McPhee Electric v. Konover Constr. Corp.

Full title: MCPHEE ELECTRIC LTD., LLC v. KONOVER CONSTRUCTION CORP

Court: Connecticut Superior Court Judicial District of New Haven at New Haven

Date published: Oct 22, 2009

2009 Ct. Sup. 18721 (Conn. Super. Ct. 2009)

Opinion

No. CV-07-5009694S

October 22, 2009

MEMORANDUM OF DECISION

LINDA K. LAGER, JUDGE.

On March 5, 2007, McPhee Electric, Ltd., LLC (McPhee) filed this action against Konover Construction Company (Konover or KCC), with a return date of March 13, 2007. Counsel appeared for Konover and, after receiving extensions of time from the court, it filed an answer and special defenses (#107), as well as a claim for a jury trial (#108), on August 3, 2007. On July 9, 2008, Konover filed a counterclaim (#129), which was stricken by the court (Keegan, J.), as untimely filed on December 10, 2008 (#131). Thereafter, McPhee filed a number of amended complaints (##135, 143, 155). Konover moved to strike the third count of the Second Amended Revised Complaint (#159), on January 7, 2009 and on the next day McPhee withdrew that count (#161). On January 23, 2009, Konover responded to the Second Amended Revised Complaint by filing an Answer and Special Defense and Counterclaim (#164). On January 30, 2009, McPhee moved to strike the counterclaim (#177, 181) and the court (Cronan, J.), granted that motion on February 13, 2009.

On March 13, 2009, the parties waived a jury trial and agreed to try this case before the court. Trial commenced before the undersigned on April 13, 2009 and evidence concluded on May 4, 2009. The court heard testimony from eighteen witnesses and more than 350 exhibits were moved into evidence.¹ The operative complaint (#159) alleged breach of contract (First Count), negligence (Second Count), defamation (Fourth Count), a breach of the covenant of good faith and fair dealing (Fifth Count) and a CUTPA violation (Sixth Count). The operative answer (#164) contained a number of special defenses directed to all counts and certain special defenses directed only to the first and fifth counts, the second count, and the fourth and sixth counts.

1 The court required each side to pre-mark exhibits using the following numbering convention: the plaintiff's exhibits started with #1 and the defendant's exhibits started with #501. The court also ruled that it would only consider as full exhibits those that each side moved into evidence during the course of the testimony.

Following the conclusion of the evidence, the parties filed factual statements and legal briefs and the court held oral argument, in accordance with the court's instructions regarding post-evidentiary submissions. The court granted each side additional time to submit further memoranda regarding the defamation count and the last post-trial brief was filed on August 3, 2009.

I.

The court finds the following facts based on the credible testimony, the parties' joint statement of undisputed facts (Joint statement) dated April 7, 2009 and exhibits introduced at trial. In addition to this general statement of facts, other findings will be made when specific claims are addressed.

Sometime late in 2001, the Town of North Haven, Connecticut (town) formed a building committee, chaired by Radha Prasad (Prasad), for the purpose of constructing a new high school on a site adjacent to the existing high school. The new North Haven High School (NHHS) was to be completed by September 2005. According to Prasad, the building committee decided early on that the project would be built in the following phases: first site work, then the building itself, then the installation of furniture, fixtures and equipment, then work on the athletic fields after the demolition of the existing high school and, finally, work to upgrade bleachers and install elevators.

The town selected Kaestle Boose Associates (KBA) as the architect for the project. Its duties included project design, responding to requests for information, preparing change orders, issuing architect's supplemental instructions and construction administration, that is, determining whether the construction meets the intent of the contract documents. The town selected Konover Construction Company (KCC or Konover) as the construction manager for the project, joint statement ¶ 2. As construction manager, Konover was involved in the project pre-construction and with the bidding process.

On June 19, 2003, Konover executed a construction management contract with the town, ex. 6. The contract was based on two standard American Institute of Architects (AIA) documents, the A121 construction management contract and the A201 General Conditions agreement. The A121 portion covered, among other things, the construction manager's responsibilities, the owner's responsibilities, compensation, changes in the work and payments to subcontractors. The A201 portion covered similar subjects including, among other things, contract administration, subcontractors, changes in the work, time, payments and completion. The town made it clear to Konover that the opening date for the new school was to be September 2005. Initially, the project was scheduled to start in early February 2004, ex. 67. Construction actually started on February 24, 2004 and the turnover date was September 6, 2005, a period of 558 calendar days, not including the time to demolish the existing high school and construct the athletic fields, ex. 68, 145.

