An unpaid subcontractor may attempt to hold a property owner responsible for work performed on the owner’s property, even though the subcontractor’s contract is with the general contractor. The fact that the owner benefited from that work, however, generally does not, by itself, create an obligation to pay for it.
One theory an unpaid subcontractor may pursue is quantum meruit, which, under certain circumstances, permits recovery of the reasonable value of services performed. However, this theory has an important limitation: a party generally cannot recover under quantum meruit for work governed by a valid written contract.
This limitation is particularly significant in construction projects, where subcontractors typically contract with general contractors rather than property owners. The subcontractor therefore ordinarily looks to the general contractor, with whom it contracted, for payment for its work. As the Appellate Division, Second Department, explained in Sybelle Carpet & Linoleum of Southampton v. East End Collaborative, Inc., a subcontractor performs its work “for the benefit of the general contractor who is responsible for the completion of the improvement, not for the benefit of the owner.” Accordingly, an owner does not ordinarily become responsible for paying a subcontractor merely because the owner receives the benefit of its work.
The Second Department recently reaffirmed these principles in Marine Bulkheading, Inc. v. Ibex Construction Company, LLC. The dispute arose from the construction of a Costco store in Brooklyn, New York. Costco Wholesale Corporation retained Ibex Construction Company, LLC as the general contractor, which in turn subcontracted with Marine Bulkheading, Inc. to install foundation piles and perform related work. Marine Bulkheading alleged that it completed its work but was not fully paid by Ibex.
Marine Bulkheading filed a mechanic’s lien and commenced an action against Ibex, Costco, and others. It subsequently sought to amend its complaint to assert a quantum meruit claim against Costco, arguing, in substance, that Costco had benefited from its work. Costco opposed the amendment, maintaining that Marine Bulkheading’s written subcontract with Ibex governed the work and precluded recovery under a quasi-contract theory. The Supreme Court, Kings County, denied the proposed amendment, and Marine Bulkheading appealed.
The appellate court affirmed, holding that Marine Bulkheading could not pursue a quantum meruit claim against Costco because its subcontract with Ibex governed the work at issue. The fact that Costco was not a party to that subcontract did not change the result. The court also emphasized that Costco had not expressly agreed to pay Marine Bulkheading for its services. The decision reinforces an important distinction in construction disputes: an owner’s receipt of the benefits of a subcontractor’s work does not, standing alone, create an obligation to pay the subcontractor. Where a valid subcontract governs the work, an unpaid subcontractor generally cannot circumvent that contractual relationship by asserting a quantum meruit claim directly against the owner unless the owner has expressly undertaken an obligation to pay the subcontractor.
Jose A. Aquino (@JoseAquinoEsq on X) is a special counsel at Duane Morris LLP’s New York office, where he is a member of Construction Group, specializing in construction law, lien law, and government procurement law. He is also a member of the Cuba Business Group.
This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed herein are those of the author and do not necessarily reflect the views of Duane Morris LLP or its individual attorneys.
