Opinion
No. CV05-4004311S
June 6, 2008
Following the issuance of the court's decision in the above-referenced matter, the plaintiff filed a Motion for Reconsideration of the Calculation of Damages, a Motion for Attorneys Fees and a Motion for Prejudgment Interest. The court heard oral argument on these motions on May 12, 2008 and counsel filed memoranda of law supporting their respective positions. After review, the court grants the Motion for Reconsideration of the Calculation of Damages, determining that the court erred in mathematically calculating said award, and thus awards $193,120.80 to the plaintiff. The court denies the plaintiff's Motions for Attorneys Fees and for Prejudgment Interest, thus sustaining the defendant's objections. As to unpaid amounts that, pursuant to the court's opinion in this matter, may be owed to plaintiff by Montagno Construction and derivatively by the surety under the bond referenced in plaintiff's complaint and defendants' answer, the court enters judgment against the surety defendant, Hanover Insurance Company.
Facts
Before the court are the plaintiff's Motion for Reconsideration of the Calculation of Damages, Motion for Attorneys Fees and Motion for Prejudgment Interest after a completed trial in the above titled case. The relevant facts of the underlying case can be gleaned from the facts of that decision, Dubaldo Electric v. Montagno Construction, Superior Court, judicial district of Waterbury, Docket No. CV 05 4004311 (February 11, 2008, Alvord, J.). The plaintiff, DuBaldo Electric, LLC (hereinafter DuBaldo), asks the court to reconsider its decision in light of several issues it claims the court deferred ruling on or that the court ruled upon in error. Specifically, the plaintiff claims that the court should reconsider the calculation of damages awarded to them to eliminate a double deduction for the cost to complete the construction, and that the court should grant supplemental judgment finding that reasonable attorneys fees and prejudgment interest are due to them pursuant to General Statutes §§ 52-249a and 37-3a, respectively. Oral argument was heard on this matter on May 12, 2008.
Discussion Motion for the Reconsideration of the Calculation of Damages (#133)
In its memorandum of decision, the court awarded the plaintiff damages totaling $145,535.30 for the plaintiff's substantial completion of the contract. The plaintiff claims that the court was erroneous in its calculation of damages in that it twice deducted the cost to complete the contract from the money due to the plaintiff. The plaintiff submits that this miscalculation resulted in $47,585.50 being deducted twice from the amount due to them, and requests that the damages due should be increased by that sum to a total of $193,120.80. The defendants contend that it is clear that the court intended to award DuBaldo $145,535.30 and to increase it would result in an amount substantially greater than what the court actually decided to award on the basis of the testimony and documentary evidence that it considered, and the inferences that it drew, in reaching its decision.
The court calculated the plaintiff's damages by multiplying the agreed-upon contract price of $250,450.00 by 81%, representing the percentage of work the plaintiff had completed prior to it being precluded from finishing the job. From this figure the court then added $105,867.00 and $40,472.90, accounting for approved extras and a 20% loss of efficiency, respectively. This amount was then further reduced by $14,266.10, $20,650.00 and $47,585.00, accounting for monies paid to Evolution for the plaintiff, monies paid to Globe prior to September 28, 2004 and the cost to complete, respectively. In subtracting the cost to complete, the court erred as this equated to twice deducting from the plaintiff the amount it would cost to complete the contract. By factoring in 81% for the work the plaintiff had completed, the court already took into account the 19% or $47,585.00 that had not been completed.
Calculating the damages in the proper way, as suggested by the plaintiff, the total damages due to DuBaldo for substantial completion are $193,120.80.
Globe prior to 9/28/04 ($ 20,650.00) Balance Due Plaintiff $193,120.80 81% of Contract Price $202,864.50 Approved Extras $105,867.00 Paid to Plaintiff ($121,267.50) Paid to Evolution ($ 14,266.10) Loss Efficiency 20% $ 40,472.90
Motion for Attorneys Fees (#134)
By reason of this court having reserved the issue of attorneys fees in its memorandum of decision dated February 11, 2008, the plaintiff now moves for such fees. Connecticut follows the American rule, which provides that attorneys fees and ordinary expenses and burdens are not allowed to the successful party absent a contractual or statutory exception. (Internal quotation marks omitted.) Young v. Vlahos, 103 Conn.App. 470, 479, 929 A.2d 362 (2007), cert. denied, 285 Conn. 913, 943 A.2d 474 (2008). The plaintiff bases its claim for attorneys fees on General Statutes, § 52-249a, which provides that [a] plaintiff who prevails in any action upon a bond which has been substituted for a mechanics lien shall be allowed costs and a reasonable attorneys fee.
The plaintiff contends that although § 52-249a took effect after it filed its mechanics lien and substituted a bond in lieu thereof, on July 25, 2005, the statute must be given retrospective effect. The plaintiff argues that § 52-249a did not affect substantive rights, but merely provided a procedural mechanism for the recovery of costs and attorneys fees by a successful applicant when a surety bond is substituted for a mechanics lien. The defendant counters that § 52-249a affects substantive rights, that it is not remedial in nature and that it must only be applied prospectively. The defendant further argues that at the time that the plaintiff substituted a bond in lieu of the mechanics lien, the operative statute regarding costs and attorneys fees recoverable in actions pursuant to a judgment of foreclosure or in an action on a bond was General Statutes, § 52-249(a) which Connecticut courts have continually refused to award costs and attorneys fees pursuant to.
