Opinion
No. HHD X04 CV-05-4016823 S
May 21, 2010
MEMORANDUM OF DECISION
This matter is before the court concerning the defendants C.R. Klewin Northeast, LLC (Klewin) and United States Fidelity and Guaranty Company's (USFG) motions for summary judgment (#237, 238) and to strike portions of the affidavit of James Sutton (##253, 254). The court heard oral argument concerning the motions on March 23, 2010. For the reasons stated below, Klewin's motion for summary judgment is granted in part and denied in part, and USFG's motion for summary judgment is granted. The motions to strike are denied.
I BACKGROUND A Claims Against Klewin
The plaintiff Crow Sutton Associates, Inc. (CS or plaintiff) alleges that it was a subcontractor on a construction project located in Redding, Connecticut, known as Meadow Ridge Retirement Community (the project). The owner of the project was non-party Redding Life Care, LLC (RLC), whose managing member was David Reis. See second amended complaint (#198) (complaint), first count, ¶¶ 6, 8. In 1999, non-party Sordoni Sanska Construction Company (Sordoni) entered into a contract with RLC to perform work on the project. CS subcontracted with Sordoni to provide labor, materials, and equipment for site work and landscaping at the project. See complaint, first count, ¶ 9.
CS further alleges that the contract between RLC and Sordoni was terminated, and in August 2000, RLC entered into an agreement with Klewin, whereby Klewin would act as construction manager on the project. See complaint, first count, ¶ 11. CS also alleges that, in October 2000, CS and RLC entered into an agreement whereby the subcontract between CS and Sordoni was assigned to RLC. See complaint, first count, ¶ 14. CS agreed to continue to provide labor, materials and equipment to the project. CS also alleges that, in November 2000, Klewin, as principal, and USFG, as surety, executed a labor and materials payment bond, with RLC as obligee (bond). See complaint, first count, ¶ 12; Exhibit A to affidavit of Alyssa Disney.
CS alleges that representatives of Klewin and RLC assured CS that RLC would pay CS in accordance with the subcontract and any change orders, as secured by the bond. CS also alleges that, based on these representations and assurances, it continued to perform. See complaint, first count, ¶ 16. CS contends that, despite repeated demand, RLC has only made partial payments for the labor, materials, and equipment furnished by CS, and that RLC and Klewin have failed and refused to tender payment for amounts due and owing. See complaint, first count, ¶¶ 18-19. CS alleges that it provided Klewin and USFG with notice of a bond claim on November 14, 2002. See complaint, first count, ¶ 20.
In the third count, concerning negligent misrepresentation, CS incorporates allegations from the first count and, in addition, alleges that Klewin made statements to CS, that Klewin knew, or in the exercise of due care, should have known, were false, including: (a) that RLC would pay CS in accordance with the subcontract and any change orders; (b) that CS was liable for certain backcharges for work allegedly performed by Klewin and/or other subcontractors, when in fact CS was not liable for any such backcharges; (c) that Klewin had not received payments from RLC for work performed by CS, when in fact Klewin had received such payments; (d) that CS was protected by the bond, when in fact the bond was intentionally drafted, and billings and payments were manipulated by Klewin and RLC, so that the bond would not be subject to good faith claims by claimants, such as CS, despite the apparent terms and conditions of the bond; and (e) that Klewin was processing CS's change orders in good faith, and RLC was reviewing them, when in fact Klewin and RLC did not properly do so. See complaint, third count, ¶ 20. CS also alleges that it relied on Klewin's statements to its detriment, and that it has been damaged.
As to intentional misrepresentation/fraud, in the fourth count CS reiterates the same allegations, and alleges that Klewin made the statements with knowledge of their falsity. See complaint, fourth count, ¶ 22. CS alleges that Klewin did so with the intent that CS rely on the false statements, and thereby agree to perform work and supply materials to the project, as requested by Klewin, for the benefit of Klewin and RLC. See complaint, fourth count, ¶ 22. CS also alleges that, at RLC's and Reis' direction, Klewin improperly assessed a $116,716.64 deduct change order against CS. See complaint, fourth count, ¶ 24.
Concerning good faith and fair dealing, in the fifth count, CS incorporates the allegations from the first, third and fourth counts, and alleges that Klewin failed to reasonably and adequately respond to and failed to pay CS's claim. See complaint, fifth count, ¶ 29. CS alleges that Klewin's actions and omissions were undertaken in bad faith and breached Klewin's duties of good faith and fair dealing. In the sixth count, CS incorporates the allegations from the fifth count and alleges that the same conduct constitutes unfair and deceptive acts in the conduct of trade or commerce in violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA). CS first set forth its claims against Klewin in the third, fourth, fifth, and sixth counts in its first amended complaint (#153), which was filed on March 10, 2008.
B Claims Against USFG
As to USFG, in the second count, CS incorporates allegations from the first count, and alleges that USFG is liable to CS on the bond. As to good faith and fair dealing, in the seventh count CS incorporates its allegations from the second count and alleges that USFG's actions and omissions were undertaken in bad faith.
C Subject Matter Of Motions For Summary Judgment
In its motion, Klewin contends that it is entitled to summary judgment as to the first count of the plaintiff's second amended complaint, in which CS claims that Klewin breached the bond. Klewin asserts that it paid to CS the monies that were paid to Klewin on CS's behalf.
