Quantum Meruit When a Contract Exists: Champion Food Service, Inc. v. ProAlamo Foods, L.L.C.

 

We delivered goods to a customer under an agreement, and the customer refused to pay part of the bill. Our contract claim failed at trial, but the jury awarded us the value of the goods anyway. Can we keep that award?

The Supreme Court of Texas took up a version of that question in Champion Food Service, Inc. v. ProAlamo Foods, L.L.C., No. 25-0297 (Tex. June 19, 2026). Two meat suppliers delivered frozen product to a distributor over several months, each shipment accompanied by an invoice reflecting price, quantity, and delivery terms. The distributor left roughly $73,000 in invoices unpaid, asserting the product had spoiled. The suppliers sued for breach of contract and, alternatively, in quantum meruit. The jury found no breach by the distributor, but found for the suppliers on quantum meruit and awarded about $46,000; it also found the suppliers’ reasonable attorney’s fees to be $0. The trial court disregarded the fee finding and awarded $219,674 in fees, and the court of appeals affirmed. The Supreme Court reversed and rendered judgment that the suppliers take nothing.

Quantum meruit is an equitable theory that allows recovery of the reasonable value of goods or services furnished and accepted when no enforceable agreement governs the transaction. Texas courts have long held that the theory is unavailable where a valid express contract covers the same subject matter. Woodward v. Sw. States, Inc., 384 S.W.2d 674, 675 (Tex. 1964); Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988); Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000); Hill v. Shamoun & Norman, LLP, 544 S.W.3d 724, 737 (Tex. 2018). Recognized exceptions exist — for work performed and accepted that falls outside the contract’s scope, and in certain partial-performance situations — but the Court found none of them implicated.

The opinion does not announce a new rule, but it does appear to sharpen how the existing one operates. The Court characterized the question whether a contract covers the goods or services at issue as a legal one, reviewed de novo, rather than a fact question implicitly resolved by a jury’s quantum meruit finding. Because the parties did not dispute that agreements on price, quantity, and delivery existed — agreements that suffice to form a contract under Texas Business and Commerce Code § 2.204 — the Court concluded those agreements covered the deliveries, and the quantum meruit award could not stand. The Court also addressed the suppliers’ argument that handwritten changes the distributor made on the invoices showed the deliveries fell outside any agreement. It reasoned that disputes over credits, price adjustments, or the quality of goods concern breach and damages, not the existence of a contract, offering the example of a customer who crosses out the price on a bakery receipt: the bakery’s remedy lies in contract, not in equity. Finally, the Court observed that “when the existence or scope of a contract is in dispute, the jury should be asked whether a contract exists” — an indication that a plaintiff wishing to preserve quantum meruit as a genuine alternative may need to secure a jury finding on that threshold question rather than rely on the equitable finding alone.

With the quantum meruit recovery gone, the attorney’s fees followed. Recovery under Chapter 38 of the Civil Practice and Remedies Code requires both prevailing on a claim for which fees are authorized and recovering damages. Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 666 (Tex. 2009).

Chief Justice Blacklock, joined by Justice Sullivan, concurred to raise a point the majority left for another day: the trial court’s decision to replace the jury’s $0 fee finding with an award nearly five times the damages, in a case where the plaintiff had lost its principal claim and been found to have breached itself. The concurrence questioned why the law treats a jury’s zero finding on fees with more suspicion than a zero finding on damages, and suggested the issue “should not go unaddressed for much longer.” The majority added a footnote expressing similar reservations. Whether and how the Court takes up that question may be worth watching.

For businesses that sell goods or services on informal terms, the opinion suggests that the presence of an agreement — even an oral one memorialized only by invoices — will likely channel any payment dispute into contract, and that arguing about the bill is not the same as denying the deal. It also suggests that a claim in quantum meruit, though routinely pleaded in the alternative, may not serve as a fallback where the existence of the contract is not itself in question.

See also our earlier posts on quantum meruit and its statute of limitations.

Quantum Meruit

If my company provided goods or services to another company, but we did not have a contract, does my company have a claim for getting paid?

