Opinion
No. CV 04 4005563
June 12, 2006
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT NO. 106
On November 22, 2004, the plaintiff, American Materials Corporation, filed a four-count complaint against the defendants, Enfield Builders, Inc. (Enfield) and St. Paul Fire and Marine Insurance Company (St. Paul). The defendants Enfield and St. Paul both join in the motion for summary judgment presently before the court. Throughout this memorandum, Enfield and St. Paul will be referred to collectively as the defendants. The plaintiff alleges the following facts. The state of Connecticut entered into an agreement with Enfield pursuant to which Enfield would provide material, equipment, and services to the Connecticut Air National Guard in Orange, Connecticut. As a condition of the agreement, Enfield delivered a payment bond to the state. Enfield, as principal, and St. Paul, as surety, were bound to the state for payment of subcontractors and material suppliers pursuant to General Statutes § 49-42. Enfield entered into a subcontract agreement with Yazo Construction (Yazo) pursuant to which Yazo agreed to provide material, equipment and services to the Connecticut Air National Guard in Orange, Connecticut. The agreement required that Yazo deliver a payment bond for the payment of subcontractors and material suppliers pursuant to § 49-42.
The plaintiff entered into a subcontract with Yazo and agreed to provide material, equipment and services with the understanding that Enfield required a payment bond from Yazo. On December 29, 2003, the plaintiff completed the subcontract and invoiced Yazo for materials and services totaling $67,177.50. The plaintiff was unaware that Enfield had not required Yazo to obtain a payment bond.
On March 9, 2004, after learning of Yazo's intention to seek protection from creditors under bankruptcy laws, the plaintiff invoiced Enfield. Enfield failed to pay the invoice or notify the plaintiff that it had waived Yazo's payment bond requirement. Additionally, Enfield failed to notify the plaintiff of the St. Paul bond. On March 19, 2004, Yazo filed for protection from creditors under bankruptcy laws.
On May 13, 2004, the plaintiff again submitted its invoice to Enfield and received no payment, no warning of the waiver of Yazo's bond, and was not notified of the St. Paul bond. On May 31, 2004, the plaintiff learned of the St. Paul bond and filed a claim with St. Paul, but the invoice for the material and services remains unpaid.
Count one of the plaintiff's complaint alleges that as a result of the defendants' breach of the bond and violation of § 49-42, the plaintiff has suffered damages. Count two, alleges that the defendants have been unjustly enriched by not paying for materials and services the plaintiff provided. Count three alleges that based upon fraudulent misrepresentation, Enfield induced the plaintiff to provide material and services and thereby caused the plaintiff to suffer damages. Count four alleges that Enfield violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes §§ 42-110a et seq.
The defendants have moved for summary judgment as to all counts. They filed a joint memorandum of law in support of their motion and three sworn affidavits, one of Wendy Williams, Associate Bond Counsel for St. Paul Travelers Insurance Company, and two of John Petronella, president of Enfield. The plaintiff filed a memorandum of law in opposition to the defendants' motion for summary judgment and attached a sworn affidavit from Donald Bercowetz, the plaintiff's vice-president.
Attached to the sworn affidavits of Petronella and referred to therein are documents which the court will consider given the sworn nature of the affidavits. The defendants also submitted numerous unauthenticated documents which the court will not consider. See New Haven v. Pantani, 89 Conn.App. 675, 678, 874 A.2d 849 (2005) ("Practice Book § 17-45 provides in relevant part that `[a] motion for summary judgment shall be supported by such documents as may be appropriate, including but not limited to affidavits, certified transcripts of testimony under oath, disclosures, written admissions and the like . . .' That section does not mandate that those documents be attached in all cases, but we note that `[o]nly evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment.' Home Ins. Co. v. Aetna Life Casualty Co., 235 Conn. 185, 202-03, 663 A.2d 1001 (1995). See Barlow v. Palmer, 96 Conn.App. 88, official release date, June 13, 2006.
Attached to the sworn affidavit of Bercowetz and referred to therein are documents which the court will consider given the sworn nature of the affidavits. The plaintiff has also submitted several unauthenticated documents which the court will not consider. See footnote 1.
DISCUSSION
"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.) Larobina v. McDonald, 274 Conn. 394, 399, 876 A.2d 522 (2005). "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 such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). "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.) Martel v. Metropolitan District Commission, 275 Conn. 38, 46-47, 881 A.2d 194 (2005).
