## Facts

- David Paffhausen, a carpenter and artist, obtained Elizabeth Balano’s permission to renovate her building to create a fine art print shop/studio.
- The parties understood Paffhausen would pay $60 per month only after the business was operating; Balano facilitated the renovations by approving work and permitting.
- Balano signed a handwritten note stating that Paffhausen could use the building “as long as he needs it.”
- Paffhausen performed extensive renovations over several years, supplying labor and materials; the space was usable for art shows by 1994 and 1995.
- During the renovation period, Balano (and later her estate) paid property taxes and insurance; Paffhausen paid no rent.
- After Balano’s death in October 1995, the estate offered one year of free rent and then $60 per month for no definite term; Paffhausen rejected the offer.
- Paffhausen filed a claim against the estate for compensation; after the estate disallowed it, he petitioned the Probate Court to resolve the disputed claim.

## Issues

1. Whether Paffhausen proved entitlement to recovery in quantum meruit for renovations performed with Balano’s knowledge and consent under circumstances supporting a reasonable expectation of compensation.
2. Whether the Probate Court erred by denying quantum meruit and limiting recovery to unjust enrichment measured only by the value added to the property.

## Decision

- The Maine Supreme Judicial Court vacated the Probate Court’s judgment in part.
- The court held the evidence supported recovery in quantum meruit based on an implied-in-fact agreement that Paffhausen’s compensation would be use of the building at no or nominal rent for as long as needed.
- The court remanded for calculation of quantum meruit damages: the reasonable value of labor and materials, offset by the value of Paffhausen’s use of the building.

## Legal Principles

- Quantum meruit is contract-based and requires proof that: (1) services were rendered, (2) with the defendant’s knowledge and consent, and (3) under circumstances making it reasonable for the plaintiff to expect compensation and for the defendant to understand that expectation.
- In quantum meruit, recovery is measured by the reasonable value of the plaintiff’s services and materials, subject to offsets to prevent overcompensation.
- Unjust enrichment is restitutionary and focuses on the value of the benefit retained by the defendant; it may apply absent a mutual understanding, but it is not a substitute when an implied-in-fact agreement is proved.
- When compensation is partly provided through the plaintiff’s use of property, the value of that use must be considered as an offset against the value of the services rendered.

## Conclusion

The court held that an implied agreement for low- or no-rent use of property can constitute compensation supporting quantum meruit for renovation work, and it required the Probate Court on remand to award the reasonable value of labor and materials minus the value of the plaintiff’s occupancy.


Paffhausen v. Balano, 708 A.2d 269 (Me. 1998)