Yes, Texas law provides an equitable claim for the recovery of the reasonable value of goods or services that one provides to another when no contract covered the transaction.  This cause of action is called quantum meruit.  “To recover in quantum meruit, a claimant must prove that (1) valuable services were rendered or materials furnished; (2) for the person sought to be charged; (3) and were accepted by the person sought to be charged; (4) under circumstances that reasonably notified the person sought to be charged that the plaintiff, in performing the services or furnishing the materials, expected to be paid by the person sought to be charged.”  Weaver v. Jamar, 383 S.W.3d 805, 811 (Tex. App.– Houston [14th Dist.] 2012, no pet.)(emphasis added).  “To recover in quantum meruit, the plaintiff must show that his efforts were undertaken for the person sought to be charged; it is not enough to merely show that his efforts benefitted the defendant.”  Truly v. Austin, 744 S.W.2d 934, 937 (Tex. 1988).  A party may recover under quantum meruit only when there is no express contract covering the services or materials furnished. Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex.1990).

Unilateral Mistake: An Equitable Exception to Contract Enforcement

Can I get out of a contract that I entered into by mistake?

Generally, under Texas law, if the other party did not enter into the contract based upon the same mistake (i.e., both parties made the same mistake or mutual mistake) a party cannot avoid its contractual obligations even though it entered into a contract based upon its own mistake.  Texas law, does however, recognize an equitable exception to this general principle. “[E]quitable relief will be granted against a unilateral mistake when the conditions of remediable mistake are present. These conditions generally are: (1) the mistake is of so great a consequence that to enforce the contract as made would be unconscionable; (2) the mistake relates to a material feature of the contract; (3) the mistake must have been made regardless of the exercise of ordinary care; and (4) the parties can be placed in status quo in the equity sense, i. e., rescission must not result in prejudice to the other party except for the loss of his bargain. There may be other circumstances which will govern or influence the extension of relief, such as the acts and extent of knowledge of the parties.” James T. Taylor & Son, Inc. v. Arlington Indep. Sch. Dist., 335 S.W.2d 371, 373 (Tex. 1960).

Specific performance as a remedy for breach of contract

Can one sue to make another party perform a contract that it has breached?

Generally, the remedy for a breach of contract is money damages sufficient to place the non-breaching party in the position that it would have been in but for the breach.  However, the equitable remedy of specific performance is an exception to this general rule.  The doctrine of specific performance may provide a means to make another party perform under the contract.  “Specific performance is an equitable remedy that may be awarded at the trial court’s discretion upon a showing of breach of contract. Paciwest, Inc. v. Warner Alan Props., LLC, 266 S.W.3d 559, 571 (Tex. App.– Fort Worth 2008, pet. denied). Specific performance is not a separate cause of action, but rather is an equitable remedy used as a substitute for monetary damages when damages would not be adequate. Paciwest, 266 S.W.3d at 571; Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex. App.–Dallas 2007, pet. denied).  Because specific performance is an equitable remedy available only when the legal remedy of damages is insufficient, when one brings a breach of contract suit, one must elect to sue for either money damages or specific performance. See Carrico v. Kondos, 111 S.W.3d 582, 588 (Tex. App.–Fort Worth 2003, pet. denied).”  Kleberg County v. URI, Inc., 13-14-00158-CV, 2016 WL 363114, at *11 (Tex. App. Corpus Christi Jan. 28, 2016).

Statute of Limitations for Quantum Meruit Claims

Is there a limited time within which a plaintiff must file a quantum meruit claim?

Yes.  As a general matter of Texas law, the statute of limitations on a claim for quantum meruit is four years.  See Quigley v. Bennett, 256 S.W.3d 356, 361 (Tex. App. – San Antonio 2008, no pet.); see also Pepi Corp v. Galliford, 254 S.W.3d 457, 461 (Tex. App.– Houston [1st Dist.] 2007, pet. denied)(A four-year limitations period applies to a quantum meruit claim.).

Equitable Remedy of Quantum Meruit

My company did work for another company, we did not have a contract, and now the other company refuses to pay.  Does the law provide a cause of action upon which my company may recover?

Yes, equity may allow you to recover.  In Texas, this equitable claim is generally called “quantum meruit.”  “To recover in quantum meruit, a claimant must prove that (1) valuable services were rendered or materials furnished; (2) for the person sought to be charged; (3) and were accepted by the person sought to be charged; (4) under circumstances that reasonably notified the person sought to be charged that the plaintiff, in performing the services or furnishing the materials, expected to be paid by the person sought to be charged.”  Weaver v. Jamar, 383 S.W.3d 805, 811 (Tex. App.– Houston [14th Dist.] 2012, no pet.).  “To recover in quantum meruit, the plaintiff must show that his efforts were undertaken for the person sought to be charged; it is not enough to merely show that his efforts benefitted the defendant.”  Truly v. Austin, 744 S.W.2d 934, 937 (Tex. 1988).