COUNT ONE (ENFIELD AND ST. PAUL)
The defendants claim that the court lacks subject matter jurisdiction because the project is federally funded and therefore is subject to exclusive federal jurisdiction under Miller Act, 40 U.S.C. § 3131 et seq., claims on the bond must be brought in federal, not state court. The defendants also assert that the claim is not timely and that St. Paul Fire and Marine Insurance Company has been wrongly sued because it had no involvement in the bond.
The issue of the court's subject matter jurisdiction will be addressed as a threshold matter. "Subject matter jurisdiction involves the authority of the court to adjudicate the type of controversy presented by the action before it . . . [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction . . . The objection of want of jurisdiction may be made at any time . . . [a]nd the court or tribunal may act on its own motion, and should do so when the lack of jurisdiction is called to its attention . . . The requirement of subject matter jurisdiction cannot be waived by any party and can be raised at any stage in the proceedings." Connecticut Coalition Against Millstone v. Rocque, 267 Conn. 116, 128, 836 A.2d 414 (2003).
"Although subject matter jurisdiction may be challenged at any stage of the proceedings, it has been addressed almost exclusively through a motion to dismiss." Manifold v. Ragaglia, 94 Conn.App. 103, 117, 891 A.2d 106 (2006). "Although a motion to dismiss is certainly the preferred means of challenging the court's subject matter jurisdiction, we know of no authority for the proposition that subject matter jurisdiction can never be challenged through any other procedural vehicle, most importantly by means of a motion for summary judgment." (Emphasis in original.) Id., 119. "Whereas a motion to dismiss is decided only on the allegations in the complaint and the facts implied from those allegations, summary judgment is decided by looking at all of the pleadings, affidavits and documentary evidence presented to the court in support of the motion." (Citations omitted.) Id., 120-21.
In its complaint, the plaintiff alleges that the State of Connecticut entered into an agreement whereby Enfield agreed to provide material, equipment and services to the Connecticut Air National Guard in Orange, Connecticut. As a condition of the award of the contract, Enfield delivered to the State, Payment Bond No. SV2050 in which Enfield as Principal and St. Paul as Surety bound themselves to the state for payment of subcontractors and materialmen. The plaintiff alleges that the defendants have breached their obligations under the bond in violation of General Statutes § 49-42, Connecticut's Little Miller Act. General Statutes § 49-41, as amended by No. 05-229 of the 2005 Public Acts states in relevant part: "(a) Each contract exceeding fifty thousand dollars in amount for the construction, alteration or repair of any public building or public work of the state or of any subdivision thereof shall include a provision that the person to perform the contract shall furnish to the state or the subdivision on or before the award date, a bond in the amount of the contract which shall be binding upon the award of the contract to that person, with a surety or sureties satisfactory to the officer awarding the contract, for the protection of persons supplying labor or materials in the prosecution of the work provided for in the contract for the use of each such person . . ." The defendants contend that this action is not governed by Connecticut's Little Miller Act, but rather by the federal Miller Act, 40 U.S.C. § 3131, which states in relevant part:
Before any contract of more than $100,000 is awarded for the construction, alteration, or repair of any public building or public work of the Federal Government, a person must furnish to the Government the following bonds, which become binding when the contract is awarded:(1) Performance Bond.
A performance bond with a surety satisfactory to the officer awarding the contract, and in an amount the officer considers adequate, for the protection of the Government.(2) Payment Bond.
A payment bond with a surety satisfactory to the officer for the protection of all persons supplying labor and material in carrying out the work provided for in the contract for the use of each person.
40 U.S.C. § 3133(b)(1) states in relevant part: "Every person that has furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished under section 3131 of this title and that has not been paid in full within 90 days after the day on which the person did or performed the last of the labor or furnished or supplied the material for which the claim is made may bring a civil action on the payment bond for the amount unpaid at the time the civil action is brought and may prosecute the action to final execution and judgment for the amount due." 40 U.S.C. § 3133(3) states in relevant part:
A civil action brought under this subsection must be brought
(A) in the name of the United States for the use of the person bringing the action; and
(B) in the United States District Court for any district in which the contract was to be performed and executed, regardless of the amount in controversy.
