Opinion
HHDCV106014624S.
12-21-2012
GLIDEPATH, LLC v. LAWRENCE BRUNOLI, INC.
Rogin Nassau LLC, Hartford, CT, for Glidepath, LLC. Halloran & Sage LLP, Hartford, CT, for Lawrence Brunoli, Inc.
UNPUBLISHED OPINION
Rogin Nassau LLC, Hartford, CT, for Glidepath, LLC.
Halloran & Sage LLP, Hartford, CT, for Lawrence Brunoli, Inc.
PECK, J.
On January 24, 2011, the plaintiff, Glidepath, LLC, filed a nine-count amended complaint against the defendants, Lawrence Brunoli, Inc. (" LBI") and Safeco Insurance Company of America (" Safeco"), arising out of a State of Connecticut construction project at Bradley International Airport in Windsor Locks, Connecticut (hereinafter, " the project"). The amended complaint alleges the following relevant facts. The plaintiff is in the business of designing, manufacturing and installing baggage and cargo handling systems. On April 13, 2005, the plaintiff, as subcontractor, entered into a written bid contract with LBI, as general contractor, to perform certain baggage handling system work on the project. LBI used the cost and scope of work set forth in the bid contract as a basis to obtain a contract from the department of transportation (" DOT") for the project. After LBI was awarded the project, it informed the plaintiff that $150,000 had to be reduced from the cost set forth in the bid contract as a condition of the plaintiff performing work on the project. LBI further represented to the plaintiff that the demanded cost-reduction had been initiated by the DOT. The plaintiff then negotiated with LBI to achieve the demanded cost reduction through a value-engineered change to the scope of work to be performed by the plaintiff.
On May 1, 2005, the plaintiff entered into a second written agreement with LBI to perform certain baggage handling system work for the project (the " subcontract"). LBI signed the subcontract on May 13, 2005. Pursuant to the subcontract, LBI agreed (1) to evaluate the plaintiff's progress and to pay the plaintiff on a monthly basis for any completed work; (2) to coordinate work to be done on the project and to otherwise oversee the project to make certain that the plaintiff's work could be completed on an ongoing basis without any unnecessary delays; (3) to approve work to be performed and specification for that work within a reasonable period of time; and (4) that the scope of the work that the plaintiff would be responsible for completing was dictated by the terms of the subcontract and that the work specifications had been approved by the DOT.
The plaintiff alleges that LBI failed (1) to remit payment to the plaintiff for certain completed work, approved change order work and other work that LBI directed the plaintiff to undertake; (2) to coordinate work to be done and to otherwise oversee the project; (3) to approve work to be performed and specification for work to be performed; and (4) to obtain DOT approval for work to be performed. The plaintiff also alleges that LBI required it to perform work beyond the scope of the subcontract. According to the plaintiff, it invoiced LBI for all services rendered, but LBI only paid a portion of the amount owing, leaving a balance owed on the work completed of $2,859,830.80. Counts one through six are directed at LBI and allege breach of contract, unjust enrichment, delay, violation of General Statutes § 49-41a, breach of the implied covenant of good faith and fair dealing, and violation of Connecticut's Unfair Trade Practices Act (" CUTPA"), respectively.
Counts seven through nine are directed at Safeco and allege a violation of General Statutes § 49-42, breach of the implied covenant of good faith and fair dealing, and violation of CUTPA, respectively. As against Safeco, the amended complaint alleges the following relevant facts. On April 11, 2005, Safeco, an insurance company, issued a performance contract bond to LBI in the amount of $21,143,000.32. Under the terms of the bond, Safeco is obligated to guarantee and promptly make payments of all sums due to any subcontractor who furnishes materials or supplies, or performs labor or services on the project. On March 5, 2010, the plaintiff put Safeco on notice regarding the amount and nature of its claim under the bond. On April 1, 2010, Safeco advised the plaintiff that it did not believe payment was due and owing. On May 20, 2010, the plaintiff submitted more detailed documentation concerning its claims. On June 11, 2010, Safeco denied liability under the terms of the bond.
On May 9, 2012, LBI filed a motion for summary judgment as to counts one through six. On May 23, 2012, Safeco also filed a motion for summary judgment as to counts seven through nine. The plaintiff has filed an objection to both motions to which the defendants have filed replies. The parties have submitted competing affidavits and other documents in support of their respective positions. Oral argument was held on September 10, 2012. Additional facts will be presented as necessary.
" 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. 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.) Sherman v. Ronco, 294 Conn. 548, 553-54, 985 A.2d 1042 (2010). " [T]he ‘ genuine issue’ aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred ... A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case." (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).
" In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. 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 ... 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]." (Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10-11, 938 A.2d 576 (2008).
I
LBI'S MOTION FOR SUMMARY JUDGMENT
LBI moves for judgment in its favor on counts one through six. Each count will be addressed in turn.
Count One: Breach of Contract
Count one alleges that LBI has breached the subcontract by, inter alia, failing to remit payment to the plaintiff, failing to approve work to be performed, failing to obtain DOT approval for work to be performed, and by requiring the plaintiff to perform work beyond the scope of the subcontract.
LBI contends that all allegations regarding negotiations and written communications between it and the plaintiff that occurred before the subcontract was executed are precluded by the parol evidence rule. According to LBI, the subcontract consists of LBI's form agreement, the Baggage Handling System (" BHS") specification section 14520, and the DOT's standard specifications for roads, bridges and incidental construction form 816. Form 816 binds the plaintiff, by the conditions therein, to LBI to the same extent that LBI is bound to the DOT. The plaintiff also executed a DOT subcontractor approval form CLA-12, wherein the DOT approved the plaintiff and the subcontract in the amount of $1,350,000 on the condition that LBI and the plaintiff agreed that the subcontract included the BHS specification and Form 816. LBI also asserts that the subcontract is a fully integrated document and it did not agree to, or approve, any changes to the subcontract, including the plaintiff's April 13, 2005 handwritten modification. Finally, LBI contends that approval of the plaintiff's billings and payment by the DOT to LBI are conditions precedent to the plaintiff's entitlement to payment. LBI asserts that it paid the plaintiff all amounts due that had been approved by the DOT within thirty days of receipt of payment from the DOT, as required by General Statutes 49-41a.
The plaintiff, on the other hand, asserts that there are genuine issues of material fact concerning what contract terms are applicable. According to the plaintiff, the subcontract states that " the proposal shall form the contract document and agreement and in cases of ambiguity between the ... revised quote and other documents, the ... revised quote shall prevail." The plaintiff argues that it was not required, as LBI asserts, to follow the same specifications that LBI was obligated to follow under its contract with the DOT. Rather, the subcontract provided that the plaintiff was to provide a baggage handling system that complied with CAGE based specifications. The original specifications set out by the DOT specified a baggage handling system using a BNP industry specification. This alternative CAGE specification was supplied at LBI's request to lower the cost, and with LBI's assurance that it had or would receive the DOT's approval to change the DOT specification from BNP to CAGE. The subcontract was clear that the CAGE specification, not the BNP, was being utilized. According to the plaintiff, LBI never sought or obtained permission from the DOT to change the original specifications. LBI breached the subcontract when it required the plaintiff to provide work and materials that conformed to the BNP specification, not the CAGE specification. The plaintiff contends that parol evidence will be needed to determine what LBI agreed to concerning the specifications and whether LBI breached the subcontract by specifying something different from what it was obligated to provide to the DOT.
Additionally, the plaintiff argues LBI has not fully paid what it owes the plaintiff under the subcontract. According to the plaintiff, the subcontract revised General Statutes § 49-41a, by providing that payment to the plaintiff was to be by " the 20th of each month following invoice." The plaintiff also contends that General Statutes § 49-41a applies only to items that are included on requisitions and that count one alleges that LBI ordered the plaintiff to change the specifications from CAGE to BNP, which cost over $150,000 and was never submitted to the DOT as part of any requisition. Moreover, the plaintiff argues that the subcontract does not contain any conditions precedent that LBI first receive payment from the DOT before the plaintiff is entitled to payment.
In reply, LBI states that the plaintiff's March 7, 2005 revised quote and April 13, 2005 handwritten modification, the substance of which the plaintiff refers to its arguments, were not incorporated into the subcontract and are precluded by the parol evidence rule. Furthermore, LBI argues that the BHS specification does not specify any particular industry standard and was never changed. The CAGE specification was not discussed with LBI or agreed to before the subcontract was executed. Rather, LBI hired the plaintiff to provide a baggage handling system that complied with the many requirements in the BHS specification. The CAGE standard was " buried" in the middle of the third page of the plaintiff's March 7, 2005, revised quote among references to various other industry standards. According to LBI, it was up to the plaintiff to propose a baggage handling system acceptable to the DOT. LBI also asserts that payment within thirty days was specified in the subcontract and required by General Statutes § 49-41a, and it never agreed to a change in the payment term. Finally, LBI contends that it was not obligated to obtain DOT approval for the plaintiff's work, but rather, under the subcontract, the plaintiff was required to obtain such approval.
