Opinion
No. HHB CV-09-5013418S
October 7, 2010
MEMORANDUM OF DECISION RE PLAINTIFF'S AND THIRD-PARTY DEFENDANT'S MOTION TO STRIKE (157.00) AND MOTIONS FOR SUMMARY JUDGMENT (131.00, 132.00)
This action arises out of the termination of a construction project contract between the plaintiff Old Colony Construction, LLC ["Old Colony"] and the Town Of Southington ["Town"]. Travelers Casualty and Surety Company of America ["Travelers"] was brought in by the Town as a third-party defendant by virtue of being surety for Old Colony on the project.
The defendant Town has filed motions for summary judgment against the plaintiff Old Colony and third-party defendant, Travelers. Old Colony and Travelers have filed oppositions thereto.
In addition, Old Colony and Travelers have filed a joint motion to strike certain paragraphs of two affidavits filed in support of the Town's opposition to the motions for summary judgment. The Town has filed opposition to the motion to strike. As the court's consideration of the motions for summary judgment will be affected by its ruling on the motion to strike, the motion to strike and opposition thereto are first considered by the court.
I. Motion to Strike (157.00)
A motion to strike is the proper method to attack an affidavit that does not comply with the Rules of Practice. 2830 Whitney Avenue Corp. v. Heritage Canal Development Assoc., Inc., 33 Conn.App. 563, 569, n. 3, 636 A.2d 1377 (1994). This motion to strike concerns certain paragraphs of two affidavits of the Town's employees, countering the motions for summary judgment. "It is especially appropriate to hold an affidavit by a moving party to a stringent standard." Evans Products Co. v. Clinton Building Supply, Inc., 174 Conn. 512, 516, 391 A.2d 157 (1978). Affidavits opposing summary judgment shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence and shall affirmatively show that the affiant is competent to testify to the matters stated therein. Practice Book § 17-46. Affidavits containing self-serving and unsubstantiated allegations need not be viewed as persuasive by the court. 2830 Whitney Avenue Corp. v. Heritage Canal Development Assoc., Inc., supra, 33 Conn.App. at 568, 636 A.2d 1377 (1994).
The parties have set forth their respective positions as to each challenged paragraph of the affidavits and they are not restated here. Rather, each ruling and its basis is set forth below.
A. Affidavit of Anthony J. Tranquillo
The first affidavit is of Anthony J. Tranquillo, the Town Engineer. Each challenged paragraph will be discussed seriatim.
8. Pursuant to Article 6.20 of the Contract, the Town is entitled to indemnification from Old Colony from and against all claims, costs, losses, and damages arising out of Old Colony [sic] failure to perform the work in accordance with the Contract.
Ruling: This is a merely a legal conclusion, not premised upon Mr. Tranquillo's personal knowledge. See Buell Industries, Inc. v. Greater New York Mutual Insurance Co., 259 Conn. 527, 557, 791 A.2d 489 (2002). Paragraph 8 is stricken.
16. The Surety failed to conduct any meaningful investigation of Old Colony's default of its obligation under the Contract, as required by the Bond and Connecticut law.
Ruling: No foundation has been provided as to the source of this information. The affiant is providing his personal opinion as to another party's conduct or lack thereof. His opinion at deposition that the Surety should have interviewed him or others is not admissible without foundation, nor is his opinion that such failure to conduct interviews made any investigation meaningless. This is a conclusory statement, not admissible in evidence. P.B. § 17-46; Gupta v. New Britain General Hospital, 239 Conn. 574, 583, 687 A.2 111 (1996). Paragraph 16 is stricken.
18. The Town never rescinded its June 2006 declaration of Old Colony's default of its obligations under the Contract.
Ruling: This is within the personal knowledge of the affiant and as to this paragraph, the motion to strike is denied. The corresponding documents do not contradict this statement. The documentation speaks to "termination," rather than "default."
23. At the time the Town terminated Old Colony on August 14, 2007, the Contract Time, which had expired on June 14, 2005, had been expired for approximately 800 days, and Old Colony had been in default since May 2006.
Ruling: So much of this paragraph as states, "and Old Colony had been in default since May 2006," is a conclusory statement, containing a legal opinion, not admissible in evidence. P.B. § 17-46; Gupta, supra. That portion of Paragraph 23 is stricken.
24. At the time the Town terminated Old Colony on August 14, 2007, Old Colony was liable to the Town for liquidated damages in the amount of at least $316,800.00 pursuant to the contract.
Ruling: This is a merely a legal conclusion, not premised upon Mr. Tranquillo's personal knowledge. See Buell Industries, Inc., supra. Paragraph 24 is stricken.
25. At the time the Town terminated Old Colony on August 14, 2007, Old Colony was not entitled to any further payments under the Contract.
