Opinion
No. CV 04 0084236 S
April 11, 2005
MEMORANDUM OF DECISION ON THE DEFENDANT TOWN OF CHESHIRE'S MOTION TO STRIKE
STATEMENT OF THE CASE
This is an action instituted by the plaintiff, Coastal, Inc. Plumbing-Heating (Coastal), seeking to recover compensation for plumbing goods and supplies provided by it as part of construction work done at Cheshire High School. The allegations of the complaint relevant to this motion are as follows. The plaintiff, as a subcontractor, entered into an agreement with the defendant, TP Builders, Inc. (TP Builders), as the general contractor, to provide plumbing services and materials for four bathroom groups at Cheshire High School. Under this agreement, the plaintiff would be paid $72,485 for its work. The plaintiff claims that it performed under the contract and is owed $57,930.13, which TP Builders has failed to pay. Count five of the complaint alleges that the Town of Cheshire (Town) retains the benefit of the plaintiff's work, has refused to pay for this work, and thereby, has been unjustly enriched. The complaint further alleges that "[t]he defendant Town of Cheshire entered into a contract specifically drafted to avoid the necessity of a bond leaving subcontractors without protection for their claims."
The Town filed an answer admitting that TP Builders did not furnish a payment bond, but otherwise denying the plaintiff's allegations that the Town is liable for any of the plaintiff's claims. During oral argument, the parties stipulated that the court could entertain the motion to strike despite the waiver provision of Practice Book § 10-7.
Pending before the court is the Town's motion to strike count five of the complaint. The Town argues that the motion should be granted because privity of contract does not exist between the Town and the plaintiff and because the Town does not owe a duty to the plaintiff to obtain a bond. For the following reasons, the motion to strike is denied.
DISCUSSION CT Page 6549
"The function of a motion to strike is to test the legal sufficiency of a pleading; it admits all facts well pleaded . . . The role of the trial court [is] to examine the [complaint], construed in favor of the plaintiff to determine whether the [pleading party has] stated a legally sufficient cause of action." (Citation omitted; internal quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997). "Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Doe v. Yale University, 252 Conn. 641, 667, 748 A.2d 834 (2000). The Supreme Court has stated that when a complaint could allege the nature of a cause of action more precisely, the "lack of linguistic specificity" does not warrant striking a count in a complaint. D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, 202 Conn. 206, 220, 520 A.2d 217 (1987).As previously stated, count five of the complaint claims that the Town is liable under the principal of unjust enrichment. Based on the plaintiff's allegations, which must be considered true in reviewing this motion to strike, the plaintiff has asserted sufficient facts to state a cause of action for unjust enrichment. The complaint alleges that the Town has received the benefit of the plaintiff's goods and services, has refused to pay for these benefits, and as a result, has been unjustly enriched to the plaintiff's detriment. See Paulsen v. Kronberg, 66 Conn.App. 876, 878, 786 A.2d 453 (2001) ("Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefitted, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiff's detriment.")
During oral argument, the Town's counsel conceded that the Town was unable to contest, as part of its motion to strike, the complaint's allegation that the Town did not pay either TP Builders or the plaintiff all the amounts owed to the plaintiff for the materials and services provided by the plaintiff.
The Town insists that the motion to strike should be granted because "there is [no] privity between the Town, as the 'land owner,' and Coastal, as a subcontractor." To support its position, the Town relies on the following viewpoint of Professor Farnsworth to support its position:
"Suppose that an owner of land makes a contract with a general contractor for the construction of a building, and the general contractor in turn makes another contract with a subcontractor for the plumbing work. Then suppose that the subcontractor does the plumbing work, but the general contractor fails to pay him. If the owner has not yet paid the general contractor, does the subcontractor have a claim in restitution directly against the owner for the benefit conferred on him by the plumbing work? The answer is generally no. Although the subcontractor did not do the work gratuitously, since he expected compensation from the general contractor, he did it with no expectation of compensation from the owner against whom the claim is made."
E. Farnsworth, Contracts, (1982) § 2.20, pp. 102-103.
Professor Farnsworth characterizes the above proposition as representing the "majority" rule, but whether this characterization is true or not, his description of the rule does not represent a correct statement of Connecticut law. The elements of a cause of action for unjust enrichment, as previously described, do not include a contractual, "privity" requirement. Under Connecticut precedent, the elements of unjust enrichment may be established when a property owner receives the benefits of a subcontractor's work and fails to pay for them to the subcontractor's detriment, even when the subcontractor's agreement is solely with a prime contractor. See generally, Providence Electric Co. v. Sutton Place, Inc., 161 Conn. 242, 278 A.2d 379 (1971). Through its agreement with TP Builders, the Town requested the plumbing work and expected to pay for it. Under these circumstances, the Town should not benefit from the value of such work without paying fair compensation to the detriment of the plaintiff. "The equitable remedy of unjust enrichment may be invoked when justice requires that a party be compensated for property or services rendered under a contract, and no [legal] remedy is available by an action on the contract. As an equitable right, unjust enrichment is based on the principle that in a given situation, it is contrary to equity and good conscience for the defendant to retain a benefit which has come to him at the expense of the plaintiff." (Citations omitted; internal quotation marks omitted.) Garwood Sons Construction Co. v. Centos Associates Limited Partnership, 8 Conn.App. 185, 187, 511 A.2d 1377 (1986).