As an initial matter, this court must determine what evidence it may consider on the motion for summary judgment. " The parol evidence rule prohibits the use of extrinsic evidence to vary or contradict the terms of an integrated written contract ... The parol evidence rule does not apply, however, if the written contract is not completely integrated ... As a threshold matter, therefore, a trial court must determine whether the written contract is a complete integration for purposes of the parol evidence rule ... The characterization of a trial court's determination regarding the question of whether a contract is integrated will differ depending on whether a merger clause exists in the contract. If the contract does not contain a merger clause, such a determination is primarily a question of fact because the court is allowed to examine the extrinsic evidence ... On the other hand, if the contract contains an unambiguous merger clause, we view such a determination as a question of law in light of Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 495, 746 A.2d 1277 (2000) ... [O]ur Supreme Court in Tallmadge Bros., Inc., created a novel rule with respect to the effect of the insertion of a merger clause into a contract. The rule, in essence, provides that a merger clause inserted into an agreement establishes conclusive proof of the parties' intent to create a completely integrated contract, and the court is forbidden from considering extrinsic evidence on the matter unless there was unequal bargaining power between the parties." (Citations omitted; internal quotation marks omitted.) Benvenuti Oil Co., Inc. v. Foss Consultants, Inc., 64 Conn.App. 723, 727-28, 781 A.2d 435 (2001).
In the present case, both parties submitted a copy of the subcontract. LBI asserts that section VI of the subcontract contains a merger clause and, thus, this court cannot consider any extrinsic evidence presented by the plaintiff. Section VI provides that " [a]ny changes to this contract must be executed in writing or by written change order from Lawrence Brunoli, Inc. All the requirements of this subcontract purchase order shall be included in any change whether identified or not on said change order, unless specifically excluded by Lawrence Brunoli, Inc. Final payment can be adjusted to reflect any modifications in the scope of the work."
Contrary to LBI's assertion, section VI of the subcontract is not a merger clause as it does not include language indicating that the subcontract is the entire agreement or contains the entire understanding of the parties. See Three Sixty Five (365) Cherry, LLC v. Siseman, LLC, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 09 6001196 (March 18, 2010, Mintz, J .) (mortgage note did not contain a merger clause stating that it was the entire agreement even though it contained a clause stating that oral modifications were not permitted); Benvenuti Oil Co. v. Foss Consultants, Inc., Superior Court, judicial district of New London, Docket No. CV 01 0485270 (January 25, 2006, Corradino, J.) (letter did not contain a merger clause because there was " no explicit statement that the letter [was] a final, complete, and exclusive statement of all the terms agreed upon" (internal quotation marks omitted)); Gardner v. Sr. Paul Catholic High School, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 97 0143514 (November 15, 2001, Doherty, J.) (30 Conn. L. Rptr. 691) (collective bargaining agreement contained both a merger clause and a clause prohibiting subsequent oral modifications); see also Moore v. Pennsylvania Castle Energy Corp., 89 F.3d 791, 798 n. 3 (11th Cir.1996) (" an integration clause is a portion of a particular contract that restates the rationale of the parol evidence rule within the terms of the contract" (internal quotation marks omitted)); J. Calamari & J. Perillo, Contracts (5th Ed.2003) § 3.6, p. 142 (" [a] merger clause states that the writing is a final, complete, and exclusive statement of all of the terms agreed on"); 6 A. Corbin, Contracts (Rev. Ed.2010) § 25.7, p. 56-57, § 25.8, p. 68.
Consequently, extrinsic evidence will be needed to determine whether the subcontract was a completely integrated contract. If a contract does not contain a merger clause, a determination of whether a contract is a complete integration for purposes of the parol evidence rule " is primarily a question of fact because the court is allowed to examine the extrinsic evidence." Benvenuti Oil Co., Inc. v. Foss Consultants, Inc., supra, 64 Conn.App. at 728. " The parol evidence rule does not apply to every contract of which there is written evidence, but only applies where the parties to an agreement reduce it to writing, and agree or intend that that writing shall be their agreement." 11 S. Williston, Contracts (4th Ed.1999) § 33:15, p. 616-17. " The parties' agreement on the terms of the contract, the memorialization of the agreement in writing, and the intention that the written document completely embody the contract constitutes an ‘ integration’ of the contract. When that occurs, the fact of integration triggers the parol evidence rule." 11 S. Williston, Contracts, § 33:15, p. 618. However, " [w]hether the parties intended to integrate their negotiations in a writing is a question of fact for the court." Associated Catalog Merchandisers, Inc. v. Chagnon, 210 Conn. 734, 740, 557 A.2d 525 (1989).
In the present case, LBI submits the affidavit of Lawrence Brunoli, Jr. (" Brunoli"), the President of LBI. Brunoli attests that the subcontract, consisting of the typed portion of the form agreement, the BHS specification and Form 816, is the only agreement between LBI and the plaintiff. Brunoli further attests that LBI did not agree to or approve, in writing, any changes to the subcontract, including the plaintiff's April 13, 2005 handwritten modification. Attached to the affidavit is a copy of the subcontract, the BHS specification 14520, Form 816 and Form CLA-12. The copy of the subcontract submitted by LBI is identical to the copy submitted by the plaintiff. Both copies include a handwritten modification on the second page, which states " VIIII. Modifications to Lawrence Brunoli: Subcontract Purchase Order Between Lawrence Brunoli Inc. & Glidepath LLC dated 4/13/05 for the Bradley Int. Airport Terminal Baggage Handing Project. (See Attached List.)" This handwritten modification is initialed, although it is unclear by whom. LBI asserts that it did not approve this modification and it did not submit the " attached list."
In support of its objection, the plaintiff submitted the affidavit of Steven Graviet, the plaintiff's " executive jurisconsult of construction and risk management." Graviet states that he was involved in the management of the project from the time of preparation of the quotations through to the completion of the project, and is personally aware of and familiar with the facts contained in the affidavit. Graviet attests in relevant part that prior to LBI's submission of a bid to the DOT, LBI contacted the plaintiff concerning price-reduction alternatives. The DOT's original specifications included a design criteria known as BNP, which is more stringent and expensive than the CAGE specification. The plaintiff provided LBI with a quotation based on the less expensive CAGE specification. Once LBI was selected as the low bidder by the DOT, LBI advised the plaintiff that the DOT would accept the CAGE specification but wanted the plaintiff to reduce its price by an additional $150,000. The plaintiff and LBI negotiated a new proposal dated March 7, 2005, (hereinafter, " revised quote") which lowered the plaintiff's quotation by $150,000. When LBI provided the subcontract to the plaintiff, the plaintiff incorporated the revised quote as part of the overall agreement and added a page of other modifications to the form. This, according to the plaintiff, is reflected in the handwritten modification to the subcontract. The plaintiff then signed the subcontract on May 1, 2005, and returned it to LBI, which signed it on May 13, 2005.
In its reply memorandum, LBI contends that the plaintiff failed to proffer admissible evidence in support of its objection to the motion for summary judgment because Graviet's affidavit fails to state that the attached exhibits are true and accurate copies. LBI also contends that Graviet was not involved in the contract discussions and is not competent to testify. Graviet attests that he has personal knowledge of the facts to which he is attesting, and, therefore, the court will consider his affidavit. The issue of admissible evidence will be discussed, infra.
Attached to Graviet's affidavit, as Exhibit 1, is a copy of the subcontract, identical to that submitted by LBI, as well as a document entitled " Modifications to Lawrence Brunoli Subcontract Purchase Order Between Lawrence Brunoli, Inc. and Glidepath, LLC. Dated April 13, 2005 for the Bradley International Airport Terminal Baggage Handling Project" (hereinafter, the " modification"). Graviet attests that the modification contains three paragraphs. The first paragraph makes the plaintiff's scope of work " subject to the content of [its] revised quote dated March 7, 2005." Paragraph two makes some minor clarifications, not relevant to the present discussion. Finally, Graviet attests that paragraph three changed the wording of section V of the subcontract. Graviet recites the language of the section V, with the modifications noted in bold or brackets. The modifications, in essence, alter the work schedule and legal rights of the plaintiff to seek delay damages. Graviet also attests to the language of the revised quote, which stated that the plaintiff would " design, manufacture and ship the baggage handling system ... per the CAGE, Inc. specifications, " and further stated that " [t]his tender proposal shall form the contract document and agreement. In the event of any ambiguity between this quotation and the scheduled work, then the terms of this document shall prevail."
