J. QUANTUM MERUIT/UNJUST ENRICHMENT
1. Introduction
Despite the difference in meaning between the two terms, quantum meruit and unjust enrichment have been so closely associated by South Carolina courts that they are easier to discuss together rather than separately.
Although South Carolina has long recognized a cause of action for quantum meruit, courts' nonuniform employment of terminology, analysis, and measure of recovery surrounding the claim has created much confusion. Quantum meruit encompasses two different types of recovery: one for a legal claim415 under a contract implied in fact, and the other for an equitable claim under an implied in law, or quasi, contract. The latter is an action in restitution, also referred to as an action in unjust enrichment.416
South Carolina is among those jurisdictions that treat a quantum meruit claim as indistinct from an unjust enrichment claim.417 However, inconsistent terminology and analytical approaches among South Carolina courts is more likely to confound than explain. Under South Carolina law, "the terms contract implied-in-law, quantum meruit, quasi-contract, restitution, and unjust enrichment have often been used interchangeably to refer to the same type of claim for equitable relief."418
2. Origin and Development
While the causes of action are by no means modern, modern courts nonetheless have a difficult time with quantum meruit claims and unjust enrichment claims. The abundance of terms and the variety of explanations for the same claim produce obvious uncertainties for the many litigants who bring quantum meruit and unjust enrichment claims. Meaning "as much as he deserves," quantum meruit is based on the theory of recovery that the defendant has received a benefit which would be unjust for him to retain without paying for it.419 Although its definition relates entirely to the law of damages, South Carolina's recognition of quantum meruit as a cause of action is longstanding.420
Unusual for its refreshing clarity among case law, a footnote in Stanley Smith & Sons v. Limestone College provides a succinct explanation for the historical interrelation of restitution and implied contracts:
Restitution is a remedy designed to prevent unjust enrichment. Historically the form of action for this remedy was assumpsit, although no contract, express or implied, existed between the plaintiff and the defendant. Because of this quirk of common law pleading, the term "contract implied in law" has been used to describe the circumstances under which the law imposes an obligation to make restitution for a benefit received, notwithstanding the absence of any agreement between the parties. The unfortunate use of "implied contract" to connote both true ("implied in fact") and quasi ("implied in law") contracts has led to much confusion. The distinction, however, is clear. A contract "implied in fact" arises when the assent of the parties is manifested by conduct, not words. A quasi contract, or one implied in law, is no contract at all, but an obligation created by the law in the absence of any agreement between the parties.421
Unfortunately, the preponderance of South Carolina authority is not so clear. Language employed by some courts would indicate that quantum meruit is the remedy for an unjust enrichment claim, suggesting that quantum meruit is more likely to be damages than a stand-alone cause of action.422 While unjust enrichment would appear to be more the cause of action, the confusion is exacerbated by the role of unjust enrichment itself as an element of proving quantum meruit syntactically.
South Carolina courts continue to conflate causes of action for unjust enrichment and quantum meruit, but modern authority has endeavored to bring about some consistency in application. In Myrtle Beach Hosp., Inc. v. City of Myrtle Beach, the South Carolina Supreme Court adopted the existing three-part test for quantum meruit and clarified that "quantum meruit, quasi-contract, and implied by law contract are equivalent terms for an equitable remedy" that are governed by this test.423 To recover on a theory of quantum meruit or unjust enrichment, a claimant must prove three elements:
(1) A benefit conferred by the plaintiff upon the defendant;
(2) Realization of that benefit by the defendant; and
(3) Retention of the benefit by the defendant under circumstances that make it inequitable for him to retain it without paying its value.424
Still today, plaintiffs must prove each of the above elements to succeed on a quantum meruit or unjust enrichment action.
