Earhart v. William Low Co

In Earhart v. William Low Co., 25 Cal. 3d 503, 600 P.2d 1344, 158 Cal. Rptr. 887 (Cal. 1979), The issue was articulated as follows: "whether a party who expends funds and performs services at the request of another, under the reasonable belief that the requesting party will compensate him for such services, may recover in quantum meruit although the expenditures and services do not directly benefit property owned by the requesting party." Earhart, 600 P.2d at 1345. There, the plaintiff allegedly expended money at the defendant's request to commence construction of a mobile home park on the defendant's land and an adjacent lot owned by a third party. Id. The plaintiff alleged that he entered into a contract with the defendant for the construction of the mobile home park, subject to conditions relating to financing and the procurement of labor and performance bonds for the work. Id. at 1346. The defendant also entered into an agreement to purchase the adjacent parcel subject to financing. Id. at 1345. The plaintiff asserted that the defendant instructed the plaintiff to commence work on the adjacent lot, waiving the previously agreed to conditions precedent, to protect the expiration of a special use permit for the construction. The plaintiff commenced the construction and submitted a progress bill to the defendant. The defendant refused to pay, and revealed that he had contracted with another firm for the construction. Id. at 1346. The plaintiff sued in quantum meruit to recover compensation for the services. Id. at 1345. The trial court denied recovery for the sums expended for construction on the lot owned by the third party on the ground that the defendant did not receive a direct benefit from the construction. Id. The plaintiff appealed, and the California Supreme Court reversed. Id. The California Supreme Court held that "a party who expends funds and performs services at the request of another, under the reasonable belief that the requesting party will compensate him for such services, may recover in quantum meruit although the expenditures and services do not directly benefit property owned by the requesting party." (Id. at p. 505.) That case, however, was vastly different factually. The defendant requested that the plaintiff perform construction work on the defendant's property and on an adjacent parcel of property. (Id. at pp. 506-507.) The defendant then refused to pay the plaintiff for any of the work performed. (Id. at p. 507.) The trial court found that the defendant owed the plaintiff in quantum meruit for the work performed on the defendant's property, but not on the adjoining property because the work on the adjoining property did not benefit the defendant directly. (Id. at pp. 507-508.) The Supreme Court, however, reversed that portion of the trial court's ruling. (Id. at p. 516.) In short, the plaintiff performed urgent construction services at the request of defendant, on land which defendant was in the process of purchasing. After defendant's financing fell through for purchase of the land, he refused to pay for the services, arguing that he could have no quantum meruit liability because the construction did not benefit his property. Not surprisingly, the Supreme Court rejected that theory. It explained that when defendant was the sole requestor of the services, and plaintiff relied upon defendant's promise to pay, principles of fairness supported plaintiff's recovery for the reasonable value of his labor even if those services conferred no direct benefit on defendant.