Morphy, Makofsky & Masson, Inc. v. CANAL PLACE 2000
1989 WL 6035, 538 So. 2d 569, 1989 La. LEXIS 89 (1989)
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Rule of Law:
When parties agree for services to be performed but do not agree on a price, an implied contract is formed. The performing party is entitled to recover the reasonable value of their services, and this contractual remedy precludes a claim for unjust enrichment (actio de in rem verso).
Facts:
- Canal Place hired RTKL, an architectural corporation, for a large construction project.
- RTKL subcontracted with CBM Engineers, Inc. (CBM) to perform all structural engineering services, subject to a contractual price cap of $297,511.
- At the project owner's request, CBM verbally engaged Morphy, Makofsky & Masson, Inc. (Morphy) to perform the foundation and first-floor engineering design services that were part of CBM's obligation.
- CBM sent letters to Morphy outlining the scope of work and suggesting Morphy bill on an hourly basis, but Morphy never submitted a formal proposal or entered into a written contract.
- Despite the absence of an agreement on price, Morphy performed the requested services, and CBM was aware of and communicated with Morphy during the performance of the work.
- Upon completion, Morphy submitted invoices to CBM totaling $78,613.00, calculated on an hourly basis, for the services rendered.
- CBM refused to pay the full amount of Morphy's invoices.
Procedural Posture:
- Morphy sued CBM in the Civil District Court (trial court).
- The court commissioner found no contract and recommended an equitable award of $45,000 based on unjust enrichment, prorating Morphy's work against the cap in CBM's contract with RTKL.
- The district court adopted the commissioner's recommendation and entered judgment for Morphy for $45,000.
- Morphy, as appellant, appealed the judgment to the Louisiana Court of Appeal (intermediate appellate court).
- The Court of Appeal affirmed the trial court's judgment, holding that Morphy's only remedy was in unjust enrichment.
- The Supreme Court of Louisiana granted a writ of certiorari at the request of Morphy.
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Issue:
Does an enforceable contract exist when parties agree on a scope of work but not on the price, thereby entitling the performing party to recover the reasonable value of their services rather than being limited to recovery under the doctrine of unjust enrichment?
Opinions:
Majority - Calogero, Justice
Yes. An enforceable implied-in-fact contract exists, and the law implies a term that the performing party will be paid a reasonable sum for their services. CBM requested the work and Morphy performed it with CBM's knowledge and cooperation, which manifested mutual consent and formed a contract under Louisiana Civil Code. The absence of a specific price term does not invalidate the contract. The lower courts erred by applying the doctrine of unjust enrichment, or 'actio de in rem verso,' because that remedy is subsidiary and only available when no other remedy at law, such as a claim in contract, exists. When a contract for services is silent as to price, the recovery is the reasonable value of the services, and considerations such as the defendant's enrichment or impoverishment are irrelevant. Based on expert testimony, Morphy's invoiced amount of $78,613.00 was the reasonable value for the services performed.
Analysis:
This decision clarifies the hierarchy of legal remedies in Louisiana, firmly establishing that an action in contract, even an implied one without a price term, takes precedence over the equitable doctrine of unjust enrichment. The court distinguished the proper use of 'quantum meruit' as a method for calculating reasonable compensation under an implied contract from its improper conflation with the substantive claim of unjust enrichment. This precedent prevents a party who knowingly accepts services from using its own separate, disadvantageous contractual arrangements with a third party to limit its liability to the service provider, ensuring providers are compensated for the reasonable value of their work.