In addition, Klewin contends that CS's claims which are based on negligent misrepresentation (third count), intentional misrepresentation/fraud (fourth count), and breach of the duty of good faith and fair dealing (fifth count), are time-barred by General Statutes § 52-577. Klewin also asserts that the sixth count, which is based on claimed violations of CUTPA, is time-barred by General Statute § 42-110g(f).
Section 52-577 provides, "No action founded upon a tort shall be brought but within three years from the date of the act or omission complained of."
Section 42-110g(f) provides, "[a]n action under this section may not be brought more than three years after the occurrence of a violation of this chapter."
In response to Klewin's motion, CS contends that: (1) a ruling denying a prior motion for summary judgment is the law of the case; (2) as to the first count, genuine issues of material fact exist which make summary judgment inappropriate; (3) as to the third, fourth and sixth counts, the statutes of limitations were tolled by Klewin's continuing course of conduct; and (4) as to the fifth count, the applicable statute of limitation is General Statute § 52-576, a six-year statute of limitation.
In its motion, USFG argues, as to the second count, that there is no material factual dispute as to whether Klewin fully paid CS for all sums which RLC authorized payment to CS and, therefore, there is no coverage under the bond. As to the seventh count, USFG contends that there is no evidence showing that it acted in bad faith. In response, CS asserts that genuine issues of material fact exist which make summary judgment inappropriate.
Additional references to the facts are set forth below.
II STANDARD OF REVIEW
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." (Internal quotation marks omitted.) Southwick At Milford Condominium Association, Inc. v. 523 Wheelers Farm Road, Milford, LLC, 294 Conn. 311, 318, 984 A.2d 676 (2009). "The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 11, 938 A.2d 576 (2008).
"[I]ssue-finding, rather than issue-determination, is the key to the procedure . . . [T]he trial court does not sit as the trier of fact when ruling on a motion for summary judgment . . . [Its] function is not to decide issues of material fact, but rather to determine whether any such issues exist." (Internal quotation marks omitted.) Precision Mechanical Services, Inc. v. T.J. Pfund Associates, Inc., 109 Conn.App. 560, 564, 952 A.2d 818, cert. denied, 289 Conn. 940, 959 A.2d 1007 (2008).
"Only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment. See Practice Book [§ 17-46]." Home Insurance Co. v. Aetna Life Casualty Co., 235 Conn. 185, 202-03, 663 A.2d 1001 (1995). However, the Supreme Court has stated that parties may "knowingly waive . . . compliance with the procedural provisions of the Practice Book relating to motions for summary judgment." (Footnote omitted.) Krevis v. Bridgeport, 262 Conn. 813, 824, 817 A.2d 628 (2003). Also, the Supreme Court has stated, "[w]e previously have afforded trial courts discretion to overlook violations of the rules of practice and to review claims brought in violation of those rules as long as the opposing party has not raised a timely objection to the procedural deficiency." Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 273, 819 A.2d 773 (2003).
Here, the only objection to consideration of the exhibits submitted by the parties was in the context of the motions to strike portions of Sutton's affidavit, which, as discussed below, the court has denied. Accordingly, the court has considered the exhibits.
III DISCUSSION A Law of the Case
Concerning Klewin's and USFG's previous motions for summary judgment (##118, 119), the court (Wiese, J.), in a memorandum of decision (#146.10), found that "[a] genuine issue of material fact exists concerning whether Klewin did forward all payments due CS on its subcontract from Redding [RLC]." Crow Sutton Associates, Inc. v. C.R. Klewin Northeast, LLC, Superior Court, judicial district of Hartford at Hartford, Docket No. HHD CV 05 4016823 (March 22, 2007).
CS contends that Judge Wiese's decision is the law of the case. "The law of the case doctrine expresses the practice of judges generally to refuse to reopen what [already] has been decided . . . New pleadings intended to raise again a question of law which has been already presented on the record and determined adversely to the pleader are not to be favored . . . Where a matter has previously been ruled upon interlocutorily, the court in a subsequent proceeding in the case may treat that decision as the law of the case, if it is of the opinion that the issue was correctly decided, in the absence of some new or overriding circumstance . . . A judge is not bound to follow the decisions of another judge made at an earlier stage of the proceedings, and if the same point is again raised he [or she] has the same right to reconsider the question as if he [or she] had himself [or herself] made the original decision . . . This principle has been frequently applied to an earlier ruling during the pleading stage of a case . . . According to the generally accepted view, one judge may, in a proper case, vacate, modify, or depart from an interlocutory order or ruling of another judge in the same case, upon a question of law . . . This court has determined that although a judge should be hesitant to rule contrary to another judge's ruling, he or she may do so [n]evertheless, if the case comes before him [or her] regularly and [the judge] becomes convinced that the view of the law previously applied by [a] coordinate predecessor was clearly erroneous and would work a manifest injustice if followed . . . By way of example, this court has noted that [t]he adoption of a different view of the law by a judge in acting upon a motion for summary judgment than that of his [or her] predecessor . . . is a common illustration of this principle." (Internal quotation marks omitted.) Brown Brown, Inc. v. Blumenthal, 288 Conn. 646, 656-57, 954 A.2d 816 (2008).