Under Connecticut law, if a property owner has fully paid the prime contractor under the terms of their agreement, the owner has not received any "unjust" benefit, and thus, cannot be found liable to unpaid subcontractors for unjust enrichment. Providence Electric Co. v. Sutton Place, Inc., supra, 161 Conn. 242; Garwood Sons Construction Co. v. Centos Associates Limited Partnership, supra, 8 Conn.App. 185; V.I.P. Supply v. Danpar Associates Limited Parternship, Superior Court, complex litigation docket at Stamford, Docket No: X05 CV 00 01179651 (June 19, 2002, Tierney, J.). However, the complaint here alleges that the Town has not fully paid for the materials and services provided by the plaintiff, and therefore, the Town cannot avoid liability on this basis.
The Town also argues that under General Statutes § 49-41, the prime contractor is required to obtain a surety bond, and as a consequence, a subcontractor's sole remedy is against the prime contractor and its surety for nonpayment of the subcontractor's work. "[W]hen a Town complies with General Statute § 49-41, the subcontractor and the material man who have no privity with the Town cannot proceed against the Town based on quantum meruit." Kerite Co. v. Norwalk, 32 Conn.Sup. 168, 172, 344 A.2d 364 (1975). The obvious problem with the Town's reliance on this exception to liability is that the plaintiff alleges that the Town failed to comply with General Statutes § 49-41 because no payment bond was obtained. The complaint states that "[t]he defendant Town of Cheshire entered into a contract specifically drafted to avoid the necessity of a bond leaving subcontractors without protection for their claims." (Complaint, count five, ¶ 10.). In opposition to the motion to strike, the plaintiff argues that because the Town failed to acquire the bond from TP Builders as required by § 49-41, the Town should be held responsible for the plaintiff's claims.
General Statutes § 49-41(a) provides: "Each contract exceeding fifty thousand dollars in amount for the construction, alteration or repair of any public building or public work of the state or of any subdivision thereof shall include a provision that the person to perform the contract shall furnish to the state or the subdivision on or before the award date, a bond in the amount of the contract which shall be binding upon the award of the contract to that person, with a surety or sureties satisfactory to the officer awarding the contract, for the protection of persons supplying labor or materials in the prosecution of the work provided for in the contract for the use of each such person, provided no such bond shall be required to be furnished (1) in relation to any general bid in which the total estimated cost of labor and materials under the contract with respect to which such general bid is submitted is less than fifty thousand dollars, (2) in relation to any sub-bid in which the total estimated cost of labor and materials under the contract with respect to which such sub-bid is submitted is less than fifty thousand dollars, or (3) in relation to any general bid or sub-bid submitted by a consultant, as defined in section 4b-55. Any such bond furnished shall have as principal the name of the person awarded the contract."
In response to the plaintiff's argument that noncompliance with the bond requirement of § 49-41 exposes it to liability, the Town relies on OG Industries, Inc. v. New Milford, 29 Conn.App. 783, 617 A.2d 938 (1992), aff'd, 229 Conn. 303, 640 A.2d 110 (1994). In that case, the Supreme Court held that under General Statutes § 49-41, the prime contractor, not the municipality, is obligated to acquire the payment bond. The Town contends that because it did not have a duty to obtain the bond, liability cannot be imposed on it based on the bond's absence. See OG Industries, Inc. v. New Milford, supra, 29 Conn.App. 790 ("Since the [Town] owed no legal duty to the [subcontractor], the [subcontractor's] claim against the municipality is unenforceable as a matter of law . . .")
The plaintiff's counterargument is that the Town's reliance on OG Industries, Inc. v. New Milford supra, is misplaced because since the issuance of that decision, the language of § 49-41 has been amended to now make a municipality liable to a subcontractor when a prime contractor fails to secure a payment bond. The court agrees with the plaintiff, but only to the following extent: the court finds that the present language of § 49-41 now requires a municipality to include in a major public work contract a provision requiring the prime contractor to furnish a payment bond before the final award of the contract. A municipality's failure to comply with this statutory requirement to include this provision in such a contract is a violation of a ministerial duty for which the municipality may be held liable. See generally, Tango v. New Haven, 173 Conn. 203, 204-05, 377 A.2d 284 (1977) ("when the act complained of is ministerial, the municipality is responsible for its negligent execution.")
Whether § 49-41 requires a municipality to secure a payment bond from a general contractor is a question of statutory construction. Statutory construction is now governed by Public Acts 2003, No. 03-154, § 1, which states that "[t]he meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extra-textual evidence of the meaning of the statute shall not be considered." See generally, Jones v. Kramer, 267 Conn. 336, 344 n. 4, 838 A.2d 170 (2004) (through the enactment of Public Act 03-154, "our legislature recently has enacted the method of interpretation by which this court is to interpret statutes when the text is plain and unambiguous.")