Ruling: This is a merely a legal conclusion, not premised upon Mr. Tranquillo's personal knowledge. See Buell Industries, Inc., supra. Paragraph 25 is stricken.
26. At the time the Town terminated Old Colony on August 14, 2007, the Town had satisfied all notice and demand requirement [sic] under the Bond and the Surety was obligation [sic] to perform under the Bond.
Ruling: This is a merely a legal conclusion, not premised upon Mr. Tranquillo's personal knowledge. See Buell Industries, Inc., supra. Paragraph 26 is stricken.
30. Such a submittal is in violation of Articles 10.05, 12.01, 12.02, and 12.03 of the Contract.
Ruling: This is a merely a legal conclusion, not premised upon Mr. Tranquillo's personal knowledge. See Buell Industries, Inc., supra. Paragraph 30 is stricken.
31. On May 1, 2009, the Town rightfully denied Old Colony's "Request for Equitable Adjustment" and related payment application.
Ruling: So much of Paragraph 31 as states "rightfully" is a self serving legal conclusion. See Buell Industries, Inc., supra. That portion of Paragraph 31 is stricken. The remainder of the statement is properly within the affiant's personal knowledge.
33. Pursuant to Article 3.2 and Section 15.03 of the Contract, Town is entitled to liquidated damages in the amount of at least $316,800.00 as a result of Old Colony's failure to complete the work within the Contract Time, as required by the Contract.
Ruling: This is a merely a legal conclusion, not premised upon Mr. Tranquillo's personal knowledge. See Buell Industries, Inc., supra. Paragraph 33 is stricken.
34. Pursuant to Paragraph 6.20 and Section 15.03 of the Contract, Old Colony is obligated to indemnify the Town from and against all claims, costs, loses [sic] and damages, including fees and charges from attorneys and other professionals, arising or relating to the correct of incomplete and defective work. Such damages include the cost to complete the work after Old Colony's termination, additional engineering costs, liquidated damages, and other costs.
Ruling: This statement is Mr. Tranquillo's interpretation of contract language and, as such, is merely a legal conclusion. See Buell Industries, Inc., supra. Paragraph 34 is stricken.
35. Pursuant to Article 3.2 and Sections 6.20 and 15.03 of the Contract, Old Colony is liable to the Town in the amount of at least $633,830.59.
Ruling: This statement is Mr. Tranquillo's interpretation of contract language and, as such, is a merely a legal conclusion. See Buell Industries, Inc., supra. Paragraph 35 is stricken.
In summary, Old Colony's and Travelers' motion to strike paragraphs 8, 16, 24, 25, 26, 30, 33, 34 and 35 of Mr. Tranquillo's affidavit is granted. So much of paragraph 23 as states, "and Old Colony had been in default since May 2006," is stricken. So much of paragraph 31 as states, "rightfully" is stricken as well. The motion to strike paragraph 18 is denied.
B. Affidavit of Mark J. Sciota
The second affidavit is of Mark J. Sciota, Town Attorney. Paragraph 12 of the affidavit is challenged by Old Colony and Travelers:
12. On June 13, 2006, the Surety wrongly responded that "[t]he Surety, under paragraph 4.4 of the Construction Performance Bond, waives the right to perform and complete and denies liability as a result of a factual business dispute between the parties." A true and accurate copy of the Surety's letter of June 13, 2006, is attached hereto as Exhibit B-6.
Ruling: So much of Paragraph 31 as states "wrongly" is a self serving legal conclusion. See Buell Industries, Inc., supra. That portion of Paragraph 12 is stricken. The remainder of the statement is properly within the affiant's personal knowledge.
II. Old Colony's Motion for Summary Judgment (132.00)
In its motion for summary judgment, Old Colony seeks judgment against the Town on the Town's Second Special Defense as to All Counts and as to counterclaims asserted by the Town (105.00).
"Summary judgment is a method of resolving litigation when 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 . . . The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." (Citations omitted.) Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).
A. Motion for Summary Judgment as to Special Defense
The Town's Second Special Defense as to All Counts states, "Under the law and Connecticut General Statutes § 52-139, the Defendant is entitled to a setoff or credit in the amount incurred by the Defendant on account of the Plaintiff's failure to comply with one or more agreements." The threshold issue as to the motion directed to this defense is the propriety of a motion for summary judgment as to a special defense.
Practice Book § 17-44, the rule governing summary judgment, states that the summary judgment rules apply to an action [i.e., complaint], counterclaim or cross complaint. There is no authority providing a motion for summary judgment as to a special defense. There is no appellate decision on the propriety of a motion for summary judgment as to a special defense.
