Opinion
HHDECV156059165
07-26-2017
Gemma Power Systems, LLC v. Smedley Co.
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Nina F. Elgo, J.
This contract action, commenced by the plaintiff, Gemma Power Systems, LLC, on May 5, 2015 against the defendant, Smedley Co., was submitted to an attorney fact finder pursuant to Practice Book § 23-53. Having heard the matter on October 3, 2016, the fact finder submitted his report on January 27, 2017 and recommended that judgment enter for the defendant. Pursuant to Practice Book § § 23-57 and 23-58, the plaintiff timely filed an objection, which was heard before this court on April 3, 2017.
This case concerns a subcontract agreement between the parties (agreement). Pursuant to that agreement, the defendant subcontractor agreed to provide laborers to the plaintiff in connection with its construction work at the Middletown Power Project. While the defendant retained the right to hire, oversee and terminate its workers, the agreement also provided the plaintiff with the right to object to workers who did not fulfill the job requirements and expressly authorized the plaintiff to order the defendant to make workforce changes. Moreover, the agreement obligated the defendant's on-site supervisor to " take direction from the [plaintiff's] site management" at all times.
On August 9, 2010, workers were needed to tie 100 feet of rebar. One of the workers provided by the defendant, Jane Doe (Doe), had no experience with the rebar bending machine at the site. At the insistence of the plaintiff's superintendent, Doe was terminated by the defendant the following day. Doe was replaced by a male worker.
Doe subsequently filed a complaint against the plaintiff with the Commission on Human Rights and Opportunities (CHRO), alleging that she was terminated in violation of General Statutes § 46a-60(a)(1), Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, 29 U.S.C. 621-34, and Conn. Gen. Stat. 46a-60(a)(5). The defendant refused to defend and indemnify the plaintiff, who subsequently settled the CHRO action with Doe for $30,000.
In its complaint in this contract action, the plaintiff alleged that the defendant breached the agreement by refusing to defend and indemnify the plaintiff pursuant to § 14.01(c) of the agreement, and by failing to comply with " all federal, state and local statutes and laws, " as provided by § 25.01 of the agreement. In its report, the fact finder rejected those claims and recommended that this court enter judgment in favor of the defendant.
The complaint also contained an unjust enrichment count. In its report, the fact finder ruled against the plaintiff on that count, and the plaintiff has not raised any claim with respect to that determination in its objection. Accordingly, the court deems any such claim abandoned. The court's review, therefore, is confined to the plaintiff's breach of contract claim.
DISCUSSION
The relevant contract provisions as asserted by the plaintiff in its complaint, and as found by the fact finder in his report, are in § § 14.01(c) and 25.01 of the parties' contract. Section 14.01(c) requires the defendant " to the fullest extent permitted by law . . . to defend, indemnify and hold harmless" the plaintiff and its employees against " [a]ll losses arising from third party claims that directly or indirectly arise out of or results from the failure of [the defendant] . . . to comply with applicable law." Section 25.01 defines " applicable laws" as all federal and state laws and regulations, including Title VII of the Civil Rights Act of 1964.
" Indemnification agreements have long been recognized as a valid method of allocating the risks inherent in construction projects." Leonard Concrete Pipe Co. v. C.W. Blakeslee & Sons, Inc., 178 Conn. 594, 597, 424 A.2d 277 (1979). In the interpretation of indemnification provisions, our courts have applied principles of contract law. " A contract must be construed to effectuate the intent of the contracting parties . . . The intention of the parties to a contract is to be determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction. The question is not what intention existed in the minds of the parties but what intention is expressed in the language used." (Citations omitted; internal quotation marks omitted.) Id., 598. " Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." Id., 599.
The court finds persuasive the decisions of the Superior Court which have held that our jurisprudence regarding indemnification in the context of insurance contracts applies equally to contracts between sophisticated business entities. See Finkle v. Urstadt Biddle Properties, Inc., Superior Court, judicial district of New Haven, Docket No. CV-11-6019523-S (May 22, 2015) (Nazzaro, J.) (concluding that same rule of construction applies to contractual duty to defend and indemnify between possessor of commercial property and service provider as between insurer and insured); Harman v. Belisle, Superior Court, judicial district of Hartford, Docket No. CV-12-6035291-S (September 4, 2014) (Wiese, J.) (" although the present action does not involve an insurance contract, but rather that between a possessor of property and a service provider, the same rule of construction applies as to the duty to defend"); Doe v. Terry, Superior Court, judicial district of Waterbury, Docket No. CV-08-5008897-S (January 10, 2011) (Shaban, J.) (" [t]here is no reason why a different rule of construction should apply, where, as here, there exists a detailed contract which was negotiated at arm's length between private, sophisticated, business parties").