"There is nothing in the rules of practice or in our case law, however, that specifically restricts a party to one summary judgment motion. Our Supreme Court `found nothing in our rules of practice that prohibited the refiling [of a motion for summary judgment] and looked to the federal rules for guidance . . . [T]he federal courts have held that it is not an abuse of discretion or a violation of the doctrine of the `law of the case' for a trial judge to reconsider a motion for summary judgment that has previously been denied, particularly where new evidence has been presented which was not before the court at the time of the original motion, or a clarification of the law has since occurred.' Mac's Car City, Inc. v. American National Bank, 205 Conn. 255, 260-61, 532 A.2d 1302 (1987)." Fiaschetti v. Nash Engineering Co., 47 Conn.App. 443, 445-46, 706 A.2d 476, cert. denied, 244 Conn. 906, 714 A.2d 1 (1998).
Here, Judge Wiese's decision was rendered more than three years ago. Extensive discovery, including depositions, has been undertaken since then. In addition, CS's complaint has been amended and new counts and allegations are before the court in the second amended complaint, dated October 14, 2008. CS acknowledges, in its memorandum in opposition to USFG's motion, page 21, that certain of the exhibits presented in support of the current motions for summary judgment were not before the court in connection with the previous motions for summary judgment. This court has issued rulings concerning this matter, including a previous memorandum of decision granting summary judgment concerning the counts alleged against defendant Reis. See #226.
For example, in the fourth count, paragraph 24, CS alleges that "at Redding's and David Reis' direction, Klewin improperly assessed a $116,716.64 deduct change order against Crow Sutton in order to improperly reduce the amount otherwise due to Crow Sutton." This allegation was not part of the revised complaint (#110), which was the operative complaint at the time of the court's decision on the previous motions for summary judgment.
The Supreme Court "repeatedly has recognized that the desire for judicial efficiency inherent in the summary judgment procedure would be frustrated if parties were forced to try a case where there was no real issue to be tried." (Internal quotation marks omitted.) American Progressive Life And Health Insurance Co. Of New York v. Better Benefits, LLC, 292 Conn. 111, 121, 971 A.2d 17 (2009). This court properly may consider Klewin's and USFG's motions for summary judgment.
B First and Second Counts
The first and second counts are bond claims against Klewin and USFG, respectively. In paragraph 18 of the first count, CS alleges that "Redding has made only partial payments for the labor and materials and equipment furnished . . . by CS and has failed to compensate CS for both work performed within the scope of the original Subcontract and for additional work performed by CS at [RLC's] and Klewin's request." In paragraph 19, CS alleges that RLC and Klewin have failed and refused to pay CS. In paragraph 21, CS alleges that "[p]ursuant to the terms of the Bond, Klewin is liable to CS, which is a proper claimant and third-party beneficiary on the Bond, for all amounts due to CS as a result of [RLC's] failure to pay CS as set forth above." Similarly, in paragraph 21 of the second count, CS alleges that USFG is liable on the bond "for all amounts due to CS as a result of [RLC's] failure to pay CS as set forth above."
Coverage afforded by the bond depends on the terms thereof. "[T]he liability of sureties is to be determined by the specified conditions of the bond . . . Moreover, as with the interpretation of all contracts, we must construe the instrument to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." (Citations omitted; internal quotation marks omitted.) Goldberg v. Hartford Fire Insurance Co., 269 Conn. 550, 558-59, 849 A.2d 368 (2004). "Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact . . . [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law." (Internal quotation marks omitted.) Id., 559-60. The court "must examine the terms of the payment bond executed by the defendants in this case in order to ascertain the extent of protection afforded therein to the plaintiff." Herbert S. Newman And Partners, P.C. v. CFC Construction Limited Partnership, 236 Conn. 750, 758, 674 A.2d 1313 (1996).
In the bond, Klewin, as principal, and USFG, as surety, stated, in the "Whereas" paragraph, that Klewin had entered into a contract with RLC, the owner, for Meadow Ridge Life Care. In relevant part, the bond provides, "THE CONDITION OF THIS OBLIGATION is such that if the Principal shall promptly make payment to all claimants as hereinafter defined, for all labor and material used or reasonably required for use in the performance of the Contract, then this obligation shall be void; otherwise it shall remain in full force and effect; subject, however, to the following conditions: . . . (2) If, for any reason, the Owner fails to make the payments to the Principal related to the work or labor performed or materials furnished by the claimants in accordance with Article 4.2 of the Contract, the Principal, and therefore the Surety, shall have no obligation to pay the claimants until the Owner pays the Principal."
Article 4.2 of the contract states, "[p]rovided the Owner is current with all payments due, the Construction Manager [Klewin] shall make payments to the Subcontractors and suppliers on behalf of the Owner and account to the Owner for all such amounts paid in the manner and to the level of detail as required by the Owner in accordance with the requirements of the subcontracts using funds supplied by the Owners."
Review of the provisions of the bond, when read together with Article 4.2 of the contract, which is referenced therein, makes it clear that neither Klewin nor USFG is liable thereunder for claims of non-payment by RLC to CS. RLC is not a principal or a surety on the bond. According to its express condition, the bond provides no coverage to CS if, for any reason, RLC failed to make the payments to Klewin related to the work or labor performed or materials furnished by CS. Rather, according to the terms of the bond, Klewin and USFG's obligations thereunder may be triggered only if RLC paid Klewin monies designated for CS which Klewin failed to pay to CS. That CS claims that RLC failed to pay sums to CS which were due and owing does not establish a material issue of fact as to liability on the bond.
