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Engineer that performed feasibility planning and design services for a City’s new water treatment facility was replaced by the City by another engineer, and was not paid for its work nor allowed to complete the project.  The trail court awarded the engineer damages for the City’s breach of contract. The city appealed the verdict.  It claimed that the contract was not properly executed and was, therefore, invalid.  In an ironic twist, the appellate court agreed with the city concerning the contract, but awarded the engineer twice as much on the basis of quantum meruit.  This theory permits parties to recover the value of their services even in the absence of a contract.

In this case, the engineer (PES), did substantial work picking a site for the proposed water filtration plant, locating needed equipment, and performing various preparatory work.  It claimed that its designs were eighty-five percent complete.  Although the city approved a resolution stating it would engage PES to “design plans, inspect construction, and perform other related project services,” the city council subsequently hired a different firm to study the feasibility of alternatives to the construction of a new water treatment facility.   Eventually, the city hired that same firm to design and install an alternative system it proposed.

When PES filed suit against the city for breach of contract, the city responded that there was no valid contract because the contract which had been signed by the mayor had not been approved by the city council and the city attorney as required by the city charter.   The trial court held it was a valid contract, that the city had breached it, and that the engineer was entitled to $56,488.  The appellate court reversed and held that the contract was ultra vires(executed without proper authority) because it violated the provisions of the charter.   The court was persuaded, however, that the engineer was entitled to recover on the basis ofquantum meruit, and awarded the engineer $123,277.

As explained by the court, “An action in quantum meruit provides an equitable substitute for contract claims.  Such an action allows parties who have provided goods and services to another to recover the reasonable value of these goods and services.  In order to recover under quantum meruit, the following factors must be established: (1) there must be no existing, enforceable contract between the parties covering the same subject matter; (2) the party seeking recovery must prove that it provided valuable goods and services; (3) the party to be charged must have received the goods or services; (4) the circumstances must indicate that the parties involved in the transaction should have reasonably understood that the person providing the goods or services expected to be compensated; and (5) the circumstances must also demonstrate that it would be unjust for the party benefiting from the goods or services to retain them without paying for them.” The engineer established these factors in this case and prevailed accordingly.

Professional Engineering Services v. City of Red Boiling Springs, TN, No. M1999-00342-COA-R3-CV, 2000 Tenn. App. LEXIS 256 (April 26, 2000).