LBI contends that the court may not consider the evidence attached to Graviet's affidavit as Graviet did not attest that the attached documents were true and accurate copies. Regardless of whether the court considers the evidence attached to Graviet's affidavit, the evidence presented by way of competing affidavits and a copy of the subcontract indicates that there are genuine issues of material fact as to whether the subcontract is a fully integrated document, and, thus, what contract terms control. For example, there remains a genuine issue of material fact as to whether LBI approved the handwritten modification. Although LBI denies that it did so, the modification is dated April 13, 2005, and LBI signed the subcontract on May 13, 2005. Because there are genuine issues of material fact as to what contract terms control, the motion for summary judgment as to count one is denied.
Count Two: Unjust Enrichment
LBI contends that count two is legally insufficient because it incorporates the breach of contract allegations from count one. LBI also asserts that the plaintiff failed to allege that it seeks payment for work outside the scope of the written subcontract. Finally, LBI argues that it has not benefitted from anything provided by the plaintiff.
In contrast, the plaintiff asserts that its unjust enrichment claim is an alternative theory which would provide it with an avenue to recover if the court finds that the lack of payment to the plaintiff for the extra work is not a breach of contract under count one. The plaintiff contends that it is unable to collect from the State because LBI released the State from all claims for phases I and II of the project. The plaintiff also asserts that it performed work for LBI for which the plaintiff was not paid, and this extra work permitted LBI to resolve its claims with the State, whereby the State relieved LBI of a large aspect of liquidated damages. The plaintiff acknowledges that count two incorporates the allegation of a written contract and requests that, if the court agrees with LBI, that the plaintiff be given an opportunity to delete the reference to the written contract.
In reply, LBI argues that the vast majority of the plaintiff's claims are based on delays, and, per the subcontract, the plaintiff agreed that it would only be entitled to delay damages for which the DOT accepted responsibility and actually paid. According to LBI, the plaintiff either failed or refused to provide the information requested by the DOT and, as a result, lost its right to recover anything. Furthermore, LBI states that it did not release the State from all claims for phases I and II.
" [S]everal Superior Court cases have found it improper to expressly incorporate the allegations of a breach of contract into an unjust enrichment claim, reasoning that incorporating allegations of the breach of contract into a count of unjust enrichment violates the alternative pleading rule requiring separate and distinct counts ." Brantley v. Residential Makeover, LLC, Superior Court, judicial district of New Haven, Docket No. CV 10 5033289 (July 25, 2012, Fischer, J.). " Unjust enrichment is a legal doctrine to be applied when no remedy is available pursuant to a contract ... Recovery is proper if the defendant was [benefitted], the defendant did not pay for the benefit and the failure of payment operated to the detriment of the plaintiff ... Although restitution for unjust enrichment often applies to situations in which there is no written contract, it can also apply to situations in which there is a written contract and the party seeking restitution has breached the contract." (Citations omitted; internal quotation marks. omitted.) The Final Cut, LLC v. Sharkey, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 08 5007365 (May 5, 2009, Adams, J.). In the present case, count two of the plaintiff's amended complaint incorporates paragraphs one through nineteen of count one. Those paragraphs acknowledge the existence of a written contract, but do not contain express allegations of the breach of the contract. It was not improper for the plaintiff to incorporate the allegations of a written contract into the unjust enrichment count. See, e.g., G.A. Washington, LLC v. Kent Horticultural Services, Inc., Superior Court, judicial district of Litchfield, Docket No. CV 11 6004915 (October 1, 2012, Danaher, III, J.) (motion to strike denied where plaintiff did not incorporate express allegations of breach of contract). " Unjust enrichment applies wherever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract." (Internal quotation marks omitted.) Vertex, Inc. v. Waterbury, 278 Conn. 557, 573, 898 A.2d 178 (2006).
The court turns now to LBI's assertion that there is no genuine issue of material fact that the plaintiff is not seeking payment for work outside the scope of the written subcontract, and that LBI has never benefitted from anything provided by the plaintiff. Brunoli's affidavit and the documents attached thereto, however, provide no evidence supportive of LBI's position.
Count two alleges that LBI is not required to pay the plaintiff until the State pays LBI, and, as a result, LBI has benefitted in that it received the value of the plaintiff's labor, material, equipment and services without fully paying for the work and has had use of that value and/or those funds. LBI also received a benefit from the plaintiff in finishing the project and not suffering liquidated damages or claims from the State for delays in the completion of the project.
In support of its objection, the plaintiff relies on Graviet's affidavit, in which Graviet attests that LBI submitted a claim to the DOT in 2007 for delays and interferences by the DOT. The DOT settled with LBI on October 10, 2008, by providing LBI with a time extension of 869 days and payment of $1,709,808 for extended costs. In its memorandum of law, the plaintiff asserts that it does not know the full details of this settlement and, thus, cannot comment on how the settlement relates to section V of the subcontract, which, the plaintiff contends, was altered by the handwritten modification.
Attached to Graviet's affidavit is a release and waiver of claims by LBI to the State dated October 10, 2008. Graviet's affidavit fails to properly authenticate this document and it will not be considered by the court.
The plaintiff also submits the affidavit of its counsel, Lawrence Rosenthal, who attests that on or about November 10, 2011, he wrote a letter to LBI's counsel, Attorney William Wilson, requesting an update to the request for production of documents to include the settlement proposal and terms that had occurred between LBI and the DOT. Wilson confirmed that there was a settlement agreement, but, due to State requirements, there were no documents or details that he could provide other than a general statement that the State provided a time extension and that the amount of money in the settlement was significant. Rosenthal contacted Wilson again in December 2011, and March 2012, about the settlement. Each time, Wilson stated that the paperwork was not finalized but going through the process with the State for final approval. To date, LBI has not provided the information concerning the settlement that it reached with the State.
Attached to LBI's reply memorandum is an affidavit from Wilson, who attests that he was involved with all settlement discussions between LBI and the State regarding the project. Wilson attests that the DOT did not pay for any subcontractor delays because LBI was able to exclude certain subcontractor claims, with the intent that they would be addressed at the end of the project. Wilson's affidavit refers specifically to " PCO # 316." PCO # 316 refers to one of the plaintiff's claims for an estimated $300,000, which, according to LBI, was left open pending the plaintiff's submission of additional information requested by the DOT. Moreover, Wilson asserts that, as a result of a March 31, 2011 meeting, the plaintiff was afforded the opportunity to work directly with the DOT and its auditors to provide supporting documentation for its claim. According to Wilson, based on the information he obtained from the DOT, the plaintiff failed or refused to allow the DOT's auditors to review the plaintiff's books and records for several months until the DOT rejected the plaintiff's claim in its entirety in October 2011. Thereafter, LBI settled its claim with the DOT under a general release without any party admitting any liability. No part of any settlement payment to LBI was related to the plaintiff's claim. Wilson attests that the plaintiff has known since October 28, 2011, that the settlement with the DOT did not include any portion of the plaintiff's claim.
As discussed, supra, there are genuine issues of material fact concerning what contract language controls, including whether section V of the subcontract was modified, specifically with respect to the plaintiff's right to collect delay damages. Thus, based on the competing affidavits, there are genuine issues of material fact as to how LBI's settlement with the State relates to the subcontract. Moreover, there are genuine issues of material fact as to whether the settlement included any portion of the plaintiff's claim. For these reasons, the motion for summary judgment as to count two is denied.
Count Three: Delay Damages
In count three, the plaintiff alleges in relevant part that LBI and the plaintiff agreed upon a schedule for completion of the plaintiff's work. Per the subcontract, the plaintiff had a scheduled start date of May 30, 2005, and a scheduled completion date of January 13, 2006. Over the course of the project, the plaintiff was forced to contend with various delays caused or controlled by LBI due to LBI's mismanagement of the project. The plaintiff further alleges that LBI required it to perform work beyond the scope of the agreement, which added to the cost and further delayed the plaintiff from completing its work.
LBI argues that the plaintiff is not entitled to damages for delay under the plain language of the subcontract which provides various limitations on delay damages. According to LBI, the subcontract provides that the preliminary schedule was approximate only and subject to change, and that the plaintiff agreed to accept responsibility for adhering to a fluctuating schedule. Furthermore, per the terms of the subcontract, the plaintiff agreed not to assess any delay damages or claims against LBI unless the DOT accepted responsibility and paid for such delays. LBI asserts that this provision is a condition precedent that must occur before the plaintiff is entitled to delay damages. According to LBI, it presented the plaintiff's delay claims to the DOT for its review and consideration, but the DOT rejected the plaintiff's claims.