The new NHHS was to be approximately 240,000 square feet and was designed with five areas, designated with the letters "A" though "E." Areas A, B and C were each three stories and constituted the academic wing. Area C also had the cafeteria on the first floor, as well as the shop area. Area D included the gymnasium and Area E included the auditorium and the art and music departments. Ex. 383. Areas A and E were connected by a corridor (A-E connector) which created an enclosed courtyard. The construction was sequenced to start at area C, and then proceed to B, A, D and E sequentially. The A-E connector was to be one of the last parts of the building to be constructed. New athletic fields were also to be constructed on the site of the existing high school following its demolition and after grading at that site, ex. 504, 890, 890A, 891.

The NHHS project was publicly bid in stages. Phase 1 was the site work, concrete and steel. Area D did not have structurally sound soil and the phase 1 plans specified that earth would have to be mounded up to a certain height and allowed to settle before the piles could be driven for that area. The first round of bids for the site work was rejected by the town and was rebid. Site work began in late February 2004.

Phase 2 was general construction which included the mechanical, electrical and plumbing (MEP) trades. The invitation for phase 2 bidders, ex. 10, was made available in March 2004 and a pre-bid meeting was held on April 8, 2004. In order to attend the phase 2 pre-bid meeting, subcontractors were required to register and purchase the plans, which included, among other things, all drawings and specifications, milestone schedules for the various trades, ² a "time is of the essence clause,"³ and a template of KCC's subcontract agreement. The bid documents made it clear that the successful bidder was required to sign the KCC subcontract agreement "without modification or alteration." Ex. 10, p. 14, ¶ 46. McPhee purchased the plans and attended the pre-bid meeting, joint statement ¶¶ 4, 5.

2 The electrical milestone schedule is ex. 13; the milestone schedules for the other trades are roofing, ex. 384, spray fireproofing, ex. 385, masonry, ex. 386, and general trades, ex. 387.

3 Paragraph 13 of the Instructions to Bidders, ex. 10, provided, in part: "TIME IS OF THE ESSENCE OF THE SUBCONTRACT. Completion of work included in the Subcontract in accordance with the Project Schedule is absolutely essential to the use and occupancy of the Project for the Owner's operations. Subcontractor to include in its quotation all costs, extra crews, equipment, warehousing, etc. as required to meet the schedules . . . If Subcontractor is behind schedule through any fault or act or failure to act of the Subcontractor, or its agents or sub-subcontractors, it shall add manpower and/or work overtime as required by Construction Manager in order to regain schedule. No compensation for such overtime or added manpower will be made . . . If Subcontractor is required by Construction Manager to work overtime for the convenience of the Project, such overtime premium costs will be compensated except that no overhead or profit will be allowed on the premium portion of these costs." (Emphasis in original.)

At the pre-bid meeting, the prospective bidders were told that the September 2005 opening date was a priority for the town and advised that the schedule was very aggressive, ex. 15. They were also advised that construction would move sequentially from Area C to B to A to D to E. On April 9, 2004, KCC issued Addendum 8 to the Phase 2 bidders which incorporated all the Phase 1 contract documents, ex. 891, including information regarding the construction of the athletic fields. The electrical work for the NHHS project was broken down into four standard categories with specified durations for each category set forth in an electrical milestone schedule dated March 24, 2004, ex. 13: MEP Underground commencing May 21, 2004 (80 days), MEP Rough commencing June 9, 2004(215 days), MEP Finish commencing April 6, 2005 (80 days) and Punchout/Closeout commencing June 6, 2005 (65 days).

McPhee relied on the bid package documents, including the milestone schedules for the various trades, in estimating its bid. McPhee employed a number of estimators in its estimating department who worked on the bid for the NHHS project. It used a computerized estimating program called Accubid in preparing its bid. The program assists in pricing materials and provides average standard labor hours to install components. McPhee chose to calculate its bid describing all activities as "normal labor conditions," although some of the specified electrical work required the use of scaffolding or lifts which are generally more difficult conditions. The purpose of the "labor conditions" category is to permit Accubid to incorporate a risk variable for labor efficiency in producing its estimate. According to John Conroy (Conroy), who has been McPhee's chief financial officer since 2007, labor is the most contingent part of a bid estimate and more of an unknown than materials.