3. Practical Observations - Substantive
Each of the three elements of a quantum meruit or unjust enrichment claim gives rise to unique complications for plaintiffs and defendants. The following discussion summarizes the landscape of relevant South Carolina authority on bringing or defending such claims.
a. Conferring a Benefit on the Defendant. To recover on a theory of quantum meruit or unjust enrichment, the benefit conferred upon the defendant must be nongratuitous.425 While the Supreme Court of South Carolina specified that the benefit conferred must be nongratuitous in Sauner v. Public Serv. Auth. of S.C., the court of appeals in Church v. McGee averred that the nongratuitous requirement could be found in much earlier precedent discussing compensation for caregiving services.426
Analyzing a similar quantum meruit claim for caregiving services, the court of appeals in Church found that there was sufficient evidence to support the trial court's finding that the caregiver's love for the decedent was the only reason she performed services for him.427 Thus, the caregiver was not entitled to relief under the theory of quantum meruit in her action seeking $400,000 for caregiver services, because her own testimony showed that her services were gratuitous.428
b. Defendant's Realization of the Benefit. South Carolina authority offers minimal discussion on the second element of unjust enrichment and quantum meruit claims, the realization of the benefit by the defendant, and the discussion that does exist blurs the analysis with the third element (unjust retention of the benefit). For example, in Gignilliat v. Gignilliat, Savitz & Bettis, L.L.P., the South Carolina Supreme Court averred that recovery under a theory of quantum meruit "requires a showing of actual damages resulting from the wrongful retention of benefits (goods or services) by the defendant."429
The court found that a law firm partner's surviving spouse could not show damages arising from the firm's alleged wrongful continued use of the partner's name after the partner's death, and therefore, "her claim for quantum meruit/unjust enrichment fail[ed]."430 Acknowledging that the use of the name had some value, the court nonetheless determined that the evidence did not support that this value was more than sentimental, and held that the spouse failed to show that any goods or services were bestowed on the firm.431
Similarly, in Trident Const. Co., Inc. v. Austin Co., the court found that "when a subcontractor submits a proposal to a general contractor, the general contractor is not unjustly enriched when it does not award the subcontract to that subcontractor even though the general contractor may have benefitted from the subcontractor's bid."432 Merging the discussion of the second and third elements, the court held that "[t]his [was] not a situation where [the general contractor] has retained a benefit bestowed upon it by [the subcontractor] that makes it unjust for it to retain the benefit without paying for its value."433
In South Carolina, a contractor or subcontractor bringing an unjust enrichment action for work on a construction project is required to prove a benefit conferred upon the defendant by the plaintiff; the defendant's appreciation or knowledge of such benefit; and that the circumstances make the defendant's retention of such benefit without payment to the plaintiff inequitable.434 For example, in Earthscapes Unlimited, Inc. v. Ulbrich, the court found that a company that provided landscaping services to homeowners in connection with the construction of a home was entitled to recovery from the homeowners based on quantum meruit because the landscaping work conferred a benefit on the homeowners, the homeowners realized and enjoyed the benefit of that work, and allowing the homeowners to retain the benefit of the company's work without paying its value, under the circumstances of the case, would be unjust.435
c. Defendant's Unjust Retention of the Benefit. Assuming a party has been "enriched" by the efforts of the claimant, the next question is whether the enrichment was "unjust." The third element of quantum meruit and unjust enrichment claims is perhaps the most likely to pose problems for the practitioner. Although the tests for a quantum meruit claim and an unjust enrichment claim are largely indistinguishable,436 South Carolina authority holds as axiomatic that a claim for quantum meruit will not lie absent evidence of unjust enrichment.437 Furthermore, in addition to the inevitable confusion arising from inconsistent terminology, determining whether retention of the benefit is unjust involves equitable considerations that will be subject to the unique facts of each case.
Unfortunately, South Carolina courts do not expound much on their determinations of when a benefit is or is not unjust to retain. Quantum meruit and unjust enrichment litigation would appear to be governed by ipse dixit438 reasoning — the result is what the court says it is. For example, in LandBank Fund VII, LLC v. Dickerson, a developer brought an action seeking a declaration that a consultant the developer had hired was not entitled to a fee in conjunction with the sale of a large tract of land.439 The consultant counterclaimed for breach of contract and, alternatively, quantum meruit.440 The appellate court, without much explanation, expressed its agreement with the...
