## Facts

- Anthony Maglica founded and solely owned a machine shop that became Mag Instrument, Inc.; he incorporated the business in 1974 and held all shares in his name.
- Anthony and Claire Halasz began cohabiting in 1971, held themselves out as husband and wife, and Claire adopted the surname “Maglica,” but they never married.
- Claire worked extensively in the business over many years and alleged her efforts materially contributed to the company’s growth and success.
- No written agreement granted Claire any ownership interest; she later discovered Anthony was transferring stock to his children.
- After the couple separated, Claire sued on multiple theories, including contract-based claims and quantum meruit.
- The jury rejected Claire’s express and implied-in-fact contract theories for an equity interest but awarded her $84 million in quantum meruit under instructions permitting valuation by either market value of comparable services or the value of the benefit conferred on Anthony.

## Issues

1. Whether quantum meruit damages may be measured by the recipient’s gain (“value of the benefit”) rather than the reasonable value of the services rendered.
2. Whether jury instructions on implied-in-fact contract improperly limited consideration of cohabitation and “holding out” evidence, prejudicing proof of an implied agreement.

## Decision

- The court reversed the $84 million quantum meruit judgment because the jury was instructed on an incorrect measure of recovery.
- The court held quantum meruit recovery is limited to the reasonable value of services rendered (assuming the services were beneficial), not the defendant’s resulting gain or business appreciation.
- The court concluded the quantum meruit instruction improperly allowed an equity-like award despite the jury’s finding of no contract granting an ownership interest.
- The court ordered reversal and remand for a new trial on the contract-based theories under correct instructions, and for any restitutionary award to be calculated under the proper quantum meruit measure.

## Legal Principles

- Quantum meruit is a quasi-contract remedy implying a promise to pay for reasons of justice; recovery is the reasonable value of services rendered, not the recipient’s gain.
- A restitution award cannot be used to obtain the equivalent of an equity interest after the factfinder rejects a contract conferring such an interest.
- In evaluating an implied-in-fact contract between nonmarital cohabitants, cohabitation and public representation as spouses are not, by themselves, proof of contract, but may be considered as part of the surrounding circumstances relevant to whether an agreement was formed.
- Misleading or insufficiently qualified jury instructions that direct jurors to disregard relevant contextual evidence can warrant reversal and a new trial.

## Conclusion

The court held that quantum meruit compensates only the market-based reasonable value of services, not the defendant’s benefit measured by business growth, and it reversed a large restitution award that functioned as a substitute for a rejected equity contract; it also required a new trial because the implied-contract instructions may have improperly excluded relevant cohabitation context.


Maglica v. Maglica, 66 Cal. App. 4th 442 (Cal. Ct. App. 1998)