Opinion
CV156028626S
02-23-2016
Mastrobattisto, Inc. v. Nutmeg Utility Products, Inc
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO STRIKE, #118
PETER EMMETT WIESE, JUDGE.
I
Procedural History
On March 24, 2015, the plaintiff, Mastrobattisto, Inc., commenced this action by service of process on the defendant, Nutmeg Utility Products, Inc. On March 30, 2015, the plaintiff filed a four-count complaint, alleging breach of contract, contractual indemnity, negligence, and common-law indemnity.
The complaint is dated March 17, 2015.
Count one sounds in breach of contract, and alleges that the plaintiff was a subcontractor to a nonparty, Haynes Construction Co. (Haynes), to provide site work and utility improvements for a construction project known as Gateway Commons Apartment Complex (the project). On June 20, 2014, the plaintiff executed a purchase order with the defendant, whereby the defendant agreed to provide and install mechanical and piping components for the water booster pump station at the project, which was an integral part of the water supply system for the apartment complex. The defendant proceeded to provide and install the subject components through February 18, 2015, when it completed work, subject to final testing and punch list. On February 18, 2015, because of a failure in a flange adaptor and/or other fittings, the pump station " blew out, " resulting in approximately one million gallons of water flooding the station and the surrounding areas. The adaptor and/or fittings were either not installed correctly by the defendant or were not the proper materials.
After the plaintiff discovered the blow out, the plaintiff notified the defendant and requested that the defendant investigate the event and inspect the damage, and to repair all resulting damage. The plaintiff repeatedly asked the defendant to assist in the inspection, clean up, and repair of the damaged facility, but the defendant failed to respond.
On March 9, 2015, the plaintiff received notice from Haynes that the plaintiff has failed to properly complete the pump house due to improperly installed and defective fittings that caused a breach in the water piping, and that Haynes will seek resulting damages from the plaintiff. Even before receiving the notice, the plaintiff was engaged in clean up and repair efforts without any assistance from the defendant. After receiving the notice, the plaintiff also arranged for the delivery and installation of the necessary components to replace the damaged material.
Count two sounds in contractual indemnity, and it incorporates the allegations in count one. Count two further alleges that " [p]er the terms of [the plaintiff's] subcontract with [the defendant], [the] [d]efendant's work was to be provided per the project specifications, which included indemnification obligations by [the defendant] for any defects in the materials it provided or work it performed." Despite the plaintiff's demands, the defendant has failed to indemnify the plaintiff.
Count three sounds in negligence, and it incorporates most of the allegations in count one and count two. Count three further alleges that the blow out was caused by the negligence and carelessness of the defendant because the defendant used incorrect fittings and adaptors and/or because the defendant incorrectly installed the fittings and adaptors.
Finally, count four is a common-law indemnity claim, and it incorporates the allegations in count three.
As to damages, the plaintiff seeks the same damages as to all four counts, namely, " costs of clean-up, repair, replacement, and installation of damaged equipment and materials, and other damages due to the resulting late performance and completion of the work."
On September 11, 2015, the defendant filed a motion to strike count two and count three of the complaint. On September 29, 2015, the plaintiff filed an objection to the motion. Finally, on October 23, 2015, the defendant filed a reply to the objection. The matter was heard at short calendar on November 16, 2015.
II
DISCUSSION
" The purpose of a motion to strike is to contest ... the legal sufficiency of the allegations of any complaint ... to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). " In ruling on a motion to strike the trial court is limited to considering the grounds specified in the motion." Meredith v. Police Commission, 182 Conn. 138, 140, 438 A.2d 27 (1980).
" [A] motion to strike challenges the legal sufficiency of a pleading and, consequently, requires no factual findings by the trial court ... [The court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency ... Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied ... Moreover, [the court notes] that [w]hat is necessarily implied [in an allegation] need not be expressly alleged ... It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted. Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership, 309 Conn. 342, 350, 71 A.3d 480 (2013). " A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Emphasis in original; internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).
The defendant moves to strike count two of the complaint on the ground that General Statutes § 52-572k(a) voids any provision in a construction contract which purports to indemnify a party for damage to property caused by or resulting from the negligence of that party. The defendant also moves to strike count three of the complaint on the ground that the economic loss doctrine prohibits a party from recovering in tort where the basis for that party's tort claim arises from a contractual relationship, and the alleged damages are purely economic.
The plaintiff counters that neither § 52-572k(a) nor the economic loss doctrine apply under the facts alleged in the complaint. More specifically, as to count two, the plaintiff argues that § 52-572k(a) is not applicable because it only voids provisions that purport to indemnify a party for its own negligence. Moreover, as to count three, the plaintiff contends that the economic loss doctrine has not been conclusively adopted in Connecticut with regard to construction cases, and that there is a split of authority among the trial courts regarding its application. The plaintiff further argues that, where the doctrine has been used to bar negligence claims in construction cases, the courts have generally required a lack of privity between the two parties or that the damages be purely economic losses. The plaintiff contends that neither requirement is met in the present case.
