Today’s Blog addresses the Texas debt collections issue of QUANTUM MERUIT—an equitable theory of recovery, intended to prevent unjust enrichment, when there is AN IMPLIED AGREEMENT TO PAY FOR SERVICES RECEIVED. In re Kellogg Brown 166 SW3d 732 (Tex. 2005), also Barnett v. Coppell 123 SW3d 804 (Dallas, 2003). If an express written agreement covers the transaction in dispute, quantum meruit cannot be brought or used by the Texas collections attorney, because QM is an independent theory that does not arise from a contract.
The elements of QM are as follows: 1- Plaintiff provided valuable services or materials; 2- the services or materials were provided for Defendant; 3- Defendant accepted the services or materials; 4- Defendant had reasonable notice that Plaintiff expected compensation for the services or materials furnished Excess Underwriters v. Frank’s casing Crew 246 SW3d 42 (Tex. 2008). Upon a jury trial concerning QM, the Texas Pattern Jury Charge can be found at PJC 101.42.
Q- what are some Texas cases denying quantum meruit damages?
A few cases have addressed situations where QM was not available. The first was LTS Group v. Woodcrest 222 SW3d 918 (Dallas 2007, no pet.) where the Dallas Court correctly ruled that “the expectation of a future business advantage or business opportunity, cannot form the basis of a cause under QM”. However, LTS was decided because of the inadequate proof provided by the furnisher of the services. The furnisher, LTS, only testified, when asked about the basis for its opinion as to the value of the services provided, that ‘most brokers get about 4%.’ The Court said that testimony constituted “no evidence” of the value of the services provided nor was it any evidence of the reasonable value of the work provided, and also quoted the M.J. Sheridan case 731/620 (Houston 1st 1987).
Word to the wise in Dallas commercial collections actions would be, make sure you prove up your QM damages, thoroughly. The LTS cases, above, was later cited by the Houston 1st Dist. case of Green Garden v. Schoenmann 2010 Tex App. LEXIS 8887 (Nov. 2010). In Green it was argued that a QM recovery is not available when a party provides services “merely in hopes of obtaining a future business relationship”. The Houston Court however, stated the Tx. Supreme Court view that “in certain circumstances, a party who provides services with an expectation of entering into a future business agreement may seek recovery of the value of said services” under QM if there is sufficient evidence of the remainder of the QM elements. Vortt Exploration v. Chevron 787 SW2d 942, (Tex. 1990). InVortt, the Tx. Sup. Ct. also noted that the parties had been negotiating for 4 years to reach a joint operating agreement, and services were provided only in the expectation that such agreement would be reached. Under those circumstances a QM claim was allowed.
Also, if the service provider provides the services, for the provider’s own benefit, no QM claim will be allowed. Again, the services, and evidence about them, must be provided to the Defendant.
If you have any questions about this topic, or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call: 214-752-8800 or Email Us: firstname.lastname@example.org
*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion
Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate