Opinion
FSTCV176031940S
07-01-2019
FIRST MASSEY FNG, INC. v. SKANSKA USA BUILDING, INC.
UNPUBLISHED OPINION
SOMMER, J.
I. INTRODUCTION AND FACTUAL BACKGROUND
In this matter, the plaintiff, First Massey FNG, Inc., has filed a bond claim against the defendant, Fidelity and Deposit Company of Maryland ("Fidelity"). The first count of the plaintiff’s second amended complaint, filed with the court on February 27, 2018, alleges the following relevant facts. Prior to March 2014, defendant Skanska USA Building, Inc. ("Skanska") entered into a contract with Stamford Hospital for the construction of the Stamford Hospital Expansion and Renovation Project ("the Project"). On January 4, 2013, the plaintiff entered into a subcontract agreement with Skanska for the provision of labor and materials for the Project, specifically, the Unitized Exterior Envelope Work, on the improvement of a property owned by Stamford Hospital at 30 Shelburne Road in Stamford ("the Property") for the base subcontract amount of $27, 575, 000.00, subject to additions and deductions by change order. The plaintiff performed its work and fulfilled its obligations under the subcontract. Hence, Skanska failed to pay the plaintiff in full for the labor and materials that they provided, and on January 17, 2017, there was an outstanding balance of $2, 797, 156.00 due under the subcontract. The plaintiff made demand upon Skanska for payments due, but as of the date of this motion the plaintiff has not been paid.
The plaintiff brings a breach of contract claim against Skanska in the second count of its complaint.
On January 17, 2017, the plaintiff served and recorded a mechanic’s lien in its favor on the Property in the amount of $2, 797, 156, for work performed. On May 19, 2017, Skanska filed a motion for dissolution of mechanic’s lien by substitution of bond, pursuant to General Statutes § 49-37. On June 13, 2017, the court, Tobin, J., granted the motion for a surety bond issued by Fidelity in the amount of $3, 356, 587.20, accordingly substituted for the Mechanic’s lien. On June 14, 2017, Skanska, as principal, and Fidelity, as surety, issued a bond for discharge of mechanic’s lien for the benefit of the plaintiff, in the amount of $3, 356, 587.20. As of this date, plaintiff has been damaged in an amount not less than $2, 797, 156, and Fidelity is liable under the bond.
On October 11, 2017, Fidelity filed an answer, denying the plaintiff’s entitlement to the bond, and asserting the lack of a lienable fund as a special defense. On that same date, the plaintiff filed a reply denying this special defense. On May 15, 2018, Fidelity filed a motion for summary judgment, asserting that the lienable fund has been exhausted. The plaintiff filed an objection on November 27, 2018, to which Fidelity replied on December 19, 2018. Hence, the plaintiff filed a supplemental objection on January 30, 2019, to which Fidelity, again, replied on February 28, 2019. The parties were heard at short calendar on March 4, 2019. The issue presented herein is whether the court should grant or deny Fidelity’s motion for summary judgment on the basis that the lienable fund available to the plaintiff has been exhausted.
II. APPLICABLE LAW AND ANALYSIS
"[S]ummary 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. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Cefaratti v. Aranow, 321 Conn. 637, 645, 138 A.3d 837 (2016). "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 ... It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact ... are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]. Ferri v. Powell-Ferri, 317 Conn. 223, 228, 116 A.3d 297 (2015).
Many of the material facts in the case are not in dispute. However, the parties present conflicting arguments as to the application of Connecticut’s mechanic’s lien statutes to those facts. In its memorandum in support of its motion for summary judgment, Fidelity contends that there is no issue of fact that the lienable fund which forms the basis for the plaintiff’s recovery has been exhausted that the plaintiff cannot prevail as a matter of law. While the lienable fund was originally the contract price, Fidelity maintains that this amount has been completely diminished. Specifically, Fidelity contends that plaintiff’s right to recovery is barred because, pursuant to General Statutes § § 49-37 and 49-33, the lienable fund has been reduced by bona fide payments made in good faith by the owner prior to the filing of the notice of lien, as well as payments made to complete the contract after the lien was filed. Thus, the final original contract price of $284, 091, 867, was reduced by payments prior to the filing of the lien, totaling $257, 005, 698.23. Then, that amount was further reduced by subsequent payments in the amount of $16, 986, 233.77 in order to complete the contract. Thereafter, the only remaining amount was $99, 935.00, which was held as retainage pending completion of certain "punch list" items. However, Fidelity contends that this amount also includes costs to complete the Project, and therefore it also should be deducted from the lienable fund. Accordingly, Fidelity contends that the lienable fund has been completely exhausted and that judgment should be rendered in its favor.
In objection to the defendant’s motion for summary judgment, the plaintiff First Massey FNG, Inc. contends, inter alia, that a lienable fund continues to exist. The plaintiff contends that the payments made to complete the contract are only properly deducted from the lienable fund in the event of the general contractor’s default. Because that has not occurred here, the plaintiff contends that a lienable fund still exists as there was still an unpaid balance on the original contract at the time they filed their lien. First Massey also argues that in order to determine whether payments are properly deductible from the lienable funds, a factual inquiry as to whether the owner acted in good faith is required. First Massey claims there are material issues of fact which must be adjudicated as a threshold issue to the question of whether the fund has been exhausted.
The plaintiff also makes two additional arguments in opposing summary judgment: (1) that issues of fact exist as to whether the payments, prior to the fund attaching, were made in good faith, and, (2) that payments made by an insurance company, for the event of subcontractor default, resulted from collusion between Stamford Hospital and Skanska to deprive the subcontractors of payment, and that the amount of these payments should also count towards the lienable fund. These arguments are both unpersuasive and seemingly unsupported by the evidence. It is doubtful the conduct alleged by the plaintiff rises to the level of bad faith required for the payments to no longer be bona fide. See generally Rene Drywall Co., Inc. v. Strawberry Hill Associates, 182 Conn. 568, 574-75, 438 A.2d 774 (1980). Similarly, the plaintiff’s second argument, seeking an enlargement of the fund, is also unpersuasive because the lienable fund is determined, by statute, as the contract price, minus bona fide payments made by the owner before receiving notice of the lien. See General Statutes § 49-36. Regardless, the court need not address these arguments squarely, because, for the reasons noted infra, a lienable fund continues to exist.
In reply, Fidelity contends that the plaintiff’s argument should be rejected, as construing the mechanic’s lien statutes in such a manner works to contravene their intent, and would result in double payment on the part of the owner.
This matter requires the court to review and interpret the statutory scheme concerning mechanic’s liens. In so doing, the court considers, to the greatest extent possible, the plain and ordinary meaning of the statutes, while also giving meaning to every part, so as to render nothing superfluous. See Megos v. Ranta, 179 Conn.App. 546, 552, 180 A.3d 645, 648, cert. denied, 328 Conn. 917, 180 A.3d 961 (2018).
Moreover, "[a]lthough the mechanic’s lien statute creates a statutory right in derogation of the common law ... its provisions should be liberally construed in order to implement its remedial purpose of furnishing security for one who provides services or materials." (Citations omitted; internal quotation marks omitted.) F.B. Mattson Co. v. Tarte, 247 Conn. 234, 238, 719 A.2d 1158 (1998). Under Connecticut’s mechanic’s lien statutes, General Statutes § 49-33 et seq., "a contractor can put a lien on real estate for claims of more than ten dollars for materials furnished or services rendered in making repairs or improvements to the real estate affected ... The lien can be foreclosed on in the same manner as a mortgage." (Citation omitted.) Dehm Drywall, LLC v. Geary, Superior Court, judicial district of Windham, Docket No. CV-08-5003665-S (April 20, 2011, Vacchelli, J.). A mechanic’s lien, however, "can only be enforced to the extent that there is a ‘lienable fund’ available against which it can be applied." Id. "The statutory limitations on lienable funds as applicable to subcontractors are set forth in General Statutes § § 49-33 and 49-36." (Footnotes omitted.) ProBuild East, LLC v. Poffenberger, 136 Conn.App. 184, 191, 45 A.3d 654 (2012).
The lienable fund statutes pertinent to the present matter are § § 49-33(e) and (f), and § § 49-36(a) and (c). General Statutes § 49-37 allows for the substitution of a bond in place of a mechanic’s lien. Pursuant to this statutory scheme, "[a] subcontractor is subrogated to the rights of the general contractor through whom he claims, such that a subcontractor only can enforce a mechanic’s lien to the extent that there is unpaid contract debt owed to the general contractor by the owner." ProBuild East, LLC v. Poffenberger, supra, 136 Conn.App. 191-92.
"Those who provide services or materials in connection with the construction of a building are entitled to claim a lien on the land that they have improved if they fall into one of two categories. Lienors are protected if they have a claim either (1) by virtue of an agreement with or the consent of the owner of the land, or (2) by the consent of some person having authority from or rightfully acting for such owner in procuring labor or materials ... Lienors in the second category must give timely notice of their intent to claim a lien in order to perfect their lien, while those in the first category need not give such notice ... Lienors in the second category include subcontractors and persons who furnish materials or services by virtue of a contract with the original contractor or with any subcontractor, that is to say at least first and second tier subcontractors." (Citations omitted; footnote omitted.) Seaman v. Climate Control Corp., 181 Conn. 592, 595-96, 436 A.2d 271 (1980).
It has been noted that General Statutes § § 49-33(f) and 49-36(c) define and delimit the fund to which a properly noticed mechanic’s lien may attach. See Rene Drywall Co., Inc. v. Strawberry Hill Associates, 182 Conn. 568, 571-72, 438 A.2d 774 (1980). Both sections provide that no mechanic’s lien may attach to any building or land in an amount greater than the price which the owner has agreed to pay to the general contractor; id., 572; but also come with more specific provisions as to the means by which the lienable fund is reduced, and warrant further examination. In particular, this amount may be diminished further by bona fide payments, as defined in section 49-36, made by the owner to the general contractor before receiving notice of the mechanic’s lien or liens.
General Statutes § 49-33(f) provides: "Any such subcontractor [seeking a mechanic’s lien] shall be subrogated to the rights of the person through whom the subcontractor claims, except that the subcontractor shall have a mechanic’s lien or right to claim a mechanic’s lien in the event of any default by that person subject to the provisions of sections 49-34, 49-35 and 49-36, provided the total of such lien or liens shall not attach to any building or its appurtenances, or to the land on which the same stands or to any lot or to any plot of land, to a greater amount in the whole than the amount by which the contract between the owner and the person through whom the subcontractor claims exceeds the reasonable cost, either estimated or actual, as the case may be, of satisfactory completion of the contract plus any damages resulting from such default for which that person might be held liable to the owner and all bona fide payments, as defined in section 49-36, made by the owner before receiving notice of such lien or liens." (Emphasis added.)
General Statutes § 49-36(c) more generally provides: "In determining the amount to which any lien or liens may attach upon any land or building, or lot or plot of land, the owner of the land or building or lot or plot of land shall be allowed whatever payments he has made, in good faith, to the original contractor or contractors, before receiving notice of the lien or liens. No payments made in advance of the time stipulated in the original contract may be considered as made in good faith, unless notice of intention to make the payment has been given in writing to each person known to have furnished materials or rendered services at least five days before the payment is made."
In the court’s view, these sections represent alternative, divergent, means to calculate a lienable fund. Section 49-33(f) does indeed provide that the "costs of completing" the contract may be deducted from the lienable fund, but only upon the event of default of the party to who they are subrogated, i.e., the general contractor. Conversely, the more general § 49-36(c) provides that the lienable fund is only diminished by bona fide payments made in good faith prior to the filing of the mechanic’s lien. Thus, the mechanisms of § 49-33(f) in reducing a mechanic’s lien by costs to complete the contract only appear to apply in the event of the general contractor’s default. Indeed, this "default" provision was specifically added to allow the recovery of subcontractors, where the general contractor defaulted, because otherwise the subcontractor’s claim, which, exists by subrogation, would be extinguished, providing the owner with a windfall. See Seaman v. Climate Control Corp., supra, 181 Conn. 605 n.8.
Thus, in the absence of default by a general contractor, the lienable fund is equal to "the unpaid contract debt owed by the owner to the general contractor." Id., 592. The lienable fund available to a subcontractor does exist by virtue of subrogation, and if the entire contract price is paid prior to the lien’s filing, then the lienable fund is indeed exhausted. See, e.g., Sanford & Hawley, Inc. v. Seeley, Superior Court, judicial district of Hartford, Docket No. CV186091015S, Docket No. CV186091015S (February 25, 2019, Pelligrino, J.T.R.) (entire contract price paid prior to filing of lien); Jeffrey v. R. Franco Home Improvements, Superior Court, judicial district of New Haven, Docket No. CV145034947S (December 5, 2014, Burke, J.) (same); Peltier v. Stevenson Lumber Co.-Suffield, Inc., Superior Court, judicial district of Middlesex, Docket Nos. CV990090651 & CV990090652 (March 23, 2000, Arena, J.).
If an unpaid amount on the contract exists at the time of the lien’s filing, however, then a lienable fund persists. Indeed, § 49-36 "measures the lienors’ rights against the owner with reference to a lienable fund created by payments owed to the general contractor under the prime contract at the time of notice." (Emphasis added.) General Electric Supply Co. v. SNETCO, 185 Conn. 583, 586, 441 A.2d 581 (1981), overruled on other grounds by State v. Spillane, 257 Conn. 750, 759, 778 A.2d 101 (2001). Moreover, "[t]he subcontractor’s right to a lien, though inchoate, comes into existence when he begins furnishing materials [or labor] ... and becomes perfected when he files his lien, having complied with all statutory requirements. These rights which are given the subcontractor cannot be taken from him or abridged by act of the contractor or the owner ." (Citation omitted; emphasis added.) J.L. Purcell, Inc. v. Libbey, 111 Conn. 132, 137, 149 A. 225 (1930).
Indeed, a project owner that continues to make payments to the general contractor after receiving notice of the plaintiff’s mechanic’s lien is still liable for the amount of the lien at the time of its filing. See Stone v. Moomjian, 92 Conn. 476, 103 A. 635 (1918) (subsequent payments to general contractor after subcontractor filed notice of lien did not work to exhaust lienable fund). This is based on the principle that the plaintiff subcontractor "had filed his notice, and by that act, had come into a position in which, as prospective lienor, [the owner] by force of statute, owed him some duty and assumed some corresponding burden of responsibility and liability." Id., 483. While such a result can result in double payment, it has been noted that there "is no express prohibition of additional payments. What is forbidden is an allowance to the owner on account of them if the subcontractor lienors who have served their notices are to suffer thereby. By the service of his notice a prospective subcontractor lienor who thereafter duly files his certificate of lien acquires the right to find in the property owner’s hands such an amount within the limits of what is due to the original contractor at the time of the service, or what shall thereafter become due, as will suffice in its division and distribution pursuant to statute to satisfy his claim as it shall prove to be. The owner may make such payments as he chooses, but in making them he acts at his peril ." (Emphasis added.) Id., 485. This result is justified on the basis that the owner’s "duty is to those who have given notice, and his responsibility for nonperformance of that duty is to save them from loss for his mistaken or indiscreet action." Id., 486. See also Ritzenberg v. Noland Co., 364 F.2d 667, 669 (D.C. Cir. 1966) (if an owner "chooses to rely on the contractor in this situation to see to it that the money is used to pay the lienor, and the contractor disappoints him in this expectation, then a second payment for the same materials may be the consequence" [footnote omitted]).
In the present case, the court determines that the lienable fund has not been exhausted. This is so even solely considering the defendant’s representation of the evidence. The original contract price between the parties was $284, 091, 867. Miller Aff. ¶9 (Docket #150). Subsequently, the plaintiff filed their notice of lien on January 17, 2017, in the amount of $2, 797, 156.00 See Pl’s Amended Complaint, Count One, ¶15 (Docket #136). The payments made prior to the notice of the lien totaled $267, 005, 698.23. Miller Aff. ¶11. This leaves a balance of $17, 086, 168.77. Regardless of the exactitude of this calculation (see footnote three herein), it is apparent that a lienable fund exists in the amount required to satisfy the plaintiff’s mechanic’s lien of $2, 797, 156.00 This is so, regardless of subsequent payments made, because the lien was perfected at the time of its filing. See J.L. Purcell, Inc. v. Libbey, supra, 111 Conn. 137. Costs made to complete the work or contract after the notice of lien are only credited against such an amount in the event of general contractor default, pursuant to General Statutes § 49-36. See Yale Electric East, LLC v. Semac Electric Co., Inc., Superior Court, judicial district of Stamford-Norwalk, Docket No. CV166029449S (July 30, 2018, Jacobs, J.) (66 Conn.L.Rptr. 835, 838). Indeed, any further payments made after this notice are made at the owner’s peril. See Stone v. Moomjian, supra, 92 Conn. 485. Accordingly, the court concludes that the record in this case establishes that genuine issues of material fact exist. In Yale Electric East, LLC v. Semac Electric Co., supra, the court denied the motions for summary judgment of both the plaintiff and the defendant finding that the evidence which each presented failed to establish that there is no genuine issue of material fact. The court rejected the argument made by Fidelity that the fund had been exhausted, finding that at the time it gave notice of its lien, Skanska was still owed $54, 778.345.44 pursuant to its contract with the hospital. Based on the facts submitted to the court in this case, the court finds that the defendant Fidelity has failed to establish that there is no genuine issue of material fact with respect to its argument that the lienable funds available for recovery under the bond.
The court notes that there are some discrepancies between the parties, as to the amount of the contract, and the amount in the lienable fund after the filing of the notice of lien. While these issues of fact are not necessarily material, they will require clarification further at trial. Regardless, under the calculation of either party, a lienable fund exists that could satisfy the amount of the plaintiff’s lien.
III. CONCLUSION
For the foregoing reasons, the motion for summary judgment filed by Fidelity is denied.