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Illinois Appellate Court Restates Standard for Contractor’s Recovery for Extra Work
by Daniel Brennan and Max Guggenheim
The Illinois appellate court recently held that where a contractor performs extra work not included in the written contract, the contractor can recover through application of the Watson test, and through quasi-contractual theories of quantum meruit and unjust enrichment. Stark Excavating v. Carter Constr., No. 06-L-181, 110357 (Ill. App. Ct. Mar. 28, 2012).
In summer 2005, Plaintiff Stark Excavating (“Stark”) was hired by Defendant Carter Construction (“Carter”) to perform concrete, excavation, trench backfill, and site utility work for an expansion of a warehouse for Menards’ Champaign, Illinois store. The project was put on hold during the summer, and Stark informed Carter that extra money would be necessary to heat and protect concrete work that would be performed in colder weather due to the delayed start.
In October 2005, Carter held a meeting with the subcontractors to discuss performing the project during the winter months. Stark submitted a revised bid with a letter explaining an upcharge of $12,100 for winter heat of the concrete, but did not discuss the cost of performing winter protection work. On October 17, 2005, Stark and Carter entered into a subcontractor agreement. The agreement contained a paragraph stating that no extra work shall be completed except upon written order signed by Carter Construction.
On December 2, 2005, Stark sent a letter to Carter expressing the necessity of performing winter protection work. In the letter, Stark stated it intended to document all additional costs falling outside of its contract obligations. Upon completion of the disputed work, Stark intended to resolve any claims by the terms of the subcontract agreement.
Carter responded days later informing Stark it would not sign any work orders not preapproved by Menards. Stark replied the following day that it would not expect Carter to sign work orders for winter protection, but upon completion of the disputed work it intended to resolve claims as provided by the terms of the subcontract agreement. Stark’s project manager testified that Stark took winter protection measures because Carter’s CEO threatened to remove Stark from the job if Stark’s work was not quickly completed. Carter’s CEO testified that he believed winter protection work was included in Carter’s contract with Stark.
The following summer, Stark filed a claim against Carter for breach of contract for nonpayment of (1) extra work for winter protection of the premises; (2) other authorized extras, and (3) retainage. Carter filed a motion for summary judgment and the trial court granted partial summary judgment in favor of Carter for the payment for extra work for winter protection of the work. The court applied the test to recover for extra work set forth in Watson Lumber Co. v. Guennewig, 79 Ill. App. 2d 377 (1967). Watson summarized the applicable rules for recovery of extras as follows:
“The law assigns to the contractor, seeking to recover for ‘extras,’ the burden of proving the essential elements. That is, he must establish by the evidence that:
(a) The work was outside the scope of his contract promises;
(b) The extra items were ordered by the owner;
(c) The owner agreed to pay extra, either by his words or conduct;
(d) The extras were not furnished by the contractor as his voluntary act; and
(e) The extra items were not rendered necessary by any fault of the contractor.” Id. at 389-390.
While the trial court found the winter protection work was clearly outside the scope of the contract, the trial court found nothing to show that Carter ordered the work done nor did it agree to pay extra for the work. The trial court concluded Stark was not contractually obligated to perform the winter protection work.
Stark filed an amended complaint adding claims for payment for winter protection work under the theories of quantum meruit and unjust enrichment. The trial court again ruled against Stark, and granted Carter’s motion for summary judgment. Stark filed an appeal.
The Illinois appellate court re-evaluated the evidence in light of Watson factors. The appellate court agreed with the trial court that winter protection was outside the scope of the contract. Continuing with Watson, the court found evidence in the record showed Carter specifically told Stark to do its work pursuant to the contract and that Carter believed the winter protection work was included in its contract with Stark. A trier of fact could find Carter’s threat to terminate Stark if it did not quickly complete its work served as an implicit order for Stark to perform the winter protection work since that work was necessary to perform the job in a workmanlike manner.
The third Watson element — “the owner agreed to pay extra by his words or conduct” — was deemed inapplicable because Carter believed the winter protection work was part of Carter’s contract with Stark. A trier of fact could also find the winter protection work was not a voluntary act because Stark made it clear in its December 2nd letter that it considered winter protection work as an additional cost that fell outside its contractual obligations, but it would perform the work because it was necessary. Lastly, there was no suggestion that the extra items were rendered necessary by the fault of Stark. The appellate court held that a trier of fact could find Stark should be paid for the winter protection work.
Stark’s quasi-contractual claims for unjust enrichment and quantum meruit were viable because the payment for winter protection work was expressly excluded in the contract. As a result, quasi-contractual recovery is possible. Assuming Carter demanded the concrete work be done at a specific time, and the winter protection work (excluded from contract) was necessary to complete the work in a workmanlike manner, Carter may have received a valuable benefit without paying for it. Thus, a genuine issue of material fact existed concerning Stark’s right to recover costs for winter protection work. For the foregoing reasons, the appellate court reversed judgment and remanded for further proceedings.
If a subcontractor is diligent in communicating with a contractor that work is outside the scope of their contract but must be completed to do their work in an appropriate workmanlike manner, a subcontractor can recover for their extra work through the application of the Watson test as explained in the Stark decision.