Opinion
FSTCV166028187S
11-08-2016
Baker Concrete Const., Inc. v. A. Pappajohn Company
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO DISMISS (#108.00)
Kenneth B. Povodator, J.
The defendant has moved to dismiss this proceeding, claiming that the court lacks subject matter jurisdiction. In particular, because of the claimed interrelatedness of contractual relationships, the defendant claims that the plaintiff's action is premature--depending upon terminology, not ripe, not justiciable, etc.--based on the existence and status of other litigation (not involving the plaintiff, directly).
In summary form, the plaintiff was a subcontractor on a project on which the defendant was the general contractor, and pursuant to the contract between these parties, the defendant claims that the plaintiff is bound by the outcome of any claims/proceedings brought by the defendant against the owner/developer. The defendant further claims that the existence of the bankruptcy proceedings involving the owner/developer (in which the defendant is a participant) constitutes the type of litigation contemplated by the agreement between the parties, and that until such time as that litigation is resolved (or proceeds beyond some as-yet-unattained point), the plaintiff's claims in this proceeding are premature.
The contract language quoted by the defendant in its brief is the essential predicate to the arguments being advanced:
15.8 In the event that a dispute exists between the Subcontractor and Contractor arising out of or relating to the Subcontractor's Work under the Subcontract Documents or an (sic) action by the Owner and/or Architect and in the event that the Contractor actually commences an action or proceeding against the Owner, at any time whatsoever, then, at the election of the Contractor, the dispute between the Contractor and the Subcontractor shall be decided in the same forum, location and manner as the dispute between the Contractor and Owner and/or Architect. In the event that an action has been previously commenced by the Subcontractor against the Contractor, the Subcontractor agrees to withdraw such action, and participate in the action or proceeding then commenced by the Contractor against the Owner and/or Architect. The Subcontractor agrees to participate in such action or proceeding and to present its own claim therein, through an attorney chosen by the Contractor but approved by Subcontractor at the Subcontractor's own expense, and to be bound by the decision rendered thereon . . . It is expressly understood that the purpose of this Paragraph is to ensure consistency in the resolution of disputes arising out of all the Work at the Project. In no event shall Contractor be liable to Subcontractor for Work performed or for any other cause whatsoever, except to the extent that Contractor may recover therefore, from the Owner. In the event of such recovery, the amount awarded to the Contractor on account of the Subcontractor's claim shall be paid to the Subcontractor, less the Subcontractor's proportionate share of expenses, costs and attorneys fees incurred by Contractor in prosecuting the claim. In addition thereto, the Subcontractor's recovery shall be diminished by the reasonable overhead and profit mark-up to Contractor . . .
While the court understands the desire of the defendant to have the proceedings against the owner/developer as the central focus of attention, and appreciates the existence of a contractual provision that supposedly compels such an approach, the court must deny the motion to dismiss. The defendant has attempted to frame the status as implicating jurisdiction, but properly framed, there is no jurisdictional issue, especially relating to subject matter jurisdiction.
The dispute between the plaintiff and the defendant is one for which this court has subject matter jurisdiction. " [I]t is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged . . . Subject matter jurisdiction involves the authority of the court to adjudicate the type of controversy presented by the action before it . . ." (internal quotation marks and citations, omitted). Sousa v. Sousa, 322 Conn. 757, 770, 143 A.3d 578, 587 (2016). There is nothing in the nature of a secondary contractual dispute that impacts this court's " authority . . . to adjudicate the type of controversy presented" --the ability to resolve a dispute between the parties as framed in the complaint. The court reaches this conclusion by trying to analyze the nature of the contractual obligation upon which the defendant relies--primacy of the dispute between the defendant and the owner/developer, with the plaintiff agreeing to be bound by that process.
