Thursday, July 3, 2014

Standards of Proof for Quantum Meruit Actions: Process Engineers & Constructors, Inc. v. DiGregorio, Inc., (R.I., July 1, 2014)

In Process Engineers & Constructors, Inc. v. DiGregorio, Inc., No. 2013-87 (July 1, 2014), the Rhode Island Supreme Court affirmed a judgment awarded to a sub-subcontractor following a bench trial. 

The case is helpful because it provides standards of proof under Rhode Island law for quantum meruit claims often brought in construction disputes.  The two points are:
  1. A plaintiff need only prove it was not at fault for the changed condition (not need to prove cause).
  2. No expert testimony is required to prove the costs incurred were "fair and reasonable."  Proof of the value of the services is sufficient.
At trial, the sub-subcontractor plaintiff sought to recover against the party with whom it contracted (the subcontractor) $316,000 based upon extra work performed.  Plaintiff brought breach of contract and quantum meruit causes of action.  The trial justice found that the plaintiff did not satisfy its burden of proof on the breach of contract claims for failure to follow the change order requirements of the contract. 

On its quantum meruit recovery, plaintiff sought to recover for three categories: (1) change order work, (2) increased bond premium charged due to increased contract amount, and (3) additional costs due to replacing a pipe caused by wet insulation. 

As to the first item (unallocated change order work), the trial justice held that the plaintiff failed to meet its burden of showing that a benefit was conferred on defendant and that the defendant accepted the benefit.

The trial justice found in the plaintiff's favor as to the increased bond premium and wet insulation extra work item.  Specifically regarding the wet insulation item, the trial court found that the loss was not due to the sub-subcontractor's action because it was not responsible to dewater the trenches that became wet. 

In its appeal, defendant contended  the evidence presented by the plaintiff was insufficient because the plaintiff did not prove defendant was responsible for the wet insulation.  The Supreme Court framed the issue and its holding as follows:
Whether [plaintiff] only had to prove that it was not responsible for the loss or whether [plaintiff] also had to prove what caused the loss. We hold that [plaintiff] was required to prove only that it was not at fault for the loss; it did not need to prove who was at fault." Emphasis added.
The second issue on appeal concerned the requisite proof that services rendered were "fair and reasonable" for quantum meruit recovery.  Here, the Court shifted the burden on the defendant to establish the claimed charges and costs were unreasonable.  Citing Bruner & O'Connor, the Supreme Court stated:
For purposes of the prima facie case, a plaintiff need only submit evidence of the value of the services; the factfinder is permitted to infer that the charges are fair and reasonable. A plaintiff is not required to put forth expert testimony on the reasonableness of the value of the services during his or her prima facie case. If a defendant wishes to contest the fairness or reasonableness of the value asserted by a plaintiff, the burden shifts to the defendant to prove that the charges were unreasonable. Emphasis added.
The Supreme Court did not explain what level of proof is required for a defendant to establish charges were not "fair and reasonable" or whether expert testimony would be required.  On the specific facts of the case, the Court found that the defendant simply failed to challenge the reasonableness of the costs .  It stated, "[defendant] did not challenge the hourly rates, the number of hours worked, the costs of materials, or the charges for equipment." 

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