The Illinois Appellate Court found that a party to a contract was able to pursue quasi-contractual relief against a nonparty to the contract if the nonparty had requested and received a benefit of the work but did not pay for that work.
In C. Szabo Contracting, Inc. v. Lorig Construction Co., the Illinois State Toll highway hired Lorig Construction Company (Lorig) to construct certain improvements upon a major state highway. Lorig entered into a subcontract with JLA Construction, Inc. (JLA) to install a sewer system. Before the subcontract work was performed, Lorig directed JLA to assign its work to JLA & Sons, Inc., a subsidiary that was otherwise qualified to perform the work pursuant to a state government requirement. Due to concerns Lorig had in regard to JLA’s subsidiary being able to perform its work in accordance with mandated union labor requirements, Lorig advised JLA that it would take over the installation work unless JLA provided the appropriate union labor within five days.
Two days after receiving such notification, JLA subcontracted the work to the plaintiff, C. Szabo Contracting, Inc. (Szabo), which was a separate JLA subsidiary that was able to provide the requisite union labor. After entering into an agreement with JLA, Szabo advised Lorig—via facsimile—that it was able to comply with the contract terms and ready to proceed with the work. Szabo eventually proceeded with and completed the work despite never getting a formal response back from Lorig.
After the project was completed, Szabo and JLA filed suit against Lorig under breach of contract and unjust enrichment theories due to non-payment for the sewer installation work. After sifting through differing testimony from the parties, the trial court found in favor of Szabo, JLA, and JLA & Sons under an unjust enrichment theory for the sewer installation work, rejecting Lorig’s contention that it had paid all invoices and did not believe it owed any additional amounts. The trial court further found that, through daily jobsite reports and testimony, Lorig was aware that Szabo had performed work. Lorig appealed the trial court’s decision.
On appeal, the Appellate Court affirmed the lower court’s finding, but did so for different reasons. Since this specific issue had never been before any Illinois court, the Appellate Court took it upon itself to provide a thorough opinion and analysis.
In arriving at its decision to uphold the trial court’s decision, the Appellate Court—predictably—found that such relief would not have been available to the plaintiffs if Lorig had paid any other party for the work. Because Lorig had not paid anyone, Szabo and JLA were able to recover under unjust enrichment, despite the lack of contract between Lorig and Szabo. Most importantly, however, recovery was possible because JLA had dismissed its claims against Lorig, thereby negating any potential of double liability.
If the proposition of paying for work that has been requested and properly completed was not obvious enough before, there is now precedent in Illinois upon which unpaid subcontractors can rely.