"[T]he Miller Act is applicable only where the work in question was contracted for by the United States or by an agency of the United States or a person acting as an agent of the United States." United States ex rel Tri-State Road Boring, Inc., v. United States Fidelity Guaranty Co., 959 F.Sup. 345, 347 (E.D.La. 1996); see also United States ex rel Miller v. Mattingly Bridge Co., 344 F.Sup. 459 (W.D.Ky. 1972) (finding that the Miller Act "Does not apply where the work in question was not contracted for by the United States or by an agency of the United States or a person acting directly as an agent of the United States").
The plaintiff relies on Hope v. Cavallo, 163 Conn. 576, 316 A.2d 407 (1972), for the proposition that because the state of Connecticut has possession and control of the Connecticut Air National Guard it is considered the owner of the property and therefore, the plaintiff asserts, The Little Miller Act, § 49-41 controls the bonding requirements for the project.
In Hope v. Cavallo, the court considered an action arising as a result of a collision between an automobile and a truck operated by an employee of the Connecticut Air National Guard. "The trial court found that as a matter of law the state did not own the vehicle and that there could be no liability on the part of the state under . . . General Statutes § 52-556 [which] states: "Any person injured in person or property through the negligence of any state official or employee when operating a motor vehicle owned and insured by the state against personal injuries or property damage shall have a right of action against the state to recover damages for such injury." Id., 579. Analyzing the trial court's application of § 52-556, our Supreme Court stated: "Whether § 52-556 is to be applied in this case turns on the construction given to the word `owned' as used in the statute." Id., 579. The court concluded: "The word "owned" as used in § 52-556 of the General Statutes encompasses the truck issued to the state of Connecticut under the unique circumstances of this case." (Emphasis added.) Id., 585-86. Here, the plaintiff's reliance on Hope v. Cavallo is misplaced inasmuch as the Court's analysis of the word "owned" was limited to the unique circumstances of that case.
In the present case, notwithstanding the plaintiff's allegation that the state of Connecticut contracted with Enfield, the undisputed evidence submitted by the defendants is that Enfield contracted with the United States Government and supplied payment and performance bonds numbered SV2050 to the United States. John Petronella states in his affidavit that he is the president of Enfield Builders, Inc. Petronella additionally states that on September 27, 2002, Enfield entered into a contract with the United States of America for the construction of the Air Control Squadron Complex in Orange, Connecticut. Attached to and referred to in Petronella's sworn affidavit is a copy of bonds numbered SV2050 with a transmittal to Michael S. Mattalski, Contracting Officer, Departments of the Army and the Air Force. The plaintiff has not come forward with sufficient evidence to dispute that the contract for the construction of the Air Control Squadron Complex is between Enfield and the United States Government.
The court is aware of the plaintiff's claims based on documents attached to and referred to in the sworn affidavit of Bercowetz that there are issues of fact as to whether St. Paul Fire and Marine Insurance Company is in fact the surety and whether there is more than one payment bond numbered SV2050. In light of the court's conclusions regarding the applicability of the federal Miller Act based on the undisputed contracting parties, the court Does not consider any confusion about the identity of the surety to be material as to the claims against St. Paul. Moreover, the affidavits of Petronella and Williams provide evidence that Enfield posted a bond with Fidelity and Guaranty Insurance. Company and United States Fidelity Guaranty Company as co-sureties for the bond for the Orange Air National Guard Project. These two companies are subsidiaries of St. Paul Travelers Insurance Company. Another subsidiary is St. Paul Fire and Marine Insurance Company, herein defendant St. Paul. Williams states in her sworn affidavit that St. Paul never issued any bond for the Orange Air National Guard Project. The plaintiff has not offered sufficient evidence to dispute that proffered by Williams and Petronella.
Pursuant to 40 U.S.C. §§ 3131, 3133, the exclusive jurisdiction for claims against sureties who have executed bonds under the Miller Act is in the United States District Court, not this state court. See Bashford-Burmister Co. v. Aetna Indemnity Co., 93 Conn. 165, 105 A. 470 (1919). "While [Section 27(b), the predecessor of 40 U.S.C. §§ 3131, 3133] has been interpreted as `merely a venue requirement,' F.D. Rich Co., Inc. v. United States ex rel Industrial Lumber Company, Inc., 417 U.S. 116, 125, 40 L.Ed.2d 703, 94 S.Ct. 2157 (1974), federal courts are in virtual unanimity that Miller Act jurisdiction is exclusively federal. See United States ex rel Owens Corning Fiberglass Corp. v. Brandt Constr. Co., 826 F.2d 643, 645 (7th Cir. 1987)." United States for the use of PCC Construction, Inc. v. Star Insurance Company et al, 90 F.Sup.2d 512, 515 (2000).