On the other hand, the plaintiff contends that LBI is misleading the court by citing to the wrong contract language. As asserted in Graviet's affidavit, when LBI provided the subcontract to the plaintiff, the plaintiff incorporated the revised quote as part of the overall agreement and added a page of other modifications to the form, which LBI accepted. Paragraph three of the modification adds and removes various words and phrases to section V of the subcontract, altering the work schedule and legal rights of the plaintiff to seek delay damages. According to the plaintiff, under the subcontract as altered by the modification, the plaintiff only agreed not to assess claims for minor delays against LBI, but that the delays suffered in the present case are more than three years. According to Graviet's affidavit, the following provisions were added to section V: " [T]he subcontractor agrees not to assess any delay damages or claims against Lawrence Brunoli, Inc. for minor delays caused by Lawrence Brunoli, Inc. or other entities under contract with Lawrence Brunoli, Inc.; Subcontractor agrees not to assess any delay damages or claims against Lawrence Brunoli, Inc. for delays caused by the Owner unless the Owner accepts responsibility, and payment." Graviet further attests that the modification deleted the provisions that the completion schedule " is approximate only and is subject to change, " and that the plaintiff agreed to accept responsibility for adhering to a " fluctuating schedule." Those provisions were replaced with the following language: " The general contractor and subcontractor agree that the mutually agreed upon completion schedule substantially reflects the sequence and durations of subcontract work items [and] the subcontractor agrees to accept responsibility for adhering to a mutually agreed upon completion schedule." According to the plaintiff, the issue of whether the claims are " minor" is a question of fact. Furthermore, because the plaintiff agreed to not assess delay damages against LBI for delays caused by the State, the determination of what delays were caused by the State or LBI is also a question of fact.
The owner of the project is the DOT.
Moreover, the plaintiff argues that summary judgment cannot enter due to the absence of the settlement agreement terms and conditions between LBI and the State. Graviet attests that, during the course of the project, the plaintiff sent numerous letters to LBI advising of the delays to the plaintiff's ability to perform. According to Graviet, the State already paid for part of the delay damages by way of settlement with LBI in 2008, but LBI has not produced the terms of this settlement agreement. The plaintiff argues that, if the State paid anything for delays to the project, then there has been a recognition of the delay issue and LBI must pay the plaintiff accordingly. Thus, the plaintiff asserts, until the settlement agreement is produced, a genuine issue of material fact exists, precluding summary judgment.
Attached to the affidavit are five letters which are not properly authenticated and will not be considered by the court.
In reply, LBI argues that, regardless of whether the subcontract contains the modifications, the plaintiff is still not entitled to delay damages. Wilson attests that no part of its settlement with the DOT was related to the plaintiff's claim. Furthermore, LBI asserts that, even if the subcontract is modified, it still incorporates the provision of Form 816, which limits delay damages.
In the present case, LBI failed to meet its burden of establishing that there is no genuine issue of material fact concerning the cause or reasons for the delays. Moreover, the parties dispute whether LBI received any payments for delay damages to which the plaintiff would be entitled. Finally, as discussed, supra, there are genuine issues of material fact as what contract terms control. Therefore, the motion for summary judgment as to count three is denied.
Count Four: Violation of General Statutes § 49-41a
Count four alleges a violation of General Statutes § 49-41a, which provides in relevant part that, " within thirty days after payment to the contractor by the state, " a general contractor must pay any amounts due any subcontractor. The complaint alleges that on March 5, 2010, the plaintiff gave notice, by certified mail, of its claim and demand to LBI pursuant to General Statutes § 49-41a in the amount of $1,900,000. LBI did not respond to this claim, and, upon information and belief, LBI submitted part of the plaintiff's claim to the State, but held back part of the claim pending completion of the project. LBI violated General Statutes § 49-41a because it refused to pay the plaintiff's March 5, 2010 claim or submit it to the DOT.
LBI argues that it does not owe the plaintiff anything further under the subcontract or General Statutes § 49-41a because it paid the plaintiff all money received from the DOT for the plaintiff's work within thirty days of receiving payment from the DOT. Brunoli attests that LBI did not receive the plaintiff's March 5, 2010 notice of claim until March 30, 2010, and that LBI did not receive any information or documentation supporting the plaintiff's claim until May 28, 2010. Brunoli further attests that LBI submitted the plaintiff's claims to the DOT, arranged for a meeting between the plaintiff and the DOT, and persuaded the DOT to allow the plaintiff an opportunity to back up and prove its claim directly to the DOT auditors. However, the plaintiff failed to provide any documentation requested by the DOT to support its claim and the DOT subsequently rejected the claim in its entirety.
In contrast, the plaintiff argues that LBI has no factual support for its position and is attempting to shift the burden of proof on summary judgment. According to the plaintiff, it has alleged that, at the time it gave notice of its claim to LBI, the plaintiff was owed funds from LBI for which the State had paid LBI. Graviet attests that the State already paid for part of the delay damages by way of settlement with LBI in 2008. According to the plaintiff, there is a material fact as to whether and when the State paid the settlement funds to LBI and why LBI did not allocate any of those funds to the plaintiff. Furthermore, the plaintiff notes that in Brunoli's affidavit, he admits that LBI failed to comply with General Statutes § 49-41a. In his affidavit, Brunoli attests that, after the plaintiff ceased work on the project, LBI deposited money received from the DOT for the plaintiff's previous work into an escrow account to pay for costs to complete the plaintiff's work. Likewise, Graviet attests that LBI did not pay the October and November 2009 payments to the plaintiff, but rather, on January 22, 2010, placed the funds, without consent, into an escrow account.
The plaintiff refers the court to exhibit 8 attached to Graviet's affidavit, which is the 2008 settlement between the State and LBI. This exhibit, however, was not properly authenticated by Graviet's affidavit and it will not be considered by the court.
The plaintiff asserts that exhibit 11 to Graviet's affidavit is the plaintiff's requisition for payment for the time period ending December 31, 2009. This exhibit, however, was not properly authenticated and it will not be considered by the court.
The plaintiff and LBI also engage in a dispute over whether LBI withheld a portion of each payment as retainage. As neither party submitted admissible evidence on the issue of retainage, this court declines to address the issue.
In reply, LBI contends that the plaintiff has the burden of raising an issue of material fact on whether payment was due under General Statutes § 49-41a. According to LBI, the only evidence before the court confirms that LBI paid the plaintiff all money it received from the DOT for the plaintiff's work within thirty days of receiving payment from the DOT.
General Statutes § 49-41a " has been called the ‘ Prompt Pay Act’ and applies specifically to subcontractors. Subsection (a)(1) mandates that a contract provision which requires that ‘ ... the general contractor, within thirty days after payment to the contractor by the state or a municipality, pay any amounts due any subcontractor, whether for labor performed or materials furnished, when the labor or materials have been included in a requisition submitted by the contractor and paid by the state or a municipality ...’ Subsection (c) provides that if payment is not made by the general contractor in accordance with such requirement, the subcontractor may set forth a claim by registered or certified mail. If the debt is not paid within ten days from the receipt of the notice, the general contractor may be liable for interest on the amount due in accordance with the terms of the statute. Further, the contractor may be required to place funds in escrow." Suntech of Connecticut, Inc. v. Lawrence Brunoli, Inc., Superior Court, judicial district of Hartford, Docket No. CV 09 5030131 (May 4, 2011, Robaina, J.).
In the present case, the competing affidavits raise a genuine issue of material fact as to whether LBI received funds which were allocated for the plaintiff's work or funds payable under the subcontract. Although Brunoli attests that LBI consistently paid the plaintiff all money paid by the DOT for the plaintiff's work within thirty days of receiving the payments from the DOT, Graviet attests that LBI did not pay the October and November 2009 payments to the plaintiff. Rather, LBI put the funds in escrow on January 22, 2010. Further, LBI failed to submit any evidence supporting Brunoli's assertion in his affidavit that LBI fully paid the plaintiff within thirty days. For these reasons, the motion for summary judgment as to count four is denied.
Count Five: Implied Covenant of Good Faith and Fair Dealing
Count five alleges in relevant part that LBI induced the plaintiff to enter into the subcontract on the basis of the false representation that the DOT was requiring a reduction of $150,000 in the cost of the work that the plaintiff would perform on the project. LBI knew that its representation concerning cost reduction was false and that the plaintiff would rely on this representation to its detriment in contracting out its services on the project. In order to effect the reduction, the plaintiff and LBI negotiated a value-engineered change in the scope of the work to be performed by the plaintiff. LBI then entered into the subcontract with the plaintiff, despite the fact that LBI knew or should have known that the DOT had not, and would not, authorize the change in the scope of the work set forth in the subcontract. LBI intended to require the plaintiff to adhere to the original specification for its work on the project, as set forth in the bid contract, while eliciting a contract price that was $150,000 less than the cost set forth in the bid contract. These actions by LBI demonstrate a bad faith design to mislead and deceive the plaintiff for the purpose of benefitting itself financially.