The bond here thus differs from that discussed in RL Acoustics v. Liberty Mutual Insurance Co., Superior Court, judicial district of Bridgeport at Fairfield, Docket No. CV 00 0380506 (September 27, 2001, Rush, J.), cited by CS. There, the plaintiff had a subcontract agreement with HRH/Atlas pursuant to which the plaintiff was to supply labor and materials for an agreed price. HRH/Atlas, as contractor and Liberty Mutual, as surety, entered into a payment bond pertaining to the contract between HRH/Atlas and the owner. See id. There, the court found that other terms of the subcontract did not indicate that the parties thereto intended to absolve HRH/Atlas of the obligation to pay the plaintiff if the owner did not pay HRH/Atlas. See id. Here, in contrast, CS has no agreement with Klewin.
Klewin and USFG have presented evidence showing that Klewin paid $1,375,146.00 to CS, representing all sums which RLC authorized CS to be paid. In his May 2009 deposition testimony, pages 60-61, James Sutton, CS's president, acknowledged that CS had been paid $1,375,145.15. In its memorandum in opposition to USFG's motion, page 29, CS agrees that Klewin paid CS the sum of $1,375,146.00 for work performed on the project. The movants have also presented evidence showing that RLC and CS had numerous disputes which they were unable to resolve by agreement. In his deposition testimony, page 58, Sutton noted that he walked out of a February 2003 meeting with Reis after Reis proposed "crooked" and "bogus" backcharges.
In opposition, CS claims that the bond "exclusion" is vague, and that it is meaningless, due to a blurring of roles. As stated above, a bond claim necessarily is dependent on the terms of the bond. The bond clearly states conditions under which the principal and surety have no payment obligations. Further, in contrast to its vagueness argument, CS asserts that, by its plain meaning, the bond would not bar recovery in regard to disputes over extra work or backcharges. The bond's terms clearly exclude the obligation to pay where RLC has not paid Klewin for the work or labor performed or materials furnished by CS.
CS also contends that material issues of fact preclude summary judgment as to the first and second counts. The court is unpersuaded. For example, USFG presented Exhibit H (to affidavit of Michael D'Amato), a computer-generated document which shows that, for cost code category 002900, Klewin received $2,194,510.39 and issued payments in the amount of $1,809,630.19. While the evidence presented to the court shows that CS's work was within that cost code category, there is no evidence showing that additional money was received by Klewin which had been earmarked for payment to CS by RLC and not paid by Klewin to CS. In contrast, there is evidence showing that other contractors' work was also treated as falling within the same cost code category (see Exhibit F). Similarly, CS's argument about an alleged discrepancy on Exhibit F's April 2004 reconciliation or speculation about retainage shown thereon provides no such evidence of a failure by Klewin to pay to CS funds which RLC directed that CS was to receive. Likewise, CS's Exhibit 22, an earlier, October 2003, summary of disputed items which were withheld for cause by RLC, also provides no such evidence.
CS contends that, since Klewin did not provide cancelled checks "there is no way to establish to whom Klewin actually issued payments for all of the funds booked as being received from [RLC] for CS's work." See CS's memorandum, p. 29. Similarly, at page 32, CS states, "it is possible that sums properly due to CS were paid to other subcontractors, or that [RLC] paid Klewin for work performed by CS which Klewin did not pay to CS."
A triable issue is not established by conjecture about what is "possible." "[S]peculative evidence . . . cannot serve as a basis for opposition to a motion for summary judgment." Nolan v. Borkowski, 206 Conn. 495, 507, 538 A.2d 1031 (1988): "A material fact . . . [is] a fact which will make a difference in the result of the case . . . A party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." (Internal quotation marks omitted.) Jones v. H.N.S. Management Co., 92 Conn.App. 223, 227, 883 A.2d 831 (2005). Based on the evidence presented, there is no material factual dispute as to whether Klewin fully paid CS for all sums which RLC authorized payment to CS. Therefore, there is no coverage under the bond. Accordingly, as to the first and second counts, Klewin and USFG have shown that they are entitled to judgment as a matter of law.
The court addresses below CS's argument that, due to spoliation, a negative inference should be drawn from the inadequacy of Klewin's discovery responses.
C Third, Fourth, and Sixth Counts
"The question of whether a party's claim is barred by the statute of limitations is a question of law[.]" (Internal quotation marks omitted.) Certain Underwriters at Lloyd's, London v. Cooperman, 289 Conn. 383, 407-08, 957 A.2d 836 (2008).
"The purpose of [a] statute of limitation or of repose is . . . to (1) prevent the unexpected enforcement of stale and fraudulent claims by allowing persons after the lapse of a reasonable time, to plan their affairs with a reasonable degree of certainty, free from the disruptive burden of protracted and unknown potential liability, and (2) to aid in the search for truth that may be impaired by the loss of evidence, whether by death or disappearance of witnesses, fading memories, disappearance of documents or otherwise." (Internal quotation marks omitted.) Neuhaus v. DeCholnoky, 280 Conn. 190, 206-07, 905 A.2d 1135 (2006).
In response to Klewin's contentions that the three-year limitations periods set forth in General Statutes § 52-577, quoted above, applies to the third and fourth counts, and that § 42-110g(f) applies to the sixth count, CS asserts that the statutes have been tolled by Klewin's continuing course of conduct.
