each lot. The city passed an ordinance that annexed the plaintiffs' land and constructed the utility lines after phase one of the development was completed. Prior to the plaintiffs' development of phase two, the city enacted a land use ordinance that prohibited it from paying the cost of such infrastructure for a private developer. The plaintiffs brought this action for breach of contract asserting that the petition for annexation and the actual annexation referencing the petition constituted evidence of a valid and binding contract. The city filed a motion to dismiss, arguing that the action was barred by the doctrine of sovereign immunity because there was no express written agreement, and the trial court agreed. Citing Corbin, the instant court stated that a contract implied-in-fact is based on a tacit promise, one that is inferred in whole or in part from the parties' conduct, not solely from their words. The court held that where an agreement is arrived at by words, oral or written, the contract is said to be ''express'' and may be evidenced by several writings. The court concluded that the petition for annexation and the subsequent annexation constituted an express contract. Accordingly, the court reversed and remanded the case to the trial court. This case is also cited at §§ 1.19 and 1.20.

(9) Ramseyer v. Daly, 2004 Cal. App. Unpub. LEXIS 11200 (2004) . Attorneys seeking to recover for their services in quantum meruit claimed that the issues should be decided by the court. The former client claimed that there were fact issues that a jury should decide. The trial court held that the issues should be tried to the court. On appeal, the instant court recognized that, under California law, the right to a jury trial guaranteed by the California Constitution is the right as it existed at common law in 1850. To determine whether a claim for quantum meruit required a trial by jury, the court assessed whether the right to a jury trial for such a claim existed at the time the California Constitution was first adopted in 1850. To answer this question, the court, relying upon Corbin, discussed the writ of assumpsit as it existed at that time. The court noted that this writ was created to enforce promises not under seal and did not create a money debt but on which the promisee had relied and materially changed its position. Eventually, the writ of assumpsit was also applied to the enforcement of obligations described as quasi contracts. Usage of the writ of assumpsit did not require distinguishing between contracts implied in fact and quasi contracts. The writ of indebitatus assumpsit, a subspecies of the writ of assumpsit, was available for the collection of debts, whether for a reasonable value (such as quantum meruit) or for a sum certain. Therefore, the court concluded, an action to recover a specific sum as the reasonable value of services was an action at law in California in 1850, and, therefore, a claimant seeking quantum meruit is entitled to a jury trial.

(10) G. Hirsch & Company, Inc. v. AmerisourceBergen Corporation, 2006 U.S. Dist. LEXIS 32895 (N.D. Cal. 2006) . AmerisourceBergen Corporation moved to dismiss a common count claim brought by G. Hirsch & Company, Inc. Hirsch manufactures and sells disposable medical and hygiene products. In 2002, Amerisource agreed to purchase products from Hirsch, but Amerisource only made partial payments for the products ordered. Despite the shortfalls in payment, Hirsch continued to supply Amerisource based on representations and promises by Amerisource to pay the outstanding balance, plus interest. Despite requests for payment, Amerisource failed to pay and Hirsch filed suit on several counts. With respect to the common count claim, the court relied upon Corbin to explain that this old common law count was a form of pleading indebitatus assumpsit which could be filed for work and labor done (quantum meruit), goods sold and delivered (quantum valebant) or for a sum certain. In California, the essential elements for a common court are (1) A statement of indebtedness in a certain sum; (2) consideration (i.e., goods sold); and (3) non-payment. The court determined that Hirsch sufficiently pled the common count claim and denied Amerisource's motion to dismiss. the common count claim.

(11) Union Pacific Railroad Company v. Cedar Rapids and Iowa City Railway Company, 2007 U.S. Dist. LEXIS 9642 (N.D. Iowa 2007) . Union Pacific Railroad Company (''UP'') and Cedar Rapids and Iowa City Railway Company (''CR''), together with a major customer of both, negotiated an agreement to improve certain rail lines. The contract anticipated an operating agreement would be created prior to construction and that CR and the customer would pay for a portion of the improvements upon completion. UP admitted that no operating agreement was completed before construction of the tracks began and that the customer never contributed to the cost. UP eventually entered into an operating agreement with CR for the improved tracks several months after the construction was actually completed, but CR refused to pay its share of the costs. One of the issues involved UP's claim for ''contract implied in fact.'' Citing Corbin, the court explained that ''when the parties manifest their agreement by words, the contract is said to be express, but when there 'is merely a tacit promise, one that is inferred in whole or in part from expressions other than words on the part of the promisor, it is said to be implied in fact. The court further explained that Iowa courts have also explained that an ''implied in fact'' contract arises from the conduct of the parties, not merely from their relationships, and requires an expression of assent. Upon review of the pleadings, the court concluded that UP pleaded the essence of an ''implied in fact'' contract claim by alleging that a contract between CR and UP to share the costs of the construction project was manifested by the conduct of the parties, and therefore CR was obligated under a contract implied in fact to pay for a percentage of the total construction costs. However, because UP failed to generate genuine issues of material fact on essential elements of the claim, CR was entitled to summary judgment.