McPhee did not consider itself bound by the Accubid numbers and would review them against its own experience on similar projects. Among the changes to the program that McPhee made was to include the cost of foremen by using a higher composite labor rate for journeymen and apprentices than was reflected in the union labor agreement, ex. 32, 355A. Also, McPhee used a lower figure for labor hours than the average industry standard that Accubid supplied because it believed it could beat that standard. The owners of McPhee, Michael McPhee, its president, and Marcus McPhee, its executive vice-president, determined how much overhead and profit were to be anticipated from the project and made that adjustment to reach a final bid figure. Other adjustments were also made to the Accubid figures in submitting the final bid.

McPhee submitted a bid on April 29, 2004 in the amount of $5,985,000.00, ex. 19, which reflected, among other things, an estimated 34,387.23 hours of labor, ex. 18, p. 43. It is undisputed that McPhee's bid was the second highest of all the electrical bids submitted in April. On May 10, 2004, all the April bids were rejected by the town as over budget and the project was re-bid, joint statement ¶ 7, with various changes made to the design in addendums 12, 13 and 14 (ex. 27-29), ⁴ joint statement ¶ 8.

4 Addendum 12 changed the lighting fixture schedule, ex. 27, p. 4, addendums 13 and 14 reduced the scope of the electrical work for the theatre lighting, dimming and sound system, ex. 28, p. 8, ex. 29, pp. 12-13, and addendum 14 allowed the use of "interlocked armored feed cable [referred to during the trial as "MC Cable"] . . . in lieu of conduit and wire [referred to during the trial as "EMT"]," ex. 29, p. 12. MC Cable is more flexible than EMT. See exs. 30 (sample EMT) and 31 (sample MC Cable).

The second bids were due on May 28, 2004, placing the projected start date for the electrical work beyond the May 21, 2004 date in the bid documents. McPhee submitted a bid in the amount of $4,997,600.00, ex. 33, which reflected, among other things, an estimated 30,993.20 hours of labor, ex. 32. The overhead and profit was reduced from $200,789.39 in the first bid, ex. 18, to $53,346.78 in the second bid, ex. 32. Mark Madore (Madore), who was one of the estimators for McPhee for both bids, testified that he would not have considered any delays or hindrances at the time of the estimate and was not directed to consider any delay to the schedule resulting from the re-bidding process.

This time, McPhee was the low bidder and, following a scope review meeting attended by representatives of McPhee and Konover, the town's building committee, upon Konover's recommendation, approved the award of the electrical subcontract to it on June 7, 2004, joint statement ¶¶ 11, 12, 13. The actual subcontract agreement and its riders, ex. 84, reflecting a start date of July 13, 2004 and a completion date of July 26, 2005, was forwarded to McPhee by KCC on July 19, 2004 for execution, ex. 514. "Rider D" to the electrical subcontract was entitled "Milestone Project Schedule between [KCC] and [McPhee]" and it set forth the same schedule as the electrical milestone schedule attached to the invitation to bid, ex. 13. McPhee received the subcontract on July 20, 2004.

A. The New NHHS Building

McPhee had been on site performing underground work since June 25, 2004, joint statement ¶ 14, ex. 44, 903. It was not unusual for McPhee to start work without a signed formal contract according to Marcus McPhee, and in this instance McPhee was aware of the aggressive job schedule and the need to mobilize quickly. By late June, it had begun the underground work, ex. 44. Anthony Rasile (Rasile) was the foreman who Marcus McPhee assigned to the site in late June and he supervised the power crew and also prepared McPhee's daily field reports, ex. 44. By June 28, 2004, slabs had been poured for Areas A and B and structural steel had been erected in Areas C and D, ex. 892. By July 7, 2004, the structural framing had proceeded to commence in Area B, ex. 892. When James Lynes (Lynes), who was the NHHS project manager for McPhee through August 2007, arrived on site on approximately July 13 or 14, 2004, he observed that piles had been driven, concrete footings were in place, structural steel was going up and the phase 1 subcontractors were getting ready to pour slabs on the pan decking. Also around the second week of July 2004, Henry Mackie (Mackie) was assigned to the NHHS project by Marcus McPhee as the overall general foreman and he also supervised the systems crew. By mid-July, McPhee had commenced its rough in area C, ex. 44, 903. By July 21, 2004, the steel framing was proceeding in Area B and for the corridor that was to connect Area A and Area E, and Area A had a complete slab, ex. 892. By the end of July, McPhee was doing rough work in both Area C and B and had completed 19 days of its underground work.