"[T]he three-year limitation of 52-577 is applicable to all actions founded upon a tort which do not fall within those causes of action carved out of 52-577 and enumerated in 52-584 or another section." (Internal quotation marks omitted.) Travelers Indemnity Co. v. Rubin, 209 Conn. 437, 441, 551 A.2d 1220 (1988). "In construing our general tort statute of limitations [, General Statutes § 52-577,] . . . we have concluded that the history of that legislative choice of language precludes any construction thereof delaying the start of the limitation period until the cause of action has accrued or the injury has occurred . . .' (Internal quotation marks omitted.) Fichera v. Mine Hill Corp., 207 Conn. 204, 212, 541 A.2d 472 (1988). The date of the act or omission complained of is the date when the . . . conduct of the defendant occurs . . . [Section] 52-577 is an occurrence statute and . . . its limitation period does not begin when the plaintiff first discovers an injury[.]" (Citations omitted; internal quotation marks omitted.) Certain Underwriters at Lloyd's, London v. Cooperman, supra, 289 Conn. 408.
Similarly, General Statutes § 42-110g(f) provides that a CUTPA action "may not be brought more than three years after the occurrence of a violation . . ." "Pursuant to the clear and unambiguous language of § 42-110g(f), no cause of action can be maintained under CUTPA if brought more than three years after the unfair practice occurs." Bellemare v. Wachovia Mortgage Corp., 94 Conn.App. 593, 606 n. 6, 894 A.2d 335 (2006), affirmed on other grounds, 284 Conn. 193, 931 A.2d 916 (2007).
Here, the last claimed project document issued by Klewin to CS occurred no later than April 30, 2004, when Change Order No. 93, which backcharged CS in the amount of $116,716.24, was issued. See Exhibit G. In paragraph 24 of the fourth count, CS alleges that this deduct change order was issued at RLC's and Reis' direction. CS asserts that it did not obtain this document until 2007, in response to discovery requests directed to Klewin and USFG. See James Sutton affidavit, ¶¶ 53, 54.
In considering the parties' arguments concerning the third, fourth, and sixth counts, the court is not called upon to adjudicate whether or not Klewin's alleged conduct amounted to negligent or intentional misrepresentation or violated CUTPA. Rather, the court must determine whether or not there is a material factual dispute as to whether CS' claims are time-barred. Since the first amended complaint was filed on March 10, 2008, more than three years after the date of the last alleged conduct, April 30, 2004, unless the three-year period provided by the statute is tolled, CS's claims in these counts are time-barred.
Continuing Course Of Conduct
"In its modern formulation, we have held that in order [t]o support a finding of a continuing course of conduct that may toll the statute of limitations there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto. That duty must not have terminated prior to commencement of the period allowed for bringing an action for such a wrong . . . Where we have upheld a finding that a duty continued to exist after the cessation of the act or omission relied upon, there has been evidence of either a special relationship between the parties giving rise to such a continuing duty or some later wrongful conduct of a defendant related to the prior act . . . The continuing course of conduct doctrine reflects the policy that, during an ongoing relationship, lawsuits are premature because specific tortious acts or omissions may be difficult to identify and may yet be remedied." (Internal quotation marks omitted.) Bednarz v. Eye Physicians Of Central Connecticut, P.C., 287 Conn. 158, 170, 947 A.2d 291 (2008).
In its reply to Klewin's special defenses, dated February 5, 2009 (#214) (reply), CS stated a legal conclusion only: "The Defendant is estopped from asserting a statute of limitations defense by virtue of the Defendant's continuing course of conduct." Practice Book § 10-57 provides, "[m]atter in avoidance of affirmative allegations in an answer or counterclaim shall be specially pleaded in the reply." "The issue must be one which the party opposing the motion is entitled to litigate under his pleadings . . ." (Internal quotation marks omitted.) Collum v. Chapin, 40 Conn.App. 449, 453, 671 A.2d 1329 (1996). By failing to plead facts supporting its contention in its reply, CS has not properly raised the issue before the court. See Grimes v. Stutman, Superior Court, judicial district of Middlesex at Middletown, Docket No. CV 04 4000108 (December 22, 2005, McWeeny, J.) ( 40 Conn. L. Rptr. 457); Franco v. Mediplex Construction, Inc., Superior Court, judicial district of New Haven at New Haven, Docket No. CV 96 390458 (August 25, 2000, Owens, J.) (factual allegations not sufficient to support claim of continuing course of conduct; claim was not properly before the court). CS has not shown that the complaint affirmatively alleges facts in avoidance of the statute of limitations. See Olah v. Brooklaw Country Club, Inc., Superior Court, judicial district of Ansonia-Milford, Docket No. 4007321 (April 17, 2009, Levin, J.), 2009 WL 1424425.
Even if CS properly had pleaded that the continuing course of conduct doctrine tolled the limitations period, it has not substantiated the contention. In order to attempt to show that a duty continued to exist, by providing evidence of a special relationship between the parties giving rise to such a continuing duty, CS asserts that "a special relationship exists between CS and Klewin which gives rise to a continuing duty by virtue of Klewin's role as principal on the Primary Bond." See CS memorandum in opposition to Klewin's motion, p. 14. In addition, CS argues that Kiewin perpetrated wrongful conduct within the three-year period preceding CS' assertion of the misrepresentation claims. See CS memorandum, p. 14. The court addresses these arguments below.
First, CS has not alleged that it had even a contractual relationship with Klewin, let alone a special or fiduciary relationship. See Bednarz v. Eye Physicians Of Central Connecticut, P.C., supra, 287 Conn. 170. It has alleged that it had a contractual relationship with non-party RLC, a commercial agreement concerning the construction project.