In OG Industries, Inc. v. New Milford, supra, 229 Conn. 306, the Court notes that the then existing language of § 49-41 provided the following in relevant part: "[b]efore any contract . . . for the construction, alteration or repair of any public building or public work of the state or of any subdivision thereof is awarded to any person . . . that person shall furnish to the state or the subdivision a bond in the amount of the contract . . . for the protection of persons supplying labor or materials in the prosecution of the work provided for in the contract . . ." (Internal quotation marks omitted.)
Public Acts 1993, No. 93-104 modified § 49-41(a) so that the operative language now provides that " [e]ach contract exceeding [fifty thousand dollars] in amount for construction, alteration or repair of any public building or public work of the state or of any subdivision thereof shall include a provision that the person to perform the contract shall furnish to the state or the subdivision on or before the award date, a bond in the amount of the contract . . . for the protection of persons supplying labor or materials in the prosecution of the work provided for in the contract . . ."
The 1993 amendment, Public Act 93-104, required payment bonds to be furnished for public work contracts exceeding $25,000. In 1997, this monetary threshold was increased to $50,000 by Public Act 97-11. (Public Acts, Spec. Sess., June 1997, No. 97-11, § 33.)
A comparison of these provisions indicates that prior to the 1993 amendment, the statute simply required the "general contractor to furnish the bond and the responsibility of the subcontractor to assure itself that the bond [had] been posted." OG Industries, Inc. v. New Milford, supra, 229 Conn. 311. However, after the amendment, the municipality is affirmatively required to provide in the contract itself that the bond will be supplied by the general contractor before the award date. The obligation of a town to include in a major public work contract a provision requiring a payment bond from the prime contractor could not be expressed in clearer or more unambiguous language. A town's failure to include a provision for a payment bond in a contract as now required by § 49-41 is a violation of an explicit, statutory mandate.
Although the court finds the language of § 49-41 unambiguous, even if there were some ambiguity, the legislative history of the 1993 amendments supports the court's conclusion. In 1993, the Connecticut house of representatives General Law Committee first addressed this issue through Raised Bill 1056. This bill proposed a change to General Statutes § 49-42, rather than § 49-41. The bill would have given unpaid subcontractors the right to serve a notice of claim on the state or municipality when general contractors fail to secure required payment bonds. Joyce Wojtas, the government affairs director for the Connecticut Construction Industries Association, testified in support of the bill contending that there were many instances where municipalities either waived the bond requirement or failed to acquire the bond from the prime contractor leaving unpaid subcontractors without a remedy against bankrupt general contractors. In particular, Wojtas cited the result in OG Industries, Inc. v. New Milford, supra, 229 Conn. 303, as a reason justifying the need for a change in the law. The Connecticut Conference of Municipalities opposed the bill insisting that municipalities should not be placed in the middle of disputes between general contractors and their subcontractors. See Conn. House General Law Committee, March 23, 1993, p. 1088-90, 1169.
The ultimate result was Substitute Senate Bill 1056, enacted as Public Act 93-104, amending General Statutes § 49-41. The final amendment does not authorize a subcontractor to file a claim against a municipality. However, the amendment addresses the legislative concerns by unequivocally mandating that a public work contract exceeding the monetary threshold have a provision requiring the prime contractor to obtain a bond.
Indeed, the official Summary of Substitute Senate Bill No. 1056 states the following: "The law requires each general contractor and subcontractor on a major public works project to post a bond to protect payments to his employees and suppliers. This bill instead requires each contract to include this requirement." (Emphasis added.).
In summary, in order to address the problems created by municipalities failing to require payment bonds from prime contractors, the legislature mandated that this requirement be included as a provision of major public construction contracts. Under the statutory language, the duty imposed on a municipality to include this provision in such contracts is ministerial, not discretionary. See generally, Tango v. New Haven, supra, 173 Conn. 205 ("'Ministerial' refers to a duty which is to be performed in a prescribed manner without the exercise or judgment or discretion").
As previously stated, the plaintiff alleges that the Town entered into a contract with TP Builders that did not require TP Builders to furnish a payment bond for the protection of subcontractors. According to the complaint, the project involved work exceeding $50,000. Section 49-41, therefore, required the contract to contain a provision for a payment bond, and the Town's failure to so provide in its contract violated a ministerial duty mandated by the statute. Consequently, the Town cannot avoid liability by relying on § 49-41.
The allegations of the complaint do not require the court to address what claims, if any, an unpaid subcontractor would have against a municipality if a public construction contract requires the prime contractor to furnish a payment bond in accordance with § 49-41, but the prime contractor fails to do so in violation of the contract.
CONCLUSION
Therefore, for the foregoing reasons, the motion to strike count five of the complaint filed by the defendant Town of Cheshire is hereby denied.
So ordered this 17th day of April 2005.
STEVENS, J.