Section 52-249a codified Public Act No. 07-120, which was approved on June 11, 2007, and became effective on October 1, 2007.
Section 52-249(a) provides that: The plaintiff in any action of foreclosure of a mortgage or lien, upon obtaining judgment of foreclosure, when there has been a hearing as to the form of judgment or the limitation of time for redemption, shall be allowed the same costs, including a reasonable attorneys fee, as if there had been a hearing on an issue of fact. The same costs and fees shall be recoverable as part of the judgment in any action upon a bond which has been substituted for a mechanics lien.
In A A Mason, LLC v. Montagno Construction, Inc., 49 Conn.Sup. 405, 889 A.2d 278 (2005) [ 39 Conn. L. Rptr. 339], the court held that § 52-249(a) does not require that costs and attorneys fees be allowed when a bond is substituted for a lien and the claimant succeeds with a claim on the bond. The court inferred that, in a foreclosure action, the phrase the form of judgment used in the law the bill amends relates to either a strict foreclosure or a foreclosure by sale. Id., 410-11. There is no provision in the statute that attorneys fees are to be allowed for the trial of the underlying action. Id., 411. Thus the court concluded that, in an action on a bond there is no hearing as to the form of the judgment or the time for redemption. Id., 412.
Whether to apply a statute retroactively or prospectively depends upon the intent of the legislature in enacting the statute . . . In order to determine the legislative intent, we utilize well established rules of statutory construction. Our point of departure is General Statutes, § 55-3, which states: No provision of the general statutes, not previously contained in the statutes of the state, which imposes any new obligation on any person or corporation, shall be construed to have retrospective effect. The obligations referred to in the statute are those of substantive law . . . Thus, we have uniformly interpreted § 55-3 as a rule of presumed legislative intent that statutes affecting substantive rights shall apply prospectively only . . . The rule is rooted in the notion that it would be unfair to impose a substantive amendment that changes the grounds upon which an action may be maintained on parties who have already transacted or who are already committed to litigation . . . In civil cases, however, unless considerations of good sense and justice dictate otherwise, it is presumed that procedural statutes will be applied retrospectively . . . Procedural statutes have been traditionally viewed as affecting remedies, not substantive rights, and therefore leave the preexisting scheme intact . . . [A]lthough we have presumed that procedural or remedial statutes are intended to apply retroactively absent a clear expression of legislative intent to the contrary . . . a statute which, in form, provides but a change in remedy but actually brings about changes in substantive rights is not subject to retroactive application . . . While there is no precise definition of either [substantive or procedural law], it is generally agreed that a substantive law creates, defines and regulates rights while a procedural law prescribes the methods of enforcing such rights or obtaining redress . . . Put differently, substantive changes to statutes in the absence of any clear expression of legislative intent to the contrary [are] presumptively prospective. (Citations omitted; emphasis added; footnote omitted; internal quotation marks omitted.) Walsh v. Jodoin, 283 Conn. 187, 195-96, 925 A.2d 1086 (2007).
Looking first at the language of P.A. 07-120, there is no indication of any legislative intent that it be applied retroactively. To the contrary, the act states that it is [e]ffective October 1, 2007, and is silent on the issue of retroactivity. Nor is there any indication in the legislative history that the act is intended to apply retroactively. The plaintiff contends the act is merely a clarification of existing law, and it should be construed retroactively. The plaintiff refers to the instance in the legislative history where the act is referred to as a clarification. Representative Gerald Fox, III, in response to questioning from Deputy Speaker Mary Fritz stated: What this Bill did was to clarify the situation in that a plaintiff would also be allowed to recover costs and reasonable attorneys fees with respect to an action when a surety bond has been substituted. (Emphasis added.) 50 H.R. Proc., Pt. 16, 2007 Sess., p. 5199. [O]ne reference to the act as a clarification, however, cannot overcome the references to the act as representing a change in existing law. Flanagan v. Blumenthal, 100 Conn.App. 255, 261, 917 A.2d 1047 (2007).
A statute will not be given a retroactive construction by which it will impose liabilities not existing prior to its passage. Laws which create new obligations . . . because of past transactions, have been universally [disproved of] by civil and common law writers, and it is to be presumed that no statute is intended to have such effect unless the contrary clearly appears. (Internal quotation marks omitted.) Aetna Casualty Surety Co. v. Lighty, 3 Conn.App. 697, 703, 491 A.2d 1118 (1985). Prior to the enactment of § 52-249a, § 52-249(a) had been interpreted by the courts and understood by the legislature that where a plaintiff prevails on a foreclosure of a mechanic lien . . . [and] when there is a mechanics lien in existence, the plaintiff is also entitled to costs and reasonable attorneys fees . . . [but,] when a bond is substituted that provision allowing for costs and reasonable attorneys fees no longer applies. 50 H.R. Proc., Pt. 7, 2007 Sess., p. 2305.