LBI asserts that it did not breach any implied covenant of good faith and fair dealing because the plaintiff's allegations involve conduct that occurred before the subcontract was entered into. According to LBI, the plaintiff is a sophisticated commercial entity and LBI negotiated with the plaintiff to get the best price it could, with the understanding that the plaintiff would be responsible for providing a baggage handling system that was acceptable to the DOT and in compliance with the BHS specification. LBI did not have the authority to change the BHS specification without the DOT's explicit approval and the plaintiff was in a superior position to know what the DOT would accept for a baggage handling system. Brunoli attests that the plaintiff was hired based on its representation that it was an experienced baggage handling system contractor and could provide and obtain approval for the specified BHS. There was no value-engineering performed by LBI before the subcontract was executed, and the BHS specification allowed for alternative proposals which had to be submitted to, and approved by, the DOT. It was up to the plaintiff to obtain that approval.
According to the plaintiff, there is a genuine issue of material fact as to whether LBI acted in bad faith in the manner in which it negotiated the subcontract to include a different set of design criteria, based on the false claim that the DOT had approved the change in order to get the plaintiff to reduce its quotation. Graviet attests that, prior to submitting a bid to the DOT for the project, LBI advised the plaintiff that LBI was pursing price reduction alternatives for the baggage handling system. In response, the plaintiff provided LBI with a quotation that utilized the less expensive CAGE design specification. LBI then advised the plaintiff that the DOT would accept the CAGE specification but wanted the plaintiff to lower its price by an additional $150,000. The plaintiff and LBI then negotiated the revised quote, which was later incorporated into the subcontract. LBI, through Brunoli's affidavit, denies that the revised quote was incorporated into the subcontract.
Graviet attests that, at the time the revised quote was negotiated, the DOT had not made any of the aforementioned representations and LBI had not asked the DOT for a change to the specification. Moreover, after submitting shop drawings for the design of the baggage handling system, LBI advised the plaintiff that the design utilizing the CAGE criteria was rejected by the DOT and that the plaintiff was required to use the BNP design criteria. The plaintiff protested to LBI that it had advised the plaintiff, before execution of the subcontract, that the CAGE specifications had been approved. LBI threatened to terminate the plaintiff and ordered the plaintiff to perform the design utilizing the BNP standards. LBI refused to pay the plaintiff for the extra work and the costs associated with the change. LBI subsequently admitted to the plaintiff, in a meeting with the State, that it had never requested a change to the design criteria and it never sought to utilize the criteria in the subcontract.
" It is axiomatic that the ... duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship ... 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 ... In accordance with these authorities, the existence of a contract between the parties is a necessary antecedent to any claim of breach of the duty of good faith and fair dealing ... As our case law makes clear, no claim for breach of the duty of good faith and fair dealing will lie for conduct occurring prior to, or during, the formation of a contract." (Citations omitted; emphasis in original; internal quotation marks omitted.) Macomber v. Travelers Property & Casualty Corp., 261 Conn. 620, 638, 804 A.2d 180 (2002).
In the present, the plaintiff alleges that LBI made material misrepresentations concerning the DOT's approval of the baggage handling system that induced the plaintiff to enter into the subcontract for a reduced fee. Since this conduct took place at the negotiation and execution stage, rather than at the performance stage, of the subcontract, LBI did not owe the plaintiffs a duty of good faith and fair dealing as to that specific conduct. See, e.g., Macomber v. Travelers Property & Casualty Corp., supra, 261 Conn. at 638-39.
However, the plaintiff also presented evidence supporting an argument that LBI acted in bad faith in its performance of the subcontract. Count five incorporates the allegations of count one, alleging breach of contract, and, thus, also alleges that, pursuant to the subcontract, LBI agreed to approve work to be performed and specification for that work, and represented that work specifications had been approved by the DOT. The complaint also alleges that LBI failed to obtain DOT approval for work to be performed and required the plaintiff to perform work beyond the scope of the subcontract. As discussed, supra, there is a genuine issue of material fact concerning the terms of the contract and the evidence before the court indicates that there is a dispute as to which party was responsible for obtaining DOT approval for a change to the BHS specification. Thus, it follows that there remains a genuine issue of material fact as to whether LBI acted in bad faith in its performance under the subcontract when it failed to obtain DOT approval for the CAGE specification.
" In Connecticut, [t]here is no appellate authority as to whether a court can permit summary judgment against a party relative to individual allegations within a single count of a complaint. At the trial court level there is a split of authority on the issue. A review of the decisions finds that the majority of the cases do not allow a party to eliminate some, but not all, of the allegations of a single count through a motion for summary judgment ... [S]ome courts have found that the language of Practice Book § 17-51 authorizes the entry of summary judgment on part of a claim within a single count provided final judgment can be entered with respect to that part of the claim and it can be severed from the remainder of the claim ... Nonetheless, the majority rule ... is that Connecticut procedure does not allow entry of summary judgment on one part or allegation of a cause of action when the ruling will not dispose of an entire claim, and therefore, will not allow entry of judgment on that claim." (Citation omitted; internal quotation marks omitted.) Embry v. Hartford, Superior Court, judicial district of Hartford, Docket No. CV 07 5014615 (October 18, 2011, Domnarski, J.); see First American Title Ins. Co. v. 273 Water Street, LLC, Superior Court, judicial district of Hartford, Docket No. CV 08 4041234 (January 5, 2012, Peck, J.) (" it is not proper for the court to grant a motion for partial summary judgment as to one allegation of a count, rather than all of the allegations of the count").
Because there remain genuine issues of material fact as to whether LBI acted in bad faith by failing to obtain DOT approval for the CAGE specification, the motion for summary judgment as to count five is denied.
Count Six: CUTPA
Count six incorporates count five and further alleges that LBI was engaged in trade or commerce and that its actions were deceptive in that (1) LBI used the bid contract as a basis to obtain a contract from the DOT to act as a general contractor on the project when LBI knew that it had no intention of honoring the cost it had agreed to pay the plaintiff, (2) LBI made misrepresentations of fact to the plaintiff to induce the plaintiff to lower its cost by $150,000 as a condition to LBI using the plaintiff on the project; (3) LBI agreed to a value-engineered change in the scope of the plaintiff's work in order to reduce the contract cost by $150,000 when LBI knew or should have known that the DOT would not agree to the changes in the scope of work, and, instead of seeking pre-approval from the DOT, LBI attempted to hold the plaintiff to the original scope of work set forth in the bid contract, without restoring the originally agreed upon contract price; and (4) LBI has continued to make false representations to the plaintiff, including representing that the DOT wished to have LBI coordinate a global settlement of subcontractor claims, in order to induce the plaintiff to forego and delay pursuing its available legal remedies for seeking payment owed by LBI.
LBI asserts that count six is without a sufficient basis because the plaintiff is relying on the same pre-contract bad faith actions alleged in count five and only added an allegation of false representations to induce the plaintiff to forego pursing legal remedies. According to LBI, the plaintiff was responsible for obtaining whatever information it needed before it entered into the subcontract, and, thus, is responsible for its own mistakes. Furthermore, if the plaintiff delayed seeking any available legal remedies, it did so on its own, not because of anything LBI did or said. In contrast, the plaintiff asserts that LBI's motion is based solely on its denial of the allegations of the plaintiff's complaint. Whether the actions alleged are violations of CUTPA is a question for the trier of fact. In reply, LBI asserts that a glorified contract dispute does not rise to the level of a violation of CUTPA, especially when there is no admissible evidence to support the claim .
In arguing that it is entitled to summary judgment because the plaintiff failed to provide admissible evidence to support its claim, LBI misapprehends the burdens that apply to summary judgment proceedings. " An important exception exists ... to the general rule that a party opposing summary judgment must provide evidentiary support for its opposition ... On a motion by [the] defendant for summary judgment the burden is on [the] defendant to negate each claim as framed by the complaint ... It necessarily follows that it is only [o]nce [the] defendant's burden in establishing his entitlement to summary judgment is met [that] the burden shifts to [the] plaintiff to show that a genuine issue of fact exists justifying a trial ... Accordingly, [w]hen 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." (Emphasis omitted; internal quotation marks omitted.) Gianetti v. United Healthcare, 99 Conn.App. 136, 141, 912 A.2d 1093 (2007).
" Our Supreme Court has previously explained that to prevail on a CUTPA claim, the plaintiff must prove, pursuant to General Statutes § 42-110b(a), that the defendant engaged in ‘ unfair or deceptive acts or practices in the conduct of any trade or commerce’ and that as a result of the use of the act or practice prohibited by § 42-110b(a), the plaintiff suffered an ‘ ascertainable loss of money or property.’ ... It is well settled that in determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission for determining when a practice is unfair: (1)[W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise— in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other business persons] ... All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." Hale Farms Condominium Ass'n, Inc. v. BG Laundry, LLC, Superior Court, judicial district of Hartford, Docket No. CV 10 6009489 (August 5, 2011, Peck, J.).
