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Parties to construction contracts usually reduce to writing their original agreement for the work contemplated. It is not uncommon for the parties to alter or modify their contract during construction. Sometimes those modifications or changes are not put into writing. The highest courts of two states recently examined whether a contractor can recover for extra work without a written change order and came to different conclusions, in large part based on contract provisions.

In CMC Enterprises, Inc. v. Ken Lowe Management Co., 525 S.E.2d 295 (W.Va. 1999), the West Virginia Supreme Court ruled that a contractor could recover for the additional work that it performed under an oral modification of the original contract. The case arose after a property owner hired a contractor to remodel a Social Security Administration building under a lump sum contract. The original contract, which the contractor drafted, required that the contractor perform all work in accordance with the building specifications set out in related contract documentation. The contract was silent as to whether change orders or modifications had to be in writing.

On the day when the contractor began work on the building, the Social Security Administration wrote to the property owner, cautioning the owner against following the floor plans outlined in the original contract documentation. A little over a week later, the contractor received the new floor plans with new specifications. The property owner informed the contractor on two separate occasions to follow the specifications in the new floor plans, which the contractor did. Less than two months after it began working on the project, the contractor completed the remodeling work. The property owner then refused to pay the contractor's invoice for the additional work required under the modifications to the original contract.

The contractor sued the owner for breach of contract, alleging that it was entitled to the value of the additional work it performed on the project arising from the modifications to the plans. The trial court found in favor of the contractor, holding that to find otherwise would permit the owner to become unjustly enriched.

The West Virginia Supreme Court affirmed the trial court. The Supreme Court found that the parties orally modified the contract to include additional work not contemplated under the original contract and that the original contract did not dictate whether or not such changes had to be in writing. The contractor was entitled to recover its costs for the additional work it performed, and the owner was not entitled to benefit from the contractor's services without paying the contractor.

In contrast, the Maryland Court of Appeals reached a different conclusion in County Commissioners of Caroline County v. Roland Dashiell & Sons, Inc., 358 Md. 83, 747 A.2d 600 (2000). In that case, the county and the contractor entered into a lump sum contract involving a county jail. The contract included the AIA A201 General Conditions. A201 requires that claims under the contract, including to adjust the contract terms, for additional costs and for time, be submitted in writing. Although the contractor sought a change order increasing the price of the contract and extending the completion date, it failed to submit its requests in a timely fashion under the terms of the contract.

The contractor filed suit against the county, seeking damages for the extra cost of work and delays and relief from liquidated damages. The trial court granted the county's motion for summary judgment, which the contractor appealed. The Court of Special Appeals affirmed the trial court in part. However, it disagreed with the trial court as to whether the contractor was entitled to recover on its quantum meruit or unjust enrichment claim against the county. The county brought a writ seeking review by the Maryland Court of Appeals.

The Maryland Court of Appeals held that the express, written agreement between the contractor and the county barred the contractor's claim for unjust enrichment. The court noted that the contractor entered into an express contract with the county, and the contract, via A201, contained provisions relating to the contractor's recovery of money for extra work at the jail. An express contract existed between the contractor and the county, which defined the rights and remedies available to the contractor under the terms of the contract. To permit the contractor to recover for its work in this situation, the court reasoned, would permit the contractor unilaterally to amend the contract and escape the terms of the original contract. There was no unjust enrichment because the county was entitled to have the contract strictly followed.

The West Virginia contract contained no such requirement, which proved to be of benefit to the contractor and a significant factor to the court. Both cases illustrate the extreme risk taken by contractors that perform extra work without written change orders.

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