Such a commercial relationship, even if it had been between CS and Klewin, as contracting parties, would be insufficient to establish that a "special relationship" existed. See id. As explained in an analogous context, in Fichera v. Mine Hill Corp., supra, 207 Conn. 210, "[t]he plaintiffs do not claim any relationship with the defendants that would create a duty continuing after the purchase of the lots other than that based upon the unfulfilled promises to construct various improvements upon the land of the defendants reserved as a recreational area. Such a contractual relationship, however, does not create a fiduciary obligation that might have imposed upon the defendants as the perpetrators of a fraud the continuing duty to disclose their prior lack of candor to the plaintiffs. Nor does the circumstance that the plaintiffs were the victims of deception . . . impose such a duty of disclosure on the defendants. We are aware of no authority holding that the perpetrator of a fraud involving merely a vendor-vendee relationship has a legal duty to disclose his deceit after its occurrence and that the breach of that duty will toll the statute of limitations. Such a relationship does not give rise to obligations equivalent to those of a fiduciary." (Emphasis added.)
In addition, CS was not a party to the bond. While CS may have had the right to make a bond claim against USFG as surety and Klewin as principal, such a right is not evidence of a continuing duty by Klewin based on the "special relationship" aspect of the continuing course of conduct doctrine. Even "the relationship of principal and surety, by itself, does not give rise to a fiduciary duty on the part of the latter for the benefit of the former." White Oak Corp. v. American International Group, Inc., Superior Court, judicial district of Hartford, Complex Litigation Docket at Hartford, Docket No. X 09 CV 07 4027319 (July 6, 2009, Shortall, J.T.R.) ( 48 Conn. L. Rptr. 198). There, a special relationship was found between a surety and a principal, where the surety required the principal to enter an agreement to cede control over its operations on two contracts in exchange for financial and other assistance. See id. The court found a special relationship "characterized by dominance on the part of AIG and dependence on the part of White Oak." Id.
In general, the purpose of a payment bond is to "protect workers and materials suppliers on . . . projects who cannot avail themselves of otherwise available remedies such as mechanic's liens." Herbert S. Newman Partners, P.C. v. CFC Construction L.P., supra, 236 Conn. 757 (discussing General Statutes § 49-41, concerning payment bonds on public projects). CS asserts that it relied on Klewin to properly perform its duties as the principal on the bond, and that it is an intended beneficiary thereof. "[T]he fact that one business person trusts another [entity] and relies on [the entity] to perform [its obligations] does not rise to the level of a confidential relationship for purposes of establishing a fiduciary duty." (Internal quotation marks omitted.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 41, 761 A.2d 1268 (2000). The role of principal on a bond creates no contractual dominance over non-party claimants so as to amount to a "special relationship" under the continuing course of conduct doctrine.
Similarly, the situation here contrasts with that in DeMunnik v. City of Danbury, judicial district of Waterbury, Complex Litigation Docket at Waterbury, Docket No. X10 UWY CV 07 4018804 (June 1, 2009, Scholl, J.) ( 48 Conn. L. Rptr, 10), cited by CS, where the defendant City, pursuant to ordinance, administered pension funds concerning the plaintiff retirees. In particular, the court found that the City had a contractual relationship with the plaintiffs, but that the extent of its contractual duty was unclear. See id. Here, the bond clearly sets forth the terms of Klewin's contractual duty.
As to the second part of the continuing course of conduct doctrine, involving a showing of violation of a continuing duty through evidence of some later wrongful conduct of a defendant related to the prior act, CS argues that the limitations period began as late as February 2, 2009. At that point, CS contends that Klewin affirmatively misrepresented, in its special defenses filed in this matter, that CS was liable for certain backcharges and that Klewin allegedly had been paid by RLC for work performed by CS. CS also cites other pleadings filed by Klewin in this matter, and discovery responses by Klewin, which were provided in 2006, within the three-year period preceding the filing of its prior amended complaint in March 2008, as evidence of a continuing course of conduct which tolls the statutes of limitations. CS contends that, therein, Klewin continued its fraudulent claim that CS was liable for backcharges, and continued to misrepresent that it had not received payments from RLC for work performed by CS, when, in fact, Klewin had received payments for such work. See CS memorandum, pp. 18-19.
As noted above, CS presented its bond claim in November 2002. Almost three years later, CS sued Klewin on the bond; the return day in this matter was October 11, 2005. By that point, no ongoing relationship between CS and Klewin made it difficult to identify specific tortious acts or omissions or to reasonably expect them to yet be remedied. See Bednarz v. Eye Physicians Of Central Connecticut, P.C., supra, 287 Conn. 170. "[T]he continuing course of conduct doctrine has no application after the plaintiff has discovered the harm." Rosato v. Mascardo, 82 Conn.App. 396, 405, 844 A.2d 893 (2004). "Upon discovery of actionable harm, the policy behind the continuing course of conduct doctrine, to preserve the ongoing relationship with the hope that any potential harm from a negligent act or omission may yet be remedied, no longer has any force." Rivera v. Fairbank Management Properties, Inc., 45 Conn.Sup. 154, 160, 703 A.2d 808 (1997) [ 20 Conn. L. Rptr. 338].
CS also argues (see CS memorandum, p. 19) that an affirmative misrepresentation is continuing wrongful conduct as a matter of law, citing Evans v. Province, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 07 6000855 (August 4, 2008, Zoarski, J.T.R.). In Evans, summary judgment was denied because the plaintiffs averred that affirmative misrepresentations continued to be made until they discovered them in August 2005, well after the initial alleged misrepresentations which led them to enter into a contract in October 2004. The parties' relationship ended in December 2005. Suit was commenced on April 4, 2007. See id.