" Although [t]here is a split of authority in Superior Court decisions regarding what is necessary to establish a CUTPA claim for breach of contract, the majority of courts [hold] that a simple breach of contract, even if intentional does not amount to a violation of CUTPA in the absence of substantial aggravating circumstances ... Nevertheless, the Appellate Court has determined that the same facts that establish a breach of contract may be sufficient to establish a CUTPA violation ... When the [S]uperior [C]ourts have permitted a CUTPA cause of action based on a breach of contract, there generally has been some type of fraudulent behavior accompanying the breach or aggravating circumstances ... Conduct that has been held to be substantial aggravating circumstances sufficient to support CUTPA claims includes fraudulent representations, fraudulent concealment, false claims ... and multiple breaches of contract." (Citations omitted; internal quotation marks omitted.) Weiss v. Volvo Penta of the Americas, Inc., Superior Court, judicial district of New London, Docket No. CV 12 6011573 (August 28, 2012, Martin, J.) [ 54 Conn. L. Rptr. 599]; see Hale Farms Condominium Ass'n, Inc. v. BG Laundry, LLC, supra, Superior Court, Docket No. CV 10 6009489 (" not every contractual breach rises to the level of a CUTPA violation ... [t]here must be some nexus with a public interest, some violation of a concept of what is fair, some immoral, unethical, oppressive or unscrupulous business practice or some practice that offends public policy" (citations omitted; internal quotation marks omitted)).
In the present case, the plaintiff has alleged that LBI made factual misrepresentations to the plaintiff to induce the plaintiff to provide a quotation for a product designed with the CAGE criteria to save costs, and then forced the plaintiff to incur costs to upgrade the design to the BNP design. These allegations are sufficiently aggravating to support a denial of summary judgment. Moreover, there are issues of fact concerning what contract terms apply, what the parties contracted for, what representations were made during the negotiations and whether the representations were misrepresentations. Therefore, the motion for summary judgment as to count six is denied.
II
SAFECO'S MOTION FOR SUMMARY JUDGMENT
Safeco moves for judgment in its favor as to counts seven, eight and nine. Each will be addressed in turn.
Count Seven: Violation of General Statutes § 49-42
Count seven alleges in relevant part that on April 11, 2005, Safeco issued a performance contract bond in the amount of $21,143,000.32 for the project. Under the terms of the bond, Safeco is obligated to guarantee and promptly make payments of all sums due to any subcontractor who furnishes materials, or supplies or performs labor or services on the project. On March 5, 2010, the plaintiff put Safeco on notice, in writing by certified mail, regarding the amount and nature of its claim under the bond. On April 1, 2010, Safeco responded to the plaintiff's claim by letter, indicating its belief that payment was not due and owing. On May 20, 2010, the plaintiff submitted more detailed documentation concerning its claims. On June 11, 2010, Safeco denied liability under the terms of the bond, relying solely on LBI's assertions and without independent review. Safeco's failure to make an independent review of the claim constitutes a breach of its surety obligations under General Statutes § 49-42.
General Statutes § 49-42 " has been referred to as the ‘ Little Miller Act, ’ a reference to a federal statute (40 U.S.C. §§ 270a-270e) upon which the Connecticut statute was fashioned. The purpose of the Little Miller Act is to assure prompt disbursement to subcontractors of funds received by the general contractor for their work." Suntech of Connecticut, Inc. v. Lawrence Brunoli, Inc., supra, Superior Court, Docket No. CV 09 5030131.
The parties do not dispute that the 2001 version of General § 49-42 is controlling, as it is the version that was in effect when the bond was signed on April 11, 2005. See American Masons Supply Co. v. F.W. Brown Co., 174 Conn. 219, 225, 384 A.2d 378 (1978) (" it is the statute in force at the time of the execution of the contract which controls"). According to Safeco, the plaintiff failed to comply with both time constraints contained in the statute. First, under General Statutes § 49-42(a) (Rev. to 2001), a notice of claim to the surety must occur within 180 days after the applicable payment date for work included on a requisition, or, for work not on a requisition, after such work or materials for which payment was not received was actually performed. Safeco argues that LBI paid the plaintiff for all work completed that was included on a requisition submitted to and paid by the DOT. However, to the extent that the plaintiff's work was included on a requisition submitted to, but not paid by, the DOT, the plaintiff never had any right to make a claim against Safeco because the condition precedent included in the subcontract, requiring that LBI first receive payment from the DOT, was never satisfied. To the extent the costs sought by the plaintiff were not included on any requisition submitted to the DOT, all costs outside the 180-day notice period are not allowed as a matter of law.
The second time constraint mandates that no suit " may be commenced after the expiration of one year after the applicable payment date provided for in subsection (a) of section 49-41a, or, in the case of a person supplying materials or performing subcontracting work not included on a requisition or estimate, no such suit may be commenced after the expiration of one year after the date such materials were supplied or such work was performed." Safeco contends that decisions of the Superior Court addressing the 2001 version of the statute have interpreted the statute of limitations contained therein to run each time a subcontractor fails to receive its applicable payment, and have assigned a distinct applicable payment date and limitations period to each requisition for which a contractor receives payment from the State for that particular requisition. Thus, according to Safeco, since the plaintiff's initial complaint is dated September 13, 2010, all work completed or money allegedly due before the one year date of September 13, 2009, falls outside the statutory notice requirements, and the plaintiff has no right to make a claim for it.
In support of its position, Safeco submits the affidavit of Kirk Austin, the home office counsel for the defendant. Austin attests that on March 30, 2010, Safeco received written correspondence from the plaintiff, dated March 5, 2010, purporting to be a notice of claim against the bond. On April 1, 2010, Austin sent correspondence to the plaintiff, acknowledging receipt of the March 5, 2010 correspondence, and requesting thirteen items of information and documentation necessary to Safeco's investigation of the plaintiff's claim on the bond. Austin's correspondence further noted that the information provided by the plaintiff, to date, was insufficient to establish liability under the bond. LBI was copied on the April 1, 2010 correspondence to the plaintiff. As part of Safeco's investigation, after receipt of the plaintiff's March 5, 2010 correspondence, and on numerous subsequent occasions, Austin communicated with LBI regarding LBI's position on the plaintiff's claim. Safeco did not receive any response from the plaintiff, nor the documentation and information requested, until May 28, 2010. Upon receipt by Safeco, Austin reviewed the materials which revealed that the plaintiff's claim against the bond was based on a purported entitlement to additional costs beyond those contemplated in the subcontract, allegedly incurred by the plaintiff between late 2005 and the date the plaintiff ceased work on the project in 2009. Austin forwarded the materials to LBI, and discussed the materials and merits of the plaintiff's claim with LBI personnel familiar with the project and the plaintiff's performance of its scope of work. Austin also spoke with the district engineer for district 1 of the DOT who was involved with the project. Following Safeco's investigation, a June 11, 2010 letter was sent to the plaintiff setting forth the results of the investigation, which revealed a substantial and good faith dispute regarding the plaintiff's claimed entitlement to payment from LBI or under the bond. As such, Safeco denied the plaintiff's claim on the bond in its entirety. Attached to Austin's affidavit are true and accurate copies of all documents referenced therein. The court notes, however, that Safeco did not submit any evidence relevant to its statute of limitations argument.
The plaintiff, on the other hand, argues that, since LBI takes the position that no money is due to the plaintiff unless and until the State pays LBI, there remains an issue of fact concerning what is owed to the plaintiff as a result of LBI's settlement with the DOT in 2008. The plaintiff also contends that LBI withheld an amount in retainage from each payment by the State, which the plaintiff included in its requisitions to LBI, but LBI did not include on its requisitions to the State.
The plaintiff submits Graviet's affidavit, in which Graviet attests that, after receiving the request from Safeco to provide additional information, the plaintiff created a large claim book which it sent to Safeco on May 20, 2010. Safeco did not send any representatives to discuss or review the information with the plaintiff nor did Safeco provide any written analysis of the claim to indicate it that it was reviewed. On June 11, 2010, Safeco issued a denial of the claim. In that letter, Safeco indicates that, at a minimum, there may be an undisputed balance owed to the plaintiff, but Safeco did not make payment of this undisputed portion of the funds. The plaintiff also submits Rosenthal's affidavit, in which Rosenthal attests that on December 22, 2011, and January 13, 2012, Safeco produced 2271 pages of documentation in response to the plaintiff's request for production of documents, but none of the documents concern any activity by Safeco between May 28, 2010, and June 11, 2010, indicating that it conducted any investigation of the plaintiff's claim before the denial letter of June 11, 2010.