A. Count Two: Contractual Indemnity
" The logic and rationale underlying our indemnity case law are based on the premise that an action for indemnification is one in which one party seeks reimbursement from another party for losses incurred in connection with the first party's liability to a third party ... Specifically, the concept of indemnity usually involves an indemnitor, A, and an indemnitee, B, who enter into a contract whereby A agrees to indemnify B for any money B becomes legally obligated to pay to a third party." Amoco Oil Co. v. Liberty Auto & Electric Co., 262 Conn. 142, 148-49, 810 A.2d 259 (2002).
General Statutes § 52-572k(a) restricts the scope of the permissible indemnity in construction contracts. Section 52-572k(a) provides, in relevant part: " Any covenant, promise, agreement or understanding entered into in connection with or collateral to a contract or agreement relative to the construction, alteration, repair or maintenance of any building, structure or appurtenances thereto including moving, demolition and excavating connected therewith, that purports to indemnify or hold harmless the promisee against liability for damage arising out of bodily injury to persons or damage to property caused by or resulting from the negligence of such promisee, such promisee's agents or employees, is against public policy and void ..."
General Statutes § 52-572k was amended in 2001, and the statute now invalidates indemnification clauses that purport to indemnify parties for injuries caused by their negligence, and not just injuries caused solely by their negligence.
The purpose [of § 52-572k] is to nullify any provision in construction contracts which grants immunity to either party for acts of negligence ... Thus, the statute seeks to declare void and against policy any agreement entered into in connection with a construction contract which relieves a person from liability ... resulting from his [ own] negligence ." (Emphasis altered; internal quotation marks omitted.) A& G Contracting v. Design/Build Collaborative, LLC, Superior Court, judicial district of New Haven, Docket No. CV-10-6008755-S, (August 2, 2012, Wilson, J.). " Although agreements related to construction contracts that seek to indemnify a party for its own negligence are void under § 52-572k ... courts have held that indemnification agreements do not violate § 52-572k where they provide that a subcontractor shall indemnify a contractor for third-party claims to the extent that the injuries claimed arose out of the subcontractor's own conduct ." (Citation omitted; emphasis added.) Id.
In the present case, the complaint described the indemnification provision as follows: " [p]er the terms of [the plaintiff's] subcontract with [the defendant], [the] [ d] efendant's work was to be provided per the project specifications, which included indemnification obligations by [the defendant] for any defects in the materials it provided or work it performed ." (Emphasis added.)
Viewing the complaint in the manner most favorable to sustaining its legal sufficiency, the indemnification provision does not violate § 52-572k(a) because the provision does not purport to indemnify the plaintiff for injuries caused by its own negligence, but only indemnifies the plaintiff for injuries that arose out of the defendant's own conduct .
B. Count Three: Negligence
" [T]he economic loss doctrine is a multifaceted set of principles that influence three major areas concerning recovery of purely economic losses, namely: (1) whether purely economic losses caused by a defective product are recoverable under tort law; (2) whether a tort claim for economic damages is viable when there is some other contract between the parties (e.g., a service contract or a contract relating to [ nondefective] goods or real estate) that allocates or could have allocated the risks of economic loss; and (3) all of the rest of tort law." (Emphasis added; internal quotation marks omitted.) Lawrence v. O& G Industries, Inc., 319 Conn. 641, 661 n.15, 126 A.3d 569 (2015).
" The Connecticut Supreme Court applied the economic loss doctrine in Flagg Energy Development Corp. v. General Motors Corp., 244 Conn. 126, 709 A.2d 1075 (1998), [overruled in part by Ulbrich v. Groth, 310 Conn. 375, 408-09, 78 A.3d 76 (2013)]." Country Squire I, Inc. v. RAW Construction, LLC, Superior Court, Judicial District of Middlesex, Docket No. CV-12-6008392-S (July 30, 2013, Aurigemma, J.) (56 Conn. L. Rptr. 591, 592). " While the court's holding in Flagg concerned a sale of goods governed by provisions of the Uniform Commercial Code (UCC), its reliance on cases which recognized the existence of the economic loss rule in a broader commercial context has led to a debate among Superior Court judges, carried on through decisions addressing a variety of factual and legal circumstances, whether the economic loss rule applies only to UCC transactions." ODP, LLC v. Shelterlogic, LLC, Superior Court, judicial district of Hartford, Complex Litigation Docket, Docket No. X09-CV-064020086-S (December 21, 2007, Shortall, J.) (44 Conn. L. Rptr. 722, 723).