It is well established that " a . . . duty to defend, being much broader in scope and application than its duty to indemnify, is determined by reference to the allegations contained in the [underlying] complaint ." (Emphasis added; internal quotation marks omitted.) DaCruz v. State Farm Fire & Casualty Co., 268 Conn. 675, 687, 846 A.2d 849 (2004). " [W]ith respect to an insurer's duty to defend a claim brought against the insured, [t]he question of whether an insurer has a duty to defend its insured is purely a question of law, which is to be determined by comparing the allegations of [the] complaint with the terms of the insurance policy." (Citation omitted; internal quotation marks omitted.) Misiti, LLC v. Travelers Property Casualty Co. of America, 308 Conn. 146, 154, 61 A.3d 485 (2013). " [I]f an allegation of the complaint falls even possibly within the coverage, then the insurance company must defend . . ." (Emphasis in original; internal quotation marks omitted.) DaCruz v. State Farm Fire & Casualty Co., supra, 268 Conn. 688. " In contrast to the duty to defend, the duty to indemnify is narrower: while the duty to defend depends only on the allegations made against the [defendant], the duty to indemnify depends upon the facts established at trial and the theory under which judgment is actually entered in the case." Id. " [W]here there is no duty to defend, there is no duty to indemnify . . ." Id.
The plaintiff objects to the fact finder's report based on its assertion that the fact finder made a " finding of discrimination" by the plaintiff. This claim, however, misconstrues the fact finders' report and the law governing the findings which were made. An indemnitor's duty to defend arises when the allegations of the underlying complaint implicate the party's duty to defend as specified in the terms of its contract with its indemnitee. See DaCruz v. State Farm Fire & Casualty Co., supra, 268 Conn. 687. Therefore, unless the allegations in Doe's CHRO complaint indicated that there was a possibility that the defendant failed to comply with applicable laws, the defendant was not required by § 14.01(c) to defend the plaintiff Moreover, unless the defendant had a duty to defend the plaintiff, it had no duty to indemnify the plaintiff for the amount of its settlement with Doe. Id., 688.
As the report makes clear, the fact finder never made a finding of discrimination by the plaintiff but rather, duly noted that Doe alleged discrimination and more importantly, only as to the plaintiff . From the evidence before the fact finder, there was no basis to find that Doe made allegations against the defendant, or otherwise alleged violations of her civil rights or of any applicable law by the defendant . Only in the latter case, had those allegations been made, would the defendant's duty to defend and/or indemnify under § 14.01(c) of the contract potentially been triggered.
The plaintiff did not furnish the fact finder with a copy of Doe's complaint to the CHRO, which hampered his ability to evaluate the plaintiff's duty to defend claim. See R.T. Vanderbilt Co., Inc. v. Hartford Accident & Indemnity Co., 171 Conn.App. 61, 91, 156 A.3d 539 (2017). In his report, the fact finder specifically found, despite that evidential shortcoming, that " [a]ccording to the proofs, [Doe's] discrimination claim was based solely upon discriminatory remarks allegedly made by the plaintiff's Superintendent at the site, Brian Roy, at the time when he was urging that [Doe] be dismissed." The fact finder further found that " [n]o other evidence has been provided that [Doe] even claims that defendant discriminated against her, and surely there has been no such determination."
In light of the foregoing, the court cannot conclude that the allegations of Doe's complaint to the CHRO implicate the possibility that they directly or indirectly arise out of or result from the defendant's failure to comply with applicable law. Therefore, the defendant had no duty under § 14.01(c) to defend the plaintiff against her CHRO action. Consequently, the defendant need not indemnify the plaintiff for its settlement with Doe.
In addition, the court notes that, in its objection to the fact finder's report, the plaintiff also alleges that the defendant's duty to defend and indemnify arises from § 14.01(a) of the parties' contract. Section 14.01(a) requires the defendant to " defend, indemnify and hold harmless [the plaintiff] . . . from and against . . . [a]ll losses claims, demands, suits, actions, damages and liabilities . . . that directly or indirectly result from any negligent, willful, reckless, or other tortuous act or omission during the performance of the work . . . except to the extent such losses arise out of or result from any negligent, reckless, or otherwise tortuous act or omission by Contractor . . ." While acknowledging that this court may not substitute its own findings of fact for those of the fact finder, the plaintiff attempts to bootstrap the found facts as a basis for asking this court " to reach different legal conclusions supported by the evidence." Specifically, the plaintiff now alleges that because Doe was an unqualified worker, and her CHRO claims resulted in the plaintiff incurring damages, the defendant has a duty to indemnify the plaintiff pursuant to § 14.01(a).