In reply, Safeco argues that the plaintiff has not provided sufficient evidence to back up its allegation that Safeco violated General Statutes § 49-42 by failing to make an independent review of the plaintiff's bond claim before denying it. Safeco contends that neither of the actions mentioned in Graviet's affidavit are required to conduct an adequate, independent investigation. The standard under which a surety reviews a bond claim under General Statutes § 49-42 is to determine whether a claim is subject to a good faith dispute. If a claim is subject to a good faith dispute, the surety may deny the claim in full compliance with the statute. While the plaintiff's claim contained many pages, two weeks was sufficient time to properly investigate the materials because it mostly consisted of documents that LBI already had in its possession. Safeco also contends that its investigation actually began when it received the plaintiff's initial notice of claim on March 30, 2010, so the investigation period was more than two weeks.
Additionally, Safeco contends that the plaintiff's reference to money that " may be due" in the denial letter is taken out of context and is merely a red herring. The letter makes clear that the amount that " may be due" was subject to the costs LBI would incur to complete additional work that the plaintiff was obligated to perform under subcontract, but failed to complete before it ceased work on the project. At the time of the letter, the completion costs were not yet known. Safeco also asserts that the DOT did not allow or pay any portion of the plaintiff's claim, including delay damages related to the plaintiff's work, and LBI's settlement with the State has no bearing on the plaintiff's claim. Furthermore, Safeco asserts that the plaintiff's retainage argument is not supported by any admissible evidence and does not raise an issue of fact, as Graviet's affidvait does not address retainage, what the State paid LBI or what LBI included on the requisitions. Finally, Safeco contends that the plaintiff failed to submit any requisitions, with the exception of one, to the court to show that its claim is timely and valid, and Graviet does not address these missing requisitions in his affidavit.
In support of its position, Safeco relies on Brunoli's affidavit, in which Brunoli states that the DOT did not accept or pay LBI for any of the delay damages alleged by the plaintiff.
An application for payment is attached to Graviet's affidavit, but is not properly authenticated and will not be considered by the court.
This payment requisition was not properly authenticated and will not be considered by the court.
" General Statutes ... §§ 49-41 through 49-43, which provide for the furnishing of bonds guaranteeing payment (payment bonds) on public works construction projects, were enacted to protect workers and materials suppliers on public works projects who cannot avail themselves of otherwise available remedies such as mechanic's liens ... Section 49-41 requires that the general contractor provide a payment bond with surety to the state or governmental subdivision, which bond shall guarantee payment to those who supply labor and materials on a public works project ... Section 49-42 provides that any person who has performed work or supplied materials on a public works project, but who has not received full payment for such materials or work, may enforce his right to payment under the payment bond. This legislation, known as the ‘ Little Miller Act’ (act), was patterned after federal legislation popularly known as the Miller Act ... and, therefore, [our courts] have regularly consulted federal precedents to determine the proper scope of our statute ... The federal precedents, like our own, counsel liberal construction of statutory requirements other than those relating to specific time constraints." (Citations omitted; internal quotation marks omitted.) Blakeslee Arpaia Chapman, Inc. v. El Constructors, Inc., 239 Conn. 708, 714-16, 687 A.2d 506 (1997).
" The provision of § 49-42 ... [that] sets forth the time limitation within which suit must be commenced under the statute ... is not to be treated as an ordinary statute of limitation, but as a jurisdictional requirement establishing a condition precedent to maintaining an action under that section ... It is well settled that, in an action brought pursuant to § 49-42, the time fixed for bringing the action is a limitation on the liability itself, and not of the remedy alone ... Because compliance with the limitations period set forth in § 49-42 is a jurisdictional requirement, a timely suit is an absolute condition precedent to maintaining an action under that section." (Citations omitted; internal quotation marks omitted.) Paradigm Contract Management Co. v. St. Paul Fire & Marine Ins. Co., 293 Conn. 569, 576-77, 979 A.2d 1041 (2009).
" Section 49-42(a) provides the time in which the claim period runs and § 49-42(b) provides the time in which a civil suit may be commenced." Kamco Supply Corp. v. HRH/Atlas Construction, Inc., Superior Court, judicial district of Tolland, Docket No. CV 00 73598 (June 19, 2001, Teller, J.) (29 Conn. L. Rptr. 750, 752).General Statutes § 49-42(a) requires a person " who performed work ... for which a requisition was submitted ... and who does not receive full payment within sixty days of the applicable payment date ..." to provide notice of a claim for payment on the bond within 180 days of the applicable payment date. " General Statutes § 49-42(a) [further] requires a person ... performing work that is not included on a requisition ... to provide notice of a claim for payment within [180] days after the day that the person last ... performed work." Kamco Supply Corp. v. HRH/Atlas Construction, Inc., supra. Correspondingly, General Statutes § 49-42(b) " requires a claimant to commence a suit on a payment within one year of the day that the claimant last performed work ... on the bonded project." (Emphasis in original; internal quotation marks omitted.) Kamco Supply Corp. v. HRH/Atlas Construction, Inc., supra. Thus, " the date on which the statute of limitations on a subcontractor's suit on a payment bond begins to run depends on whether the work at issue was included in a requisition or estimate." North Haven Construction Co. v. Banton Construction Co., Superior Court, judicial district of New Haven, Docket No. CV 99 0427298 (August 7, 2008, Bellis, J.) (46 Conn. L. Rptr. 221, 225).
General Statutes § 49-42(a) (Rev. to 2001) provides in relevant part that " [a]ny person who performed work or supplied materials for which a requisition was submitted to, or for which an estimate was prepared by, the awarding authority and who does not receive full payment for such work or materials within sixty days of the applicable payment date provided for in subsection (a) of section 49-41a, or any person who supplied materials or performed subcontracting work not included on a requisition or estimate who has not received full payment for such materials or work within sixty days after the date such materials were supplied or such work was performed, may enforce such person's right to payment under the bond by serving a notice of claim on the surety that issued the bond and a copy of such notice to the contractor named as principal in the bond within one hundred eighty days of the applicable payment date provided for in subsection (a) of section 49-41a, or, in the case of a person supplying materials or performing subcontracting work not included on a requisition or estimate, within one hundred eighty days after such materials were supplied or such work was performed."
General Statutes § 49-42(b) (Rev. to 2001) provides in relevant part that no suit " may be commenced after the expiration of one year after the applicable payment date provided for in subsection (a) of section 49-41a, or, in the case of a person supplying materials or performing subcontracting work not included on a requisition or estimate, no such suit may be commenced after the expiration of one year after the date such materials were supplied or such work was performed."
Based on the evidence submitted by the parties, there are genuine issues of material fact as to whether the work for which the plaintiff seeks payment on the bond was included on a requisition. Although Safeco primarily moves for judgment on the statute of limitations issue, it failed to provide evidence substantiating the assertions made in its memorandum of law. In fact, Safeco resorts to making alternative arguments based on whether the plaintiff's claims were or were not included on requisitions. Austin's affidavit and the exhibits attached thereto failed to shed any light on either the applicable payment dates for claims included on requisitions or the date that the plaintiff last performed work. Austin's affidavit states that the plaintiff " abandoned" the project in 2009. Graviet's affidavit states that, in order to perform its work, the plaintiff hired a sub-subcontractor, Nationwide Conveyor Specialists (" Nationwide") to provide labor and materials for the installation of the work. LBI was aware that Nationwide was a subcontractor to the plaintiff. Nationwide was still performing contract work on the project as of March 2010. Graviet also attests that the plaintiff was " providing site supervision and project management to the project, i.e., services/labor to the project, as late as January 2010." Graviet further attests that an application for payment, dated December 31, 2009, shows that the plaintiff was still performing work as of that date. Austin attests that Safeco received written correspondence from the plaintiff on March 30, 2010, which was dated March 5, 2010, and purported to be a notice of claim against the bond. March 30, 2010, would be within the 180-day notice period if the plaintiff was still performing work as of December 31, 2009.
Thus, there are issues of fact concerning the dates on which the statute of limitations began to run, and, therefore, Safeco has not met its burden of establishing that there is no genuine issue of material fact as to its liability under General Statutes § 49-42. For this reason, the motion for summary judgment as to count seven is denied.
Count Eight: Breach of Implied Covenant of Good Faith and Fair Dealing
Count eight alleges in relevant part that Safeco acted in bad faith by failing, despite an obligation to do so, to make a proper inquiry into the plaintiff's claims for the purpose of remaining ignorant of facts which Safeco knew would require it to make payment to the plaintiff under the bond.