" Some superior courts have found that the holding in Flagg warrants an extension of the economic loss doctrine well beyond cases involving the sale of goods." Country Squire I, Inc. v. RAW Const., LLC, supra (56 Conn. L. Rptr. 592), citing ODP, LLC v. Shelterlogic, LLC, supra (44 Conn. L. Rptr. 722); Dobco, Inc. v. Williams Development Co., Superior Court, judicial district of Tolland, Complex Litigation Docket, Docket No. X07-CV-990072152-S (May 17, 2002, Sferrazza, J.) (32 Conn. L. Rptr. 214); Morganti National, Inc. v. Greenwich Hospital Ass'n, Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X06-CV-99-0167154-S, (September 27, 2001, McWeeny, J.); Worldwide Preservation Services, LLC v. The IVth Shea, LLC, Superior Court, judicial district of Stamford-Norwalk, Complex Litigation Docket, Docket No. X05-CV-980167154-S (February 1, 2001, Tierney, J.) (29 Conn. L. Rptr. 7).
The court in Country Squire I, Inc. v. RAW Const., LLC, supra (56 Conn. L. Rptr. 593-94), has further stated that " [t]he economic loss doctrine is routinely applied to eliminate tort claims as a result of construction contracts ... Three rationales have been used to eliminate tort liability based on the economic loss doctrine in construction contracts: (1) it maintains the fundamental boundaries of tort and contract law by limiting the economic loss arising in construction projects to the remedies provided by the parties' contracts; (2) the doctrine is essential to the dynamics of the construction arena. If tort and contract remedies were permitted to overlap, uncertainty and unpredictability in allocating risk would increase and impede future business activity; and (3) the law of tort is primarily concerned with the protection of persons and property from losses resulting from injury while the policy considerations underlying contract law is the protection of expectations bargained for, such as profits." (Internal quotation marks omitted.)
" Others have found either that the economic loss doctrine has not been recognized in Connecticut or that the application of the ruling in Flagg is limited to claims arising from the sale of goods." Country Squire I, Inc. v. RAW Const., LLC, supra (56 Conn. L. Rptr. 592), citing Milltex Properties v. Johnson, Superior Court, judicial district of New London, Docket No. 565866 (March 15, 2004, Hurley, J.T.R.) (36 Conn. L. Rptr. 780); Reynolds, Person & Co., LLC v. Miglietta, Superior Court, judicial district of Hartford, Docket No. CV-00-0801247-S (March 27, 2001, Berger, J.) (29 Conn. L. Rptr. 481); Darien Asphalt Paving, Inc. v. Newtown, supra (23 Conn. L. Rptr. 495); Scap Motors, Inc. v. Pevco Systems International, Inc., Superior Court, judicial district of Bridgeport, Docket No. CV-97-0348461-S (August 12, 1999, Melville, J.) (25 Conn. L. Rptr. 283).
The more persuasive argument is that the economic loss doctrine is not limited to claims arising under the UCC, and that the doctrine applies to construction contracts. Firstly, as discussed, a recent Supreme Court decision noted that one of the principles of the economic loss doctrine is whether a tort claim for economic damages is viable when there is some other contract between the parties, such as a " service contract, " that allocates or could have allocated the risks of economic loss. Lawrence v. O and G Industries, Inc., supra, 319 Conn. 661 n.15.
Secondly, even though the court in Flagg applied the economic loss doctrine to the sale of goods under the UCC, the court relied, in large part, on a federal case from Virginia, Princess Cruises, Inc. v. General Electric Co., 950 F.Supp. 151 (E.D.Va. 1996). In Princess Cruises, Inc., the court explicitly stated that " [t]he economic loss doctrine has since been applied to contracts for repair services ... and contracts for services rendered as part of the construction or manufacture of products." (Citation omitted.) Id., 154.
Finally, public policy considerations are in favor of applying the economic loss doctrine to the present facts. More specifically, " [t]he rationale for the doctrine is that, because parties to a contract are free to allocate the risks, insure against potential losses, and adjust the contract price as they [deem] most wise ... courts will not extricate them from their bargain and substitute a common-law tort remedy." (Citation omitted; internal quotation marks omitted.) Ulbrich v. Groth, supra, 310 Conn. 390 n.14. In addition, " [a]n expansion of the economic loss doctrine has also been found to be more compelling in cases where [t]he parties are sophisticated corporations familiar with the type of [goods or] services rendered, and the consequences ... likely to result from a failure to perform the contract as promised." (Internal quotation marks omitted.) O'Connor v. QBE Ins. Corp., Superior Court, judicial district of New Haven, Docket No. CV-12-6032396-S, (June 27, 2014, Wilson, J.). The present contract involves what appear to be two sophisticated entities that are very familiar with the services in question, and have the ability to allocate the risks of any breach of contract.