In § 14.01(a) of the agreement, quoted verbatim by the plaintiff in its objection to the fact finder's report, the word " tortuous" appears several times. Generally, when the court interprets a contract, " the words of the contract must be given their natural and ordinary meaning." Cruz v. Visual Perceptions, LLC, 311 Conn. 93, 102, 84 A.3d 828 (2014). However, a " contract must be viewed in its entirety, with each provision read in light of the other provisions . . ." Id., 103. Considering its proximity and relation to words describing tortious behavior (e.g. negligent, willful, reckless), it is reasonable to conclude that in this context the parties intended to use the word " tortious" (meaning " wrongful." Black's Law Dictionary [9th Ed. 2009]), and not " tortuous" (meaning " having or marked by repeated turns or bends; not straightforward; complex." American Heritage College Dictionary [2d Ed. 1982]). Therefore, this court presumes that § 14.01(a) addresses tortious conduct.
To the extent that the plaintiff's objection is predicated on this new theory of breach of contract, the court rejects that contention, since the issue was never before the fact finder. Significantly, the plaintiff did not allege in its complaint that the defendant breached § 14.01(a). That issue, therefore, is not properly part of the present case. " The purpose of a complaint . . . is to limit the issues at trial . . ." (Internal quotation marks omitted.) Foncello v. Amorossi, 284 Conn. 225, 233, 931 A.2d 924 (2007); accord 71 C.J.S. 38, Pleading § 3 (2000) (" purpose of pleadings is to frame, present, define, and narrow the issues, and to form the foundation of, and to limit, the proof to be submitted on the trial"). " Pleadings have an essential purpose in the judicial process [which is] to apprise the court and opposing counsel of the issues to be tried . . . [I]t is imperative that the court and opposing counsel be able to rely on the statement of issues as set forth in the pleadings." (Citations omitted; internal quotation marks omitted.) Somers v. Chan, 110 Conn.App. 511, 528-29, 955 A.2d 667 (2008). As our Supreme Court has observed, " [a]llowing a plaintiff to rely on a theory that he has failed to raise in his complaint would silently abrogate our rules of pleading and, indeed, the very purpose of having pleadings in the first place." White v. Mazda Motor of America, Inc., 313 Conn. 610, 622 n.5, 99 A.3d 1079 (2014). This court declines to do so in the present case.
Moreover, even if the plaintiff's alternative breach of contract claim had been properly pleaded in its complaint, the underlying facts found by the fact finder do not give rise to a violation of § 14.01(a). Section 14.01(a) states that the defendant shall defend and indemnify against " [a]ll losses, claims, demands, suits, actions, damages, and liabilities (" losses") that directly or indirectly arise out of or result from any negligent, willful, reckless, or otherwise tortuous (sic) act or omission during the performance of the Work of the Subcontract; or Subcontractor or any of its affiliates, or anyone directly or indirectly employed by any of them, or anyone for whose acts such person may be liable, except to the extent such losses arise out of or result from any negligent, reckless, or otherwise tortuous (sic) act or omission by Contractor (as determined by a court of competent jurisdiction)." Thus, the defendant's duty to defend and indemnify is triggered by losses, claims, etc. that result from tortious conduct during the performance of the work subject to the contract. There is simply no evidence of any allegation in the CHRO complaint that Doe or the defendant committed any tortious acts leading to the damages alleged by the plaintiff.
Furthermore, the court rejects the argument that the defendant's failure to provide an appropriately skilled worker, by itself, morphs into a tortious act simply because Doe made a claim against the plaintiff for discrimination or because the plaintiff incurred damages in the settlement of the CHRO action. Although " [i]t is true . . . that out of a contractual relationship a tort liability, as in negligence, may arise"; Kaplan v. Merberg Wrecking Corp., 152 Conn. 405, 410, 207 A.2d 732 (1965); the basis for " [a]n action in contract is for the breach of a duty arising, out of a contract; an action in tort is for a breach of duty imposed by law." (Internal quotation marks omitted.) Pelletier v. Galske, 105 Conn.App. 77, 82, 936 A.2d 689 (2007), cert. denied, 285 Conn. 921, 943 A.2d 1100 (2008). " Just as [p]utting a constitutional tag on a non-constitutional claim will no more change its essential character than calling a bull a cow will change its gender . . . putting a contract tag on a tort claim will not change its essential character." (Citation omitted; internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 263, 765 A.2d 505 (2001).
Having reviewed the record, the court concludes that the findings set forth in the report of the fact finder are not clearly erroneous. See Robert J. Barnabei Contr., LLC v. Greater Hartford Jewish Cmty. Ctr., Inc., 14 A.3d 461, 14 A.3d 461, cert. denied, 301 Conn. 914, 19 A.3d 1260 (2011). The court further concludes that the fact finder properly determined that Doe's allegations against the plaintiff before the CHRO did not give rise to a duty on the part of the defendant to defend the plaintiff in that proceeding. The court therefore overrules the objection of the plaintiff and renders judgment in favor of the defendant in accordance with the fact finder's report.