The decisions of the Connecticut Superior Court are almost in unanimous agreement that a motion for summary judgment as to a special defense is improper. Bond v. General Accident Insurance Co. of America, Superior Court, judicial district of New London, Docket No. 538646 (September 4, 1998, Handy, J.) ( 23 Conn. L. Rptr. 181). "Such a motion is improper because Practice Book § 17-44 does not provide for summary judgment on special defenses." (Citations omitted.) Town of Canterbury v. CHR Good Word, Superior Court, judicial district of Windham at Putnam, Docket No. WWM-CV 09 6000991 S (July 16, 2010, Potter, J.T.R.) ( 2010 Ct. Sup. 15148).
The motion for summary judgment insofar as it is directed against the Second Special Defense as to All Counts is improper and, therefore, is denied.
B. Motion for Summary Judgment as to Counterclaim
As to the aspect of the motion for summary judgment directed to the Town's counterclaim, the threshold issue is whether there is any genuine issue of fact. "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 doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent. . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks and citations omitted.) Zielinski v. Kotsoris, 279 Conn. 316, 318-19, 901 A.2d 1207 (2006).
Here, the plaintiff, Old Colony, asserts that the defendant and counterclaimant, Town, is precluded from asserting its counterclaims of breach of contract, liquidated damages, breach of express warranty and breach of warranty of workmanlike condition, because the Town elected to terminate the contract for convenience. The issue is whether the Town's election to terminate the contract pursuant to Section 15.03 of the General Conditions of the contract absolved Old Colony of any further obligation for prior alleged default or liquidated damages, which could have been asserted if the contract was terminated for cause.
Unlike most private construction contracts, the subject contract contains a "termination for convenience" provision. Essentially, without the necessity of cause or reason, the Town has the option of terminating the contract with the contractor. Section 15.03 of the General Conditions of the Contract. In so doing, the contractor is paid for completed and acceptable work to date, including overhead and profit; expenses in connection with uncompleted work plus overhead and profit; all claims, costs, losses and damages incurred in settlement of terminated contracts with subcontractors, suppliers and others; and reasonable expenses directly attributable to termination. The Town is not obligated to pay for loss of anticipated profits or revenue or other economic loss arising out of or resulting from the termination for convenience. It is, in essence, a "no fault" termination clause.
Section 15.03 A. states, in pertinent part, "Upon seven days written notice to CONTRACTOR and ENGINEER, OWNER may, without cause and without prejudice to any other right or remedy of OWNER, elect to terminate the Contract."
If the issue is simply that election of the termination for convenience clause precludes the Town from seeking to pursue any claimed defects or liquidated damages, there are no issues of fact in dispute. It is simply a question of law.
Old Colony cites no Connecticut appellate authority for its assertion that the Town has forgone all claims against it. Old Colony does provide one superior court decision, Cristwood Contracting, Inc. v. Bridgeport Community Health Center, Inc., Superior Court, Docket No. CV 95 0319486S (August 31, 1998, Gormley, J.) ( 1998 WL 599594).
In that action, the defendant had terminated the contract for convenience and was sued by the contractor. In the court's decision, which largely concerns whether payment was owed on requisitions, along with interest and attorneys fees, the court precluded the defendant's set-off and counterclaim that would have been the subject of a termination for cause. The court rendered judgment for the plaintiff on the defendant's set-off and counterclaim. Unfortunately, despite stating that, "Extensive arguments took place before and during the trial concerning the viability of the set-off and counterclaims," the court sets forth no case law, analysis or reasoning for its decision. Therefore, its advisory utility is limited and this court is not bound by it.
Again, Section 15.03 A. states, in pertinent part, "Upon seven days written notice to CONTRACTOR and ENGINEER, OWNER may, without cause and without prejudice to any other right or remedy of OWNER, elect to terminate the Contract." (Emphasis added.) "Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. A court will not torture words to impart ambiguity where the ordinary meaning leaves no room for ambiguity." (Internal quotation marks omitted.) Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 498, 746 A.2d 1277 (2000). It must be presumed that the language, "without prejudice to any other right or remedy of Owner," is there for some purpose. If election of this clause precluded all other remedies for prior default and/or liquidated damages, there would be no purpose for the clause.
It would appear that the proper interpretation of this termination for convenience clause is to allow the Town to terminate at any time with no reason necessary at the time of the termination. That would not obviate the other claims that the Town may have had prior to the termination of the contract.
In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any issues exist. Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). As the Town is not precluded from prosecuting its counterclaim, there are material facts at issue, including whether or not Old Colony breached the contract and whether or not liquidated damages were incurred. Therefore, Old Colony's motion for summary judgment as to the counterclaim is denied.