This court does not have jurisdiction to entertain claims under a bond or bonds pertaining to a contract with the United States Government under the Miller Act. Accordingly, the defendants' motion for summary judgment regarding count one of the plaintiff's complaint is granted.
COUNT TWO (ENFIELD AND ST. PAUL)
The defendants argue that the plaintiff's quantum meruit/unjust enrichment claim in count two of the complaint fails because Enfield owes no money to Yazo. The defendants rely on Cluff's, Inc. v. Strafaci, Superior Court, judicial district of New London, Docket No. 552519 (January 23, 2002, Hurley, J.T.R.) ( 31 Conn. L. Rptr. 286), to support the proposition that a property owner is excused from an obligation to pay a subcontractor because of good faith payments made to a general contractor. The defendants argue that in fact, Yazo owes Enfield over $275,000.
In the present case, the plaintiff alleges in the complaint that the defendants are unjustly enriched by virtue of the use of the services and materials provided by the plaintiff for the benefit of the defendants. The plaintiff alleges that the reasonable amount the defendants have been enriched is $67, 177.50.
For the reasons stated supra regarding the jurisdictional issue in Count One, the court does not have jurisdiction of this claim against the surety. The second count insofar as it pertains to the surety for the federal project cannot be asserted in state court. See Bashford-Burmister Co. v. Aetna Indemnity Co., supra, 93 Conn. 165; United States Fidelity and Guaranty Co. v. Hendry Corporation, 391 F.2d 13 (5th cir. 1968), cert. denied, 393 U.S. 978 (1968). Accordingly, the defendant's motion for summary judgment on count two is granted as to St. Paul only.
As to Enfield, however, the assertion of the state claims of unjust enrichment and/or quantum meruit in the second count are properly within the jurisdiction of this court. "A right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another . . . With no other test than what, under a given set of circumstances, is just or unjust, equitable or inequitable, conscionable or unconscionable, it becomes necessary in any case where the benefit of the doctrine is claimed, to examine the circumstances and the conduct of the parties and apply this standard." (Citations omitted; internal quotation marks omitted.) Gagne v. Vaccaro, 255 Conn. 390, 408-09, 766 A.2d 416 (2001), aff'd, 80 Conn.App. 436, 835 A.2d 491 (2003), cert. denied, 268 Conn. 920, 846 A.2d 881 (2004).
"Unjust enrichment is a very broad and flexible equitable doctrine that has as its basis the principle that it is contrary to equity and good conscience for a defendant to retain a benefit that has come to him at the expense of the plaintiff . . . The doctrine's three basic requirements are that (1) the defendant was benefitted, (2) the defendant unjustly failed to pay the plaintiff for the benefits, and (3) the failure of payment was to the plaintiff's detriment . . . All the facts of each case must be examined to determine whether the circumstances render it just or unjust, equitable or inequitable, conscionable or unconscionable, to apply the doctrine." (Citations omitted.) Id., 409. "A plaintiff must prove in the trial court that the defendant had received a benefit at his expense under circumstances that would otherwise make it unjust for [the defendant] to retain the benefit." Id. [This is a] "highly fact-intensive inquiry." Id.
In the present case, the plaintiff alleges that it provided, and the defendants benefitted from, services and materials with a reasonable value of $67,177.50. The plaintiff alleges that Enfield refused to pay for these services and materials, that Enfield failed to notify the plaintiff that it had waived a payment bond from Yazo, and failed to notify the plaintiff that it was covered by the bond that Enfield had furnished. Additionally, Bercowetz avers that Enfield made promises and misrepresentations and has been unjustly enriched to the plaintiff's detriment. "All the facts of each case must be examined to determine whether the circumstances render it just or unjust, equitable or inequitable, conscionable or unconscionable" to apply the doctrine of unjust enrichment. Gagne v. Vaccaro, supra, 255 Conn. 409. The defendants have failed to offer evidence sufficient to satisfy the burden of showing the absence of any genuine issue of material fact, which, under applicable principles of substantive law, entitle them to judgment as a matter of law. The defendants merely argue that analogous to the property owner in Cluff's, Inc. v. Strafaci, Enfield has made all payments due Yazo in good faith, and there is no contract balance due Yazo.
See footnote 1.