(B) The following cases are noteworthy:

(1) Slick v. Reinecker, 154 Md. App. 312, 839 A.2d 784 (2003) . When the defendant (Slick) was injured in an auto accident, the plaintiff, a neighbor and friend of the defendant who was also an attorney, offered gratuitous advice and assistance. Liability rested exclusively on the other motorist. After recovering $20,000 from the state auto insurance fund, the defendant pursued an uninsured motorist claim against his own carrier. The maximum recovery under that coverage was $80,000. After her marriage broke up, the plaintiff moved to another state. She claimed that her relationship with the defendant then changed to a contract for services on a contingent fee basis. The trial court found that there was neither an express nor an implied-in-fact contract, but there was sufficient evidence of an implied-in-law or quasi contract after the plaintiff had moved. The trial court determined the value of the benefit conferred by the plaintiff at $13,000. On appeal, the instant court pursued an extensive analysis of the differences between implied-in-fact and implied-in-law or quasi contracts (which are not contracts at all). The court relied extensively on Mogavero v. Silverstein, discussed in paragraph (A)(4) of this section of the supplement. As in Mogavero, the court found insufficient evidence of any ''gain'' or unjust enrichment of the defendant through the services of the plaintiff. With respect to this contract implied-in-law, the court stated, ''[O]ur concern is not with the reasonable value of the services rendered by Ms. Reinecker but with the extent to which those services were the effective catalyst for a quantifiable gain to Slick that would not have accrued if he had not received the benefit of those services.'' The plaintiff admitted that the defendant had realized the $20,000 insurance fund recovery alone. As to the maximum $80,000 recovery, the defendant had prepared all of the necessary documentation which then prompted his carrier to provide that recovery sua sponte. There was no negotiation, and the communication between the plaintiff and the carrier provided no indication that the recovery was due to her services. Finding no quantifiable gain, the court reversed the decision below.

(2) S. Jersey Hosp., Inc. v. Corr. Med Servs., 2005 U.S. Dist. LEXIS 11693 (D.N.J. June 15, 2005) . The plaintiff, a regional medical center, became a member of MedChoice, a preferred provider organization, under which the plaintiff was obligated to provide medical services to MedChoice subscribers at a discounted rate. The defendant had contracted with the New Jersey Department of Corrections to provide healthcare at prisons and at regional hospitals throughout the state. In 1996, the defendant became a MedChoice subscriber and was offered discounted rates by participating health providers. The defendant accepted the plaintiff's offer a rate of $975 per diem. When MedChoice was acquired by the Beech Street Corporation in 2000, the plaintiff increased its price for network subscribers from $975 per diem to 80% of full charges. The plaintiff protested that change and continued to pay at the original $975 rate. Various negotiations thereafter saw the plaintiff offering higher rates which the defendant rejected and the defendant offering to pay higher rates that the plaintiff rejected. The plaintiff brought this action in 2003 claiming the defendant's breach of an implied-in-fact contract for services rendered as a well as a count in quasi contract. Both parties moved for summary judgment. The court noted that an implied-in-fact contract is a ''true'' contract arising from mutual assent but not verbally expressed. An acceptance of an offer must be absolute, manifesting acceptance of every term in the offer. Section 53(2) the Restatement (Second) of Contracts states that the rendering of performance does not constitute acceptance if an offeree notifies the offeror of non-acceptance. The defendant continuously protested the new rates offered by the plaintiff. No reasonable jury could find that the parties ever agreed to a rate. The court entered judgment for the defendant on the implied-in-fact contract counts, leaving only the plaintiff's count of quasi contract in the complaint.