III. Travelers' Motion for Summary Judgment (131.00)
In its third-party complaint, the Town asserts liability against Travelers as Surety, alleging Travelers did not perform its obligations as Surety to the Town for correction of defective work; additional legal, design professional and delay costs resulted from Old Colony's default and Travelers' failure to act; and a liquidated damages claim is pursued under the bond for the alleged failure of Old Colony to perform its work within the specified contract time.
In its motion for summary judgment, Travelers asserts that the Town's claims are barred because (1) Old Colony is not liable under the contract due to the Town's election of terminating the contract for convenience, precluding the Town's claims against both Travelers and Old Colony; and (2) the Town failed to satisfy the prerequisite terms and conditions of the bond to allow the Town to obtain the benefits of the bond.
A. Liability of Old Colony
Traveler's first ground is that it cannot be held liable as Surety, because the contractor is not liable to the Town as the Town elected to terminate the contract pursuant to Section 15.03 of the General Conditions of the contract, absolving the contractor of any further obligation for prior alleged default or liquidated damages. As set forth in Section II. above, the Town's counterclaim survives a motion for summary judgment. Therefore, Travelers cannot prevail on this ground.
B. Prerequisite Conditions of the Bond
The second ground is that the Town failed to meet its prerequisite obligations to pursue relief under the performance bond. Prior to the surety becoming obligated to perform or pay on the bond, the Town had to fulfill certain obligations. The Town had to declare Old Colony to be in default (Bond ¶ 3.2); formally terminate the contract because of the default (Bond ¶ 3.2) and agree to pay Travelers the balance of the contract due (Bond ¶ 3.3).
As to the first condition, there is a dispute that the Town declared Old Colony to be in default. It is the declaration of default which triggers the Surety's obligations to the Town.
There is also a dispute as to whether the Town rescinded its June 2, 2006 termination for cause under Section 15.02 of the contract. See Exhibit B-10, letter of Mark J. Sciota to Travelers and Attorney Robert O'Brien, attached to the affidavit of Attorney Sciota. However, that issue is of no concern here.
Bond ¶ 3 states, in relevant part, "If there is no Owner Default, the Surety's obligations under the Bond shall arise after: . . . 3.2 The Owner has declared a Contractor Default and formally terminated the Contractor's right to complete the contract . . ."
Exhibit B-1 attached to the affidavit of Mark J. Sciota, Town Attorney, submitted in support of the Town's Opposition to Summary Judgment, is a copy of a letter dated August 3, 2005 authored by Attorney Sciota to Old Colony and Travelers. The letter states, in pertinent part, "Under Paragraph 15.02 B of the contract and Section 3-1 of the Construction and Performance Bond, the Town of Southington hereby notifies the contractor and the surety that it is considering declaring a contractor default . . ." (Emphasis added.)
Again, in a letter dated May 9, 2006, Attorney Sciota wrote to Old Colony and Travelers and stated, inter alia, "Under Paragraph 15.02 B of the contract and Section 3-1 of the Construction and Performance Bond, the Town of Southington hereby notifies the contractor and the surety that it is considering declaring a contractor default . . ." (Emphasis added.) Exhibit B-3, attached to the affidavit of Mark J. Sciota.
On June 2, 2006, Attorney Sciota wrote to Old Colony and Travelers, stating that the Town was terminating for cause, pursuant to Section 15-02 of the contract. The letter does not state that the Town had declared a contractor default, although it lists several reasons for termination. Exhibit B-5, attached to the affidavit of Mark J. Sciota.
Apparently arrangements were made for Old Colony to continue with the project. On August 14, 2007, the Town terminated Old Colony for convenience, pursuant to Section 15.03 of the contract. To that date, there is no evidence provided by the Town in its submission in opposition to the motion for summary judgment that it ever declared Old Colony to be in default. Both Attorney Sciota, in Paragraph 10 of his affidavit, and the Town, in its memorandum in opposition, state that "the Town declared Old Colony in default of its obligations under the Contract," referencing Exhibit B-5. However, the letter does not state that the Town is declaring Old Colony in default. Neither do the two prior letters.
Reading the submission of the opposition to the motion for summary judgment and reviewing the evidence in the light most favorable to the opponent, Zielinski, supra, 279 Conn. at 318, 901 A.2d 1207 (2006), there is no evidence that the Town ever complied with the first prerequisite contained in ¶ 3.2 of the Bond. Although the Town and its affiant state there was a default, there is no evidence of it. Therefore, there is no genuine issue of material fact. The Town failed to comply with this prerequisite of declaring a default, necessary to hold Travelers to its obligations and Travelers is not obligated to the Town on the bond.
As there is no compliance with the first prerequisite obligation of the Town, the court does not reach the issue of compliance with the second and third prerequisites. Summary judgment is granted to Travelers on the Third-Party complaint.