COUNT THREE (ENFIELD)
The defendants argue that although count three sounds in promissory estoppel the count is missing the necessary element of a direct promise. Further, the defendants assert that the plaintiff failed to satisfy the due diligence requirement of promissory estoppel by failing to conduct an inquiry regarding whether Yazo supplied a payment bond before AMC agreed to the contract with Yazo.
The plaintiff counters that Enfield failed to disclose all relevant facts relating to bonding issues. Additionally, the plaintiff asserts that it detrimentally relied on Enfield and pursued other avenues of payment. Based on these assertions, the plaintiff argues that it has met the burden of establishing the elements of fraudulent nondisclosure.
"[T]he essential elements of an action in fraud . . . are: (1) that a false representation was made as a statement of fact; (2) that it was untrue and known to be untrue by the party making it; (3) that it was made to induce the other party to act on it; and (4) that the latter did so act on it to his injury." (Internal quotation marks omitted.) Kilduff v. Adams, Inc., 219 Conn. 314, 329, 593 A.2d 478 (1991). "[F]raud by nondisclosure, which expands on the first three of [the] four elements, involves the failure to make a full and fair disclosure of known facts connected with a matter about which a party has assumed to speak." Parker v. Shaker Real Estate, Inc., 47 Conn.App. 489, 494, 705 A.2d 210 (1998).
In the present case, the defendant has submitted John Petronella's affidavit in support of the motion for summary judgment. Petronella states that Enfield was not required to have any subcontractors provide a payment bond. Additionally, Petronella asserts that the plaintiff did not notify Enfield of any payment issue until, at the earliest, February 6, 2004. Petronella further states that Yazo submitted two invoices during the time period potentially relevant to the plaintiff's claim, but offers no authenticated documentation to support this assertion. The plaintiff included an affidavit from its vice president, Bercowetz. Bercowetz states that in at least two conversations with Petronella he was assured that the plaintiff would be paid. Additionally, Bercowetz stated that Petronella concealed the fact that Enfield had obtained a bond on the project and that Yazo was not required to obtain a payment bond. Further, Bercowetz states that as a result of Enfield withholding the bond information an earlier bond claim could not be presented.
These competing affidavits raise questions of fact: Enfield has not presented evidence sufficient to satisfy the burden of showing the absence of any genuine issue of material fact and that it is entitled to judgment as a matter of law.
COUNT FOUR (ENFIELD)
Finally, Enfield argues that count four is a derivative of count three, that the alleged CUTPA violation arises from Enfield's alleged failure to require Yazo to obtain a payment bond, that there is no obligation that Enfield require Yazo to obtain a payment bond and that Enfield has committed no wrongdoing thus no liability can attach.
The plaintiff counters that count four is a CUTPA claim alleging that Enfield engaged in wrongful conduct by failing to require Yazo to obtain a payment bond and by failing to disclose the existing bond.
CUTPA provides 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). "It is well settled that in determining whether a practice violates CUTPA [Connecticut has] 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." (Internal quotation marks omitted.) Updike, Kelly Spellacy, P.C. v. Beckett, 269 Conn. 613, 655-56, 850 A.2d 145 (2004). "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." (Internal quotation marks omitted.) De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 434, 849 A.2d 382 (2004).
In the present case, the plaintiff alleges that Enfield knew that the plaintiff sought payment for work and services and that the plaintiff was entitled to payment. Further the plaintiff alleges that Enfield engaged in a pattern of deceptive, unscrupulous and unethical practices and in so doing violated the public policies of the state of Connecticut. The plaintiff further alleges that these practices were designed to enrich Enfield at the plaintiff's expense. Again, based on the competing affidavits of Bercowitz and Petronella, there are disputed issues of fact. Therefore the motion for summary judgment as to count four is denied.
CONCLUSION
1. COUNT ONE: Summary Judgment is granted as to both defendants.
2. COUNT TWO: Summary Judgment is granted as to St. Paul Fire and Marine.
Summary Judgment is denied as to Enfield.
3. COUNT THREE: Summary Judgment is denied as to Enfield.
A fair reading of the complaint and the plaintiff's memorandum indicates that counts one and two of the complaint pertain to both defendants; whereas counts three and four pertain to Enfield alone. If that is not the case, then summary judgment shall enter as well as to counts three and four in favor of St. Paul for the reasons stated with respect to counts one and two and additionally, because there are no allegations or disputed material facts which would support a claim in counts three and four against St. Paul.
4. COUNT FOUR: Summary Judgment is denied as to Enfield.