Safeco contends that a surety's failure to investigate, unaccompanied by evidence of an improper motive, is not enough to constitute bad faith. According to Safeco, it responded to the plaintiff's claim promptly and advanced its investigation by requesting necessary information from the plaintiff, as well as consulting with LBI regarding the claim and the plaintiff's performance on the project. Safeco also reviewed project documents, spoke with the DOT and reviewed the subcontract obligations. Upon concluding, in good faith, that a substantial dispute existed regarding the plaintiff's claim, Safeco denied the bond claim within fifteen days of receiving the supporting information and documents from the plaintiff. Safeco also asserts that the plaintiff has no claim for a breach of the implied covenant of good faith and fair dealing because the plaintiff did not have a contractual relationship with Safeco.
Safeco relies on Austin's affidavit, in which Austin attests that Safeco's investigation revealed a substantial and good faith dispute regarding the plaintiff's claimed entitlement under the bond. Attached to Austin's affidavit is the June 11, 2010 denial letter sent to the plaintiff, which states that Safeco denied the claim based on LBI's allegations that the plaintiff breached the subcontract by " abandoning" the project and upon section V of the subcontract in which the plaintiff agreed to not seek delay damages from LBI unless allowed by the State.
In contrast, the plaintiff argues that whether Safeco acted in bad faith is a question for the trier of fact. The plaintiff asserts that, despite the length and complexity of the supporting information provided to Safeco, Safeco denied the plaintiff's claim shortly after receiving the information. According to the plaintiff, it is clear that Safeco denied the claim based on LBI's interpretation of the subcontract, and, specifically, section V which the plaintiff asserts was modified. The plaintiff relies on Graviet's affidavit, in which he attests that the plaintiff sent a large claim book to Safeco on May 20, 2010, but Safeco did not send any representatives to discuss or review the information with the plaintiff, and did not present any analysis of the claim in its denial letter to indicate that it even reviewed the plaintiff's submission. The plaintiff also submits Rosenthal's affidavit, in which Rosenthal attests that on December 22, 2011, and January 13, 2012, Safeco produced 2271 pages of documentation in response to the plaintiff's request for production of documents, but none of the documents concern any activity by Safeco between May 28, 2010, and June 11, 2010, indicating that it conducted any investigation of the plaintiff's claim before the denial letter of June 11, 2010.
" An 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." DSM, Inc. v. Sentry Select Ins. Co., Superior Court, judicial district of Litchfield, Docket No. CV 01 0085405 (March 22, 2002, DiPentima, J.) (31 Conn. L. Rptr. 650, 651).
In contrast to Safeco's assertion, a subcontractor may assert a claim for a breach of the implied covenant of good faith and fair dealing against a surety. For example, in Blakeslee Arpaia Chapman, Inc. v. U.S. Fidelity & Guaranty Co., Superior Court, judicial district of New London, Docket No. 520348 (March 4, 1994, Hurley, J.) (11 Conn. L. Rptr. 169), the court determined that a subcontractor was third-party beneficiary of a bond and was permitted to bring an implied covenant of good faith and fair dealing claim. See, e.g., Wolverine Fire Protection Co. v. Tougher Industries, Superior Court, judicial district of Hartford, Docket No. CV 01 0805554 (June 20, 2001, Hale, J.) (29 Conn. L. Rptr. 731) (subcontractor was entitled to bring claims that surety breached the implied covenant of good faith and fair dealing).
In the present case, the contacting parties, LBI and Safeco, executed a bond in accordance with General Statutes § 49-41. " [T]he statutory requirement of a bond is designed to protect and benefit those who furnish materials and labor to the contractor on public work, in that they may be sure of payment of their just claims, without defeat or undue delay ..." (Internal quotation marks omitted.) Okee Industries, Inc. v. National Grange Mutual Ins. Co., 225 Conn. 367, 373, 623 A.2d 483 (1993). When deciding whether a party has a right of action as a third-party beneficiary, a court must determine " whether the intent of the parties to the contract was that the promissor should assume a direct obligation to the third-party [beneficiary] ... [T]hat intent is to be determined from the terms of the contract read in the light of the circumstances attending its making, including the motives and purposes of the parties." (Internal quotation marks omitted.) Knapp v. New Haven Road Construction Co., 150 Conn. 321, 325, 189 A.2d 386 (1963). Because neither Safeco nor the plaintiff provided a copy of the surety agreement, the court cannot state whether the language of the surety expressly provides that subcontractors having direct contact with the contractor are beneficiaries or claimants of the bond. See, e.g., Blakeslee Arpaia Chapman, Inc. v. U.S. Fidelity & Guaranty Co., supra, 11 Conn. L. Rptr. 169. Thus, there remains a genuine issue of material fact as to whether the plaintiff is a third-party beneficiary to the surety contract and may maintain a breach of good faith and fair dealing claim.
Furthermore " [a] surety's failure to conduct an adequate investigation of a claim upon a payment bond, when accompanied by other evidence, reflecting an improper motive, properly may be considered as evidence of the surety's bad faith." (Emphasis in original.) PSE Consulting, Inc. v. Frank Mercede & Sons, Inc., 267 Conn. 279, 310, 838 A.2d 135 (2004); see Habetz v. Condon, 224 Conn. 231, 237, 618 A.2d 501 (1992) (" [b]ad 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)). " [A]lthough mere negligence or failure to make the inquiries which a reasonably prudent person would make does not of itself amount to bad faith, if a party fails to make an inquiry for the purpose of remaining ignorant of facts which he believes or fears would disclose a defect in the transaction, he may be found to have acted in bad faith." (Internal quotation marks omitted.) PSE Consulting, Inc. v. Frank Mercede & Sons, Inc., supra, at 309-10.
In the present case, the evidence submitted indicates that Safeco's denial of the plaintiff's claim was based on LBI's allegations that the plaintiff breached the subcontract by " abandoning" the project and upon section V of the subcontract concerning delay damages. As discussed, supra, the plaintiff contends that section V of the subcontract was modified whereas LBI asserts that it did not agree to a modification of the subcontract. Moreover, the evidence indicates that Safeco did not send any representatives to discuss or review the information with the plaintiff and did not present any in-depth analysis of the claim in its denial letter. Thus, it is a question for the trier of fact to determine whether Safeco's actions were sufficient, negligent or amount to a purposeful failure to make an inquiry for purposes of remaining ignorant of facts. Therefore, the motion for summary judgment as to count eight is denied.
Count Nine: CUTPA
Count nine alleges in relevant part that Safeco's conduct was unfair and deceptive because it acted with bad faith disregard for the plaintiff's rights and of Safeco's own obligations under General Statutes § 49-42.
Safeco contends that there is no evidence that it did anything more than investigate and properly deny, in good faith, the plaintiff's bond claim. In contrast, the plaintiff argues that the issue of whether Safeco acted in bad faith and, thus, violated CUTPA is a question of fact. In reply, Safeco asserts that all of the admissible evidence before the court confirms that Safeco performed a proper investigation and determined the existence of a good faith dispute.
" [A] violation of [General Statutes § ]49-42 may give rise to a CUTPA claim." Wolverine Fire Protection Co. v. Tougher Industries, supra, 29 Conn. L. Rptr. 734; see Brico, LLC v. Travelers Casualty & Surety Co. of America, Superior Court, judicial district of Fairfield, Docket No. CV 09 5023993 (December 29, 2010, Dooley, J.) (51 Conn. L. Rptr. 161) (" in those cases in which a CUTPA claim has been brought against an insurer as a result of alleged violations of § 49-42, the overwhelming majority of superior court decisions have allowed the CUTPA claim to stand").
" CUTPA provides in relevant part that ‘ [n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.’ General Statutes § 42-110b(a). Connecticut courts, when determining whether a practice violates CUTPA, will consider (1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise— whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen) ... Thus, a violation of CUTPA may be established by showing either an actual deceptive practice ... or a practice amounting to a violation of public policy ... Whether a practice is unfair and thus violates CUTPA is an issue of fact ... The facts found must be viewed within the context of the totality of the circumstances which are uniquely available to the trial court ... Additionally, our Supreme Court has stated that [a]ll three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a less extent it meets all three." (Internal quotation marks omitted.) Bruno v. Whipple, 138 Conn.App. 496 (2012).
As discussed, supra, the evidence submitted indicates that Safeco's denial of the plaintiff's claim was based on LBI's allegations that the plaintiff breached the subcontract by " abandoning" the project and upon section V of the subcontract concerning delay damages. The plaintiff contends that section V was modified, whereas LBI asserts that it did not agree to any modification of the subcontract. Moreover, the evidence indicates that Safeco did not send any representatives to discuss or review the information with the plaintiff, and did not present any in depth analysis of the claim in its denial letter. Whether Safeco purposefully failed to make an inquiry into the plaintiff's claims for purposes of remaining ignorant of facts, and, thus, violated CUTPA is a question for the trier of fact. Therefore, the motion for summary judgment as to count nine is denied.
CONCLUSION
Accordingly, for all the foregoing reasons, the defendants' motions for summary judgment are hereby denied in their entirety.