Section § 52-249a did not amend or repeal § 52-249(a), but instead was enacted separately to allow what § 52-249(a) would not. Referring to P.A. 07-120 and the change that § 52-249a would have on the current law, Senator Andrew McDonald stated that, this bill is intending to bring those two into coordination, or synch . . . 50 S. Proc., Pt. 9, 2007 Sess., p. 2835. Section 52-249a gave a party the right to seek attorneys fees where a bond has been substituted for a mechanics lien. Prior to the enactment of this statute no such right had existed as interpreted by the courts of this state.
Because § 52-249a affects substantive rights and there is no indication of legislative intent that it should be applied retroactively, the court determines that it may be applied prospectively only. The plaintiff's motion for attorneys fees is denied.
Motion for Prejudgment Interest (#136)
By reason of this court having deferred the issue of prejudgment interest in its memorandum dated February 11, 2008, the plaintiff now moves for such interest. Plaintiff moves for interest pursuant to General Statutes § 37-3a. Section 37-3a provides in relevant part that interest at the rate of ten percent a year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable . . . To award § 37-3a interest, two components must be present. First, the claim to which the prejudgment interest attaches must be a claim for a liquidated sum of money wrongfully withheld and, second, the trier of fact must find, in its discretion, that equitable considerations warrant the payment of interest. Ceci Brothers, Inc. v. Five Twenty-One Corp., 81 Conn.App. 419, 428, 840 A.3d 578, cert. denied, 268 Conn. 922, 846 A.2d 881 (2004)
[P]rejudgment interest is awarded in the discretion of the trial court to compensate the prevailing party for a delay in obtaining money that rightfully belongs to him . . . The detention of the money must be determined to have been wrongful. (Emphasis added; internal quotation marks omitted.) Travelers Property Casualty Co. v. Christie, 99 Conn.App. 747, 763, 916 A.2d 114 (2007). The party seeking prejudgment interest has the burden of demonstrating that the retention of money is wrongful, and this requires more than demonstrating that the opposing party detained money when it should not have done so. (Internal quotation marks omitted.) Id. The determination of whether or not interest is to be recognized as a proper element of damage, is one to be made in view of demands of justice rather than through the application of any arbitrary rule . . . The real question in each case is whether the detention of money is or is not wrongful under the circumstance. (Internal quotation marks omitted.) Dowd v. Dowd, 96 Conn.App. 75, 85-86, 899 A.2d 76, cert. denied, 286 Conn. 907, 907 A.2d 89 (2006)
The fact that an award of such interest is discretionary and subject to equitable consideration, rather than automatic, reflects the reality that not all improper detentions of money are wrongful. Maloney v. PCRE, LLC, 68 Conn.App. 727, 756, 793 A.2d 1118 (2002); see Harris v. Shay, Superior Court, judicial district of Litchfield, Docket No. CV 01 0085838 (December 24, 2002, Walsh, J.) ([t]he mere fact that the money was owed, doesn't necessarily mean that the detention of it was wrongful, in an equitable sense). Under § 37-3a, absent wrongdoing or bad faith in the part of the defendant in demanding money, no prejudgment interest can be awarded. O'Hare v. State, 218 Conn. 628, 643-44, 590 A.2d 948 (1991); see Maloney v. PCRE, LLC, supra, 755-57 (where the trial court found parties engaged in a bonafide dispute, detention of money was not wrongful).
This court has already determined that the defendant, Montagno, did not act in bad faith or intentionally avoid its obligations to DuBaldo under the contract. In its memorandum of decision this court found that while DuBaldo has amply demonstrated that Montagno has failed to compensate DuBaldo for its substantial performance of the contract, DuBaldo has not met its burden of proving that such failure is the result of bad faith, sinister motive or dishonest purpose. Montagno's project planning and lack of project oversight, Montagno's aggressive and erroneous pricing its bid to [Burlington Coat Factory] and Montagno's inability to manage its client's expectations and timetable in the face of City of Waterbury regulatory delay do not equate with bad faith. Thus, the court does not find that Montagno's conduct amounts to an intentional and calculated pattern of attempting to avoid their obligations under the DuBaldo contract. Dubaldo Electric v. Montagno Construction, supra, Superior Court, Docket No. CV 05 400431.
It cannot be said that Montagno wrongfully withheld monies owed to DuBaldo, such that an award of prejudgment interest is merited under § 37-3a. The plaintiff's motion for prejudgment interest is denied.
Conclusion
Based on the foregoing, the court reconsiders and revises its decision of February 11, 2008, and accordingly determines that judgment may enter for the plaintiff against said defendant Montagno Construction and Hanover Insurance in the amount of $193,120.80. The court further finds that the plaintiff is not entitled to attorney fees or to prejudgment interest, as such, the motions are ordered denied.