Thus, there, evidence of later wrongful conduct was provided, which met the alternative requirement of the continuing course of conduct doctrine, a showing of "some later wrongful conduct of a defendant related to the prior act." Bednarz v. Eye Physicians Of Central Connecticut, P.C., supra, 287 Conn. 170. The Evans court concluded that the claims of the defendant's "continued misrepresentations, if true, will toll the applicable statute of limitations." Evans v. Province, supra, Superior Court, Docket No. CV 07 6000855.
As explained above, Klewin's pleadings and discovery responses, on which CS relies, were presented after suit was commenced. By then, there was no ongoing relationship.
While the continuous course of conduct doctrine is "conspicuously fact-bound" (internal quotation marks omitted), Zielinski v. Kotsoris, 279 Conn. 312, 322 n. 11, 901 A.2d 1207 (2006), CS, as the opposing party, has not presented evidence of a continuing course of conduct which, as a matter of law, supports the tolling of the limitations period. No genuine issue of material fact is presented. See Ramirez v. Health Net of the Northeast, Inc., supra, 285 Conn. 11.
CS has not shown that the applicable statutes of limitations, §§ 52-577 and 42-110g(d) were tolled. CS' claims against Klewin in the third, fourth, and sixth counts are time-barred. Klewin has shown that it is entitled to judgment as a matter of law as to those counts.
D Fifth Count
As stated above, CS's fifth count alleges breaches of Klewin's duty of good faith and fair dealing. The fifth count incorporates allegations from the first, third, and fourth counts. As discussed, the allegations involve contractual obligations undertaken by Klewin in the bond.
"As our Supreme Court stated in Collins v. Anthem Health Plans, Inc., 275 Conn. 309, 880 A.2d 106 (2005), a claim brought pursuant to a contract, alleging a breach of the implied covenant of good faith and fair dealing, sounds in contract because `[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement . . . To constitute a breach of [that duty], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith.' (Citation omitted; internal quotation marks omitted.) Id., 333-34. Such a claim is therefore subject to the six-year contract statute of limitations as provided in § 52-576." CT Page 10713 Bellemare v. Wachovia Mortgage Corp., supra, 94 Conn.App. 610.
Section 52-576(a) provides, in relevant part, "[n]o action for an account, or on any simple or implied contract, or on any contract in writing, shall be brought but within six years after the right of action accrues . . ."
Thus, CS's claim in the fifth count is subject to the six-year limitations period provided in § 52-576. Since the last alleged conduct occurred in April 2004, and this claim was set forth in the amended complaint of March 2008, less than six years later, it is not time-barred. Klewin's motion is denied as to the fifth count.
E Discovery Requests
CS also argues that summary judgment should be denied because CS has not received documents it sought from Klewin in discovery, which were the subject of motions. The court issued an order (#223) concerning CS's motion for order of compliance (#219). CS did not pursue its motion for contempt (#240).
Citing Rizzuto v. Davidson Ladders, Inc., 280 Conn. 225, 905 A.2d 1165 (2006), CS contends that there are key project accounting documents which are unaccounted for, and that a negative inference may be drawn against Klewin for its failure to provide them. CS argues that such a negative inference is sufficient to create a material issue of fact.
In Rizzuto, the Supreme Court reiterated that "the trier of fact may draw an inference from the intentional spoliation of evidence that the destroyed evidence would have been unfavorable to the party that destroyed it . . . To be entitled to this inference, the victim of spoliation must prove that: (1) the spoliation was intentional, in the sense that it was purposeful, and not inadvertent; . . . (2) the destroyed evidence was relevant to the issue or matter for which the party seeks the inference; and (3) he or she acted with due diligence with respect to the spoliated evidence . . . [T]he adverse inference is permissive, and not mandatory . . ." (Citations omitted; footnote omitted; internal quotation marks omitted.) Id., 237. "Intentional spoliation of evidence is defined as the intentional destruction, mutilation, or significant alteration of potential evidence for the purpose of defeating another person's recovery in a civil action." (Internal quotation marks omitted.) Id., 243.
Here, there has been no showing that intentional destruction, mutilation or significant alteration of potential evidence occurred. Accordingly, the court may not draw a negative inference against Klewin for failing to provide the subject documents.
At oral argument on the motions, CS asserted that summary judgment should be denied based on Practice Book § 17-47. Practice Book § 17-47 provides, "[s]hould it appear from the affidavits of a party opposing the motion that such party cannot, for reasons stated, present facts essential to justify opposition, the judicial authority may deny the motion for judgment or may order a continuance to permit affidavits to be obtained or discovery to be had or may make such other order as is just." "Under [§ 17-47], the opposing party must show by affidavit precisely what facts are within the exclusive knowledge of the moving party and what steps he has taken to attempt to acquire these facts." Dorazio v. M.B. Foster Electric Co., 157 Conn. 226, 230, 253 A.2d 22 (1968).
When the court held a status conference with counsel for the parties on March 17, 2010, it was agreed that oral argument concerning the motions for summary judgment and the motions to strike portions of Sutton's affidavit would go forward on March 22, 2010. Rather than claim that CS was not prepared to proceed, CS agreed to do so.
