Quantum Meruit: A New Tool Available to Virginia Landowners

In Virginia, an action for trespass is no longer the only remedy a landowner has against a trespasser. A Norfolk judge recently held that a landowner may sue for rent even in the absence of an express or implied lease agreement. A duty to pay rent can arise under the doctrine known as quantum meruit.

In the case of City of Norfolk v. Muladhara, LLC, Norfolk managed several lots of prime commercial real estate on which the city collected rents. The Defendant, Muladhara, began conducting business on one of the lots without ever receiving permission from Norfolk. Upon discovering the trespasser, Norfolk informed Muladhara that the city managed the land and collected rent for its use. This conversation prompted the Defendant to pay the back rent the city claimed was due. However, Muladhara continued to occupy the space without any further payment.

The court held that Norfolk may base its claim for recovery on two distinct theories. First, the court found that the conversation between the city and Muladhara that led to the payment of back rent could form the basis of an implied contract. Judge Hall clearly laid out the three elements of an implied contract: offer, acceptance, and a meeting of the minds. Simply put, the city offered to overlook the previous trespass if Muladhara paid back rent, and Muladhara accepted the offer. Even though this agreement only covered Muladhara’s past occupation of the parcel, the Defendant’s payment of back rent constituted a meeting of the minds as to the rental value of the land. Should Muladhara continue to occupy the land, the meeting of the minds forms the content of the implied contract. The city, therefore, is allowed to sue for payment of rent due, and the amount will be determined by looking to the parties’ prior agreement.

Implied contract is a fairly common vehicle for the collection of rent when no formal agreement exists. The court, however, added a new tool to the landowner’s toolbox: quantum meruit, or quasi-contract. This differs from an implied contract in that a meeting of the minds (the basic terms of the contract) is not necessary. All that is required is that the city reasonably expected to be compensated for the use of its land, and that the trespasser, aware of the city’s reasonable expectation, still made use of the land. Historically, quantum meruit only applied to a plaintiff’s services or materials consumed by the defendant, not to a defendant’s use of real property. But, as Judge Hall pointed out, the Virginia Supreme Court has defined quantum meruit to apply whenever a defendant “acquires property of another,” and real property need not be excluded from this definition. Consequently, no established precedent prevents a plaintiff from pursuing the reasonable rental value of the property even if no agreement was ever reached concerning the value of the property.