The court believes that for jurisdictional purposes, the provision upon which the defendant relies should be analyzed as (analogized to) a variation on a forum selection provision. It is well-established in Connecticut that such contractual provisions are not jurisdictional in nature. Thus, a provision requiring disputes to be resolved by arbitration does not rise to the level of a jurisdictional issue; Mark v. Neundorf, 147 Conn.App. 485, 83 A.3d 685 (2014). Similarly, a provision in a contract designating a particular state as the forum for resolution of disputes is not a matter of jurisdiction. Reiner, Reiner and Bendett, P.C. v. Cadle Co., 278 Conn. 92, 897 A.2d 58 (2006). At most, these cases indicate that a court may, in its discretion, decline to exercise jurisdiction or decline to adjudicate the merits, once it is determined that the provision is entitled to enforcement. (That can only occur after the court, on the merits, determines that the provision is enforceable.) An obvious alternative to declining to exercise jurisdiction would be to enter a stay, analogous to the statutory provision for entry of a stay pending arbitration, General Statutes § 52-409. (A further overlay is that there is a sometimes-recognized distinction between mandatory forum-selection provisions and non-mandatory provisions, and the existence of an election by the defendant would seem to add yet an additional layer of required analysis.)
Subject matter jurisdictional defects cannot be waived ( Stefanoni v. Dep't of Econ. & Cmty. Dev., 70 A.3d 61, 142 Conn.App. 300, 306 (2013))--is the defendant truly asserting that the quoted contract provision could not be waived by the defendant? Certainly, if the contract provision were to be waived, the court would have jurisdiction.
The court does not believe that a motion to dismiss, predicated on the status of separate litigation and its relationship to the contract between these parties, is the proper mechanism for determining whether the contractual provision relating to that ancillary litigation is binding, is applicable to the current situation, and should be the basis for (discretionary) action by this court. The defendant may have a right to compel compliance with the quoted contract provision, as interpreted by the defendant, but that cannot be done via motion to dismiss. Enforcement of the contract is not jurisdictional.
On a somewhat simplistic level: If the defendant is correct about the enforceability of the contract provision, then the actual status of the pending litigation involving the owner/developer is essentially irrelevant (except for the actual existence of litigation as contemplated by the contract); and if the defendant is not correct about the enforceability of the contract provision, then the actual status of the pending litigation involving the owner/developer again is irrelevant. Enforceability of the contract provision (under the defendant's interpretation) is the key threshold issue. And again simplistically, the court does not understand the defendant to be arguing that the court lacks jurisdiction to resolve contractual disputes or to determine the enforceability of a provision such as relied upon by the defendant.
This is reinforced by the contract language, which does not really match the position being asserted by the defendant in this motion. The defendant argues that the plaintiff's action is premature. Under the contract language relied upon, if there is a dispute between the defendant and plaintiff (and there is), and if there is already pending a dispute between the defendant and the owner (and the defendant seems to be claiming that the bankruptcy proceeding satisfies that requirement), then at the defendant's option, the plaintiff may be obligated to resolve its dispute in that same forum as a global dispute resolution process. The next sentence in the quoted provision applies in a subset of situations, seemingly applicable here, i.e., a proceeding already commenced by the plaintiff against the defendant. " In the event that an action has been previously commenced by the Subcontractor against the Contractor, the Subcontractor agrees to withdraw such action, and participate in the action or proceeding then commenced by the Contractor against the Owner and/or Architect." Under either scenario, then, the language compels a unified action against the owner, in which the plaintiff is bound by the outcome. Only if there were no related dispute involving the owner (or architect) would there appear to be a contractually permissible action against the defendant, and there does not seem to be a possible prematurity issue in that scenario. The contract, then, contemplates compelling the plaintiff to abandon this action and join in the proceeding commenced by the defendant--it does not contemplate some deferral of action as suggested by a claim of prematurity. Perhaps more bluntly, although the defendant's articulated position is that the plaintiff's claim is not ripe for adjudication because it must await the outcome of another proceeding, the language relied upon would not allow this action ever to be adjudicated as the contract seems to require that the plaintiff's rights be adjudicated in that other proceeding.