Thus, for the foregoing reasons, the economic loss doctrine prohibits recovery in tort for economic damages, where the basis for the tort claim is the breach of a construction contract, such as the contract in the present case. Nevertheless, in the alternative, the plaintiff argues that the economic loss doctrine does not preclude recovery for negligence where there is privity, and/or where there is damage to property beyond purely economic loss.
C. Privity of Contract
Even though the plaintiff argues that the economic loss doctrine does not preclude recovery for negligence where there is privity, the Connecticut Supreme Court has applied the economic loss doctrine in a case that involves privity of contract, namely, Flagg Energy Development Corp. v. General Motors Corp., supra, 244 Conn. 126. In fact, in the construction context, Connecticut " [t]rial courts have generally refused to hold that the economic loss doctrine bars recovery where there is no contractual privity between the parties, and where, under the circumstances, a separate duty arises to the party that foreseeably relies on the other party's work." D. Rosengren, 13 Connecticut Practice Series: Construction Law (2005), § 4:7, p. 75, citing RCD-Hudson, LLC v. T.A.T. Mason Enterprises, Inc., Superior Court, judicial district of Hartford, Docket No. CV-00-598478-S (January 17, 2001, Beach, J.) (29 Conn. L. Rptr. 261); Carolina Casualty v. 60 Gregory Boulevard, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-98-0169383-S (March 21, 2000, Hickey, J.) (26 Conn. L. Rptr. 685); Darien Asphalt Paving, Inc. v. Newtown, Superior Court, judicial district of New Britain, Docket No. CV-98-0487823-S (December 7, 1998, Nadeau, J.) (23 Conn. L. Rptr. 495). As such, the plaintiff's argument regarding privity of contract lacks merit.
D. Economic Loss
As applicable to the present case, " the economic loss doctrine bars negligence claims that arise out of and are dependent on breach of contract claims that result only in economic loss ." (Emphasis added.) Ulbrich v. Groth, supra, 310 Conn. 410. The Superior Courts have further clarified that " [t]he economic loss doctrine is a judicially created principle which prohibits recovery in tort when the basis for that tort claim arises from violation of a contract and damages are limited to purely economic losses as opposed to personal injury or property damage ." (Emphasis added.) Dobco, Inc. v. Williams Development Co., supra (32 Conn. L. Rptr. 215), citing Morganti National, Inc. v. Greenwich Hospital Ass'n, supra, Superior Court, Docket No. X06-CV-99-0167154-S.
Thus, the plaintiff correctly argues that, as a matter of law, the economic loss doctrine does not preclude recovery for negligence where there is damage to property beyond purely economic loss. The plaintiff also contends, however, that it is not seeking only economic losses limited to restoring the damaged work within the scope of the contract, but is also seeking to recover for the cost to repair and clean up the damage to the entire property, which is not covered by the contracted agreement.
Our appellate courts have previously described how to compute damages for a breach of contract action, specifically a breach of a construction contract. " [A]s a general rule, in awarding damages upon a breach of contract, the prevailing party is entitled to compensation which will place him in the same position he would have been in had the contract been properly performed ... Such damages are measured as of the date of the breach ... For a breach of a construction contract involving defective or unfinished construction, damages are measured by computing either (i) the reasonable cost of construction and completion in accordance with the contract, if this is possible and does not involve unreasonable economic waste; or (ii) the difference between the value that the product contracted for would have had and the value of the performance that has been received by the plaintiff, if construction and completion in accordance with the contract would involve unreasonable economic waste." (Emphasis added; internal quotation marks omitted.) Morgillo v. Empire Paving, Inc., 158 Conn.App. 399, 414-15, 118 A.3d 760 (2015).
In the present case, as to damages, the plaintiff seeks " costs of clean-up, repair, replacement, and installation of damaged equipment and materials, and other damages due to the resulting late performance and completion of the work." The defendant correctly states that the plaintiff " is seeking damages it incurred to complete the construction of the project as contracted for in its agreement with [the defendant], which flow directly from the [defendant's] alleged breach of the contract and are therefore purely economic." The cost of repairing and cleaning up the damage stems from the alleged breach of contract because the plaintiff does not allege in its complaint that it owns the damaged property. As argued by the defendant, " [i]n other words, any damages incurred for the cost of repairing and cleaning up the property does not constitute property damage for [the plaintiff] because it does not own the damaged property, but rather economic damages it incurred as a result of the allegedly breached agreement."
Thus, the damages that the plaintiff seeks are economic damages that the plaintiff would be entitled to if it prevails on its breach of contract claim, because the damages will place it in the same position it would have been in had the contract been properly performed by the defendant. In fact, it should be noted that the plaintiff seeks the same damages in its breach of contract claim as it does in its negligence claim. Therefore, the economic loss doctrine is applicable because the plaintiff seeks purely economic damages.
III
CONCLUSION
For the foregoing reasons, the court denies the motion to strike as to count two, and the court grants the motion to strike as to count three.
SO ORDERED.