CS has not complied with Practice Book § 17-47. Where a plaintiff fails to timely comply with Practice Book § 17-47, that is "fatal to [its] claim." Sheridan v. Board of Education, 20 Conn.App. 231, 238, 565 A.2d 882 (1989).
F Seventh Count
"[E]very contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term . . . To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith." (Internal quotation marks omitted.) Ramirez v. Health Net Of The Northeast, Inc., supra, 285 Conn. 16-17, n. 18.
"To recover for breach of the duty of good faith and fair dealing, the plaintiffs had to allege and prove that the defendant[s] engaged in conduct design[ed] to mislead or to deceive . . . or a neglect or refusal to fulfill some duty or some contractual obligation not prompted by an honest mistake as to one's rights or duties . . ." (Emphasis in original; internal quotation marks omitted.) Miller v. Guimares, 78 Conn.App. 760, 773, 829 A.2d 422 (2003). "[A]n action for breach of the covenant of good faith and fair dealing requires proof of three essential elements, which the plaintiff must duly plead: first, that the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive certain benefits; second, that the defendant engaged in conduct that injured the plaintiff's right to receive some or all of those benefits; and third, that when committing the acts by which it injured the plaintiff's right to receive benefits it reasonably expected to receive under the contract, the defendant was acting in bad faith." (Internal quotation marks omitted.) Austrian v. United Health Group, Inc., Superior Court, judicial district of Waterbury, Complex Litigation Docket at Waterbury, Docket No. X06 CV 05 4010357 (July 17, 2007, Stevens, J.) ( 43 Conn. L. Rptr. 852).
"[B]ad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity . . . it contemplates a state of mind affirmatively operating with furtive design or ill will." (Internal quotation marks omitted.) PSE Consulting, Inc. v. Frank Mercede and Sons, Inc., 267 Conn. 279, 305, 838 A.2d 135 (2004). "Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive." (Internal quotation marks omitted.) Habetz v. Condon, 224 Conn. 231, 237, 618 A.2d 501 (1992).
In the seventh count, CS alleges that USFG violated its obligations under the bond: by failing to undertake an independent, reasonable, and sufficient investigation of CS's claim; by failing to make payment of the sums due to CS, or any part thereof that was not subject to a good faith dispute; by failing to make a good faith effort to collect sums due to CS; by improperly alleging that an exclusion in the bond prevents USFG from making payment to CS; by intentionally drafting and issuing a bond without obtaining sufficient consideration from Klewin; and by drafting the bond language and ignoring the manipulation of billings and payments on the project, so that the bond would not be subject to good faith claims by claimants such as CS. See complaint, seventh count, ¶ 23. CS alleges that USFG's actions and omissions were undertaken in bad faith, for the purposes of avoiding its obligations to CS under the bond. See complaint, seventh count, ¶ 26.
In support of its motion as to the seventh count, USFG contends that there are no admissible facts showing that USFG engaged in purposeful misconduct; that there can be no breach of the covenant of good faith and fair dealing where its decision to deny the claim was correct or its interpretation of the bond was reasonable; and that it was not obligated to monitor the project in advance of receiving a claim.
In response, CS argues that a genuine issue of material fact exists as to whether Klewin paid to CS all funds it received from RLC on CS's behalf. As discussed above, the court has found that there is no material factual dispute as to whether Klewin fully paid CS for all sums which RLC authorized payment to CS.
CS also argues that a genuine issue of fact exists regarding the propriety of USFG's investigation of CS's claim on the bond. The discussion in Oldcastle Precast, Inc. v. St. Paul Fire and Marine Insurance Co., United States District Court, Civil Action no. 3-05-cv-571 (JCH) (D.Conn. October 1, 2007), 2007 WL 2904208, cited by CS, did not concern a claim of breach of the covenant of good faith and fair dealing. Evidence of bad faith was not required. See id.
"[E]ven with respect to questions of motive, intent and good faith, the party opposing summary judgment must present a factual predicate for his argument in order to raise a genuine issue of fact." (Internal quotation marks omitted.) Chadha v. Charlotte Hungerford Hospital, 97 Conn.App. 527, 539, 906 A.2d 14 (2006). As stated above, a party may not rely solely on its allegations in opposition to a properly supported motion for summary judgment. In the absence of evidence of bad faith, no genuine issue of material fact is at issue as to the seventh count. "[I]n light of the absence of any evidence of bad faith, the rendering of summary judgment in favor of the defendant [is] warranted." Jones v. H.N.S. Management Co., supra, 92 Conn.App. 229.
G Motions To Strike
Both USFG and Klewin filed motions seeking to strike portions of the affidavit of James Sutton, which was submitted by CS. A conclusory affidavit does not put material facts in issue or provide a basis for denying a motion for summary judgment. See Buell Industries, Inc. v. Greater New York Mutual Insurance Co., 259 Conn. 527, 557, 791 A.2d 489 (2002). Since, as discussed above, the court concludes that there is no material fact at issue, the motions to strike portions of Sutton's affidavit are denied as moot.
CONCLUSION CT Page 10717
Based on the foregoing reasons, Klewin's motion for summary judgment is granted as to the first, third, fourth, and sixth counts. USFG's motion for summary judgment as to the second and seventh counts is granted. Judgment may enter accordingly as to these counts.Klewin's motion for summary judgment is denied as to the fifth count. The motions to strike portions of Sutton's affidavit are denied.
It is so ordered.