A potential sub-issue--the contract provision is framed in terms of a proceeding commenced by the defendant (" . . . and in the event that the Contractor actually commences an action or proceeding against the Owner . . ."). In addition to the question of proper characterization of a bankruptcy proceeding for purposes of the quoted contract passage and this proceeding, there is the procedural fact that it does not appear that the defendant commenced the bankruptcy proceeding.
Further, there is a serious question as to whether (how?) the contract language, quoted above, can apply to the present situation. The first sentence provides that " the dispute between the Contractor and the Subcontractor shall be decided in the same forum, location and manner as the dispute between the Contractor and Owner" and the second sentence provides that in appropriate circumstances, " the Subcontractor agrees to withdraw [its pending] action, and participate in the action or proceeding then commenced by the Contractor against the Owner." The third sentence, following up on the two identified scenarios, provides that " [t]he Subcontractor agrees to participate in such action or proceeding and to present its own claim therein . . ." Here, however, the pending litigation upon which the defendant relies is a bankruptcy proceeding. Is there any reason to believe that the bankruptcy court would entertain adjudication of a dispute between the plaintiff and defendant, even assuming it to be ancillary to the bankruptcy proceeding?
Ultimately, the defendant relies upon the language stating that " [i]n no event shall contractor be liable to Subcontractor for work performed or for any other cause whatsoever, except to the extent that Contractor may recover therefore, from the Owner." But this result-oriented provision comes after recitation of provisions ensuring that the plaintiff would have a right to present its claims in the same forum as utilized by the defendant in pursuing its claim against the owner, something that may not be possible in a bankruptcy court. What is the application of this language to a situation in which the subcontractor-plaintiff may not have an opportunity to be heard at all, despite a facial obligation to be bound by the outcome?
Indeed, perhaps coming full circle, if the issues raised by the defendant truly were jurisdictional in nature, the court nonetheless still would feel compelled to deny the motion--or perhaps more accurately, delay determination of the merits of the motion. The court cannot determine the merits of the claimed jurisdictional issue without considering all of the potentially-applicable provisions within the agreement between the parties, coupled with a determination as to whether the facts relating to the case--especially, the nature and status of the bankruptcy litigation--come within the scope of the contract as so interpreted. That, however, would require essentially a full determination of the merits of the case, especially the merits of the contractual defenses implicit in the defendant's position. (Although not directly relevant, the court does not understand the defendant as denying that the plaintiff rendered services and/or provided materials for which it has not been fully paid, such that the contractual provisions relied upon by the defendant will determine whether it does or may have any liability to the plaintiff, quantification aside.)
In Conboy v. State, 292 Conn. 642, 653, n.16, 974 A.2d 669 (2009), the court noted that in some situations, the determination of a motion to dismiss may be inseparable from a determination of the merits of the claim, such that the jurisdictional issue cannot be determined in advance of a trial on the merits. As should be apparent from the preceding paragraphs, there is a certain level of circularity--the claimed jurisdictional issue cannot be resolved without determining the merits of the contractual positions of the parties, which presumably should be raised in an effort by the defendant to enforce those provisions, but the outcome of such a determination would obviate the need to consider jurisdictional issues separately.
" When the jurisdictional facts are intertwined with the merits of the case, the court may in its discretion choose to postpone resolution of the jurisdictional question until the parties complete further discovery or, if necessary, a full trial on the merits has occurred."
The court appreciates the desire of the defendant to have all issues resolved as quickly as possible, but the orderly progression of pleadings serves a valid purpose. The court does not perceive there to be a true jurisdictional issue before the court, and even if there were such an issue, it is so tied up in the merits of contract interpretation that pursuant to Conboy, resolution of the issue needs to be delayed until such time as there is a full determination of the meaning, scope and application of those contractual provisions to the situation in which the parties find themselves. The court does not believe that a motion to dismiss provides an appropriate mechanism for the required full exploration of these issues.
Therefore, the motion to dismiss is denied.