By early August, McPhee was doing rough in Areas B, C, D and E. The rough work included pulling the MC Cable, see n. 4 supra, ahead of the fireproofer. A field report dated July 26, 2004, ex. 44, noted that KCC had expressed concerns about the method McPhee was using to pull the MC cable (cable). On August 3, 2004, the electrical inspector expressed some concerns about the cable, but found it acceptable, ex. 44. However, on August 4, 2004, the fireproofing subcontractor, Wesconn, raised concerns that the way McPhee was running the cable through "the decking flutes affects the UL rating," and KCC agreed to look into the issue, ex. 62. The problem was that the cable was being run over the beams and was not attached to the flutes, leaving inadequate space for the required fireproofing.

David Noyes (Noyes), the construction administrator for KBA on the NHHS project, viewed the cable on site, concluded that there was insufficient sprayed fireproofing around the installed cable and determined the condition did not conform to UL fire code ratings. On August 9, 2004, KBA issued a Response to Request for Information (RRFI), ex. 520, stating that it was not acceptable for McPhee to place the MC Cable in the flutes of the metal decking before the fireproofing and that the work which had been done was "non-conforming to the UL design," a copy of which was attached to the RRFI. KBA advised that it was "the contractor's responsibility to propose a field fix to the condition, that meets Code and carries the consent of the Local Building Inspector and Fire Marshal." Id. On the same date, KCC directed McPhee to stop pulling the cable through the flutes, ex. 44, although McPhee did continue to pull MC Cable in other parts of the academic wing during August. Meanwhile, on August 11, 2004, Noyes advised Melvin Strauss (Strauss), KCC's project manager for the NHHS, that if McPhee could place the cable at the top of the flutes there would be enough room for the required amount of fireproofing "to maintain the fire rating and Wescon's [sic] engineer would issue a letter stating that it would meet the code. This appears to be an acceptable solution to the problem." Ex. 517. By the end of August, KCC had received a UL design relating to the cable from McPhee and had forwarded it to all parties, ex. 526. The solution required McPhee to strap the cables in the flutes roughly every four feet and they had to return to those areas where the cable had been pulled to accomplish that task, ex. 44.

By August 23, 2004, the structural framing for the academic wing had been completed, the slabs and the second and third floor decking had been installed and the mason had started the block work for the exterior walls in Area C, ex. 892. A master schedule for the entire project was posted in the Konover trailer. Lynes identified a schedule dated August 30, 2004, ex. 69, to be a copy of the posted schedule. He relied on that document to create an ascending order schedule for his use, ex. 71 dated 9/2/04 and 9/3/04. Konover issued modified schedules on November 18, 2004, ex. 118, November 29, 2004, ex. 123, December 7, 2004, ex. 127 and December 21, 2004, ex. 140. The November 18th schedule addressed the completion of the interior of the academic wing and sequenced the work by floor, as did the December 7th and 21st schedules. Lynes prepared another ascending order schedule based on the December 21, 2004 modifications, ex. 142. Konover modified the December 21st schedule on January 26, 2005, ex. 162, and Lynes prepared two separate ascending order schedules, ex. 163 and 164. Konover also issued revised schedules regarding the auditorium on June 21, 2005, ex. 223, and September 14, 2005, ex. 254. According to Mackie, he and Rasile determined how many workers would be needed on the site by using the schedules and the two-week "look-ahead" that Konover provided.

In a construction management report to the town building committee for the time period of July 31, 2004 through August 31, 2004, ex. 68, Konover made the following remarks regarding the schedule:

The project is currently on schedule for the September 2005 occupancy. A copy of the update project schedule has been included as an attachment. Structural steel is currently approximately 10 days behind schedule due to weather delays. The steel erection delays [sic] has also effected the start dates for the building envelope. Underground MEP and concrete slab on grade placement is 35 days ahead of schedule. Due to the awards of MEP contracts occurring so late in the project we are currently projecting MEP coordination will be 15 days behind our original schedule. This continues to affect structural steel fabrication and other structural coordination in Areas B, D, E.

At the beginning of September 2004, McPhee was performing rough in Areas A, B and C, the academic wing of NHHS, as well as in areas D and E, ex. 903. On September 7, 2004, Marcus McPhee executed the KCC subcontract agreement, ex. 75, 84, and returned it to Konover which, in turn, executed it and returned the fully executed contract to McPhee on September 17, 2004. In September, the rough work included pulling cable, working with the masons, working on dimming system conduits and working on other conduits; some underground work in Areas D and E was also done, ex. 44. On September 21, 2004, Lynes wrote to Strauss expressing some concern that the interior framing had not yet begun, asking that certain electrical rooms be constructed as soon as possible in Areas C and A and also requesting a completion date for the electrical room in Area D, ex. 85. The letter noted McPhee's "intention to have permanent power into the building by the end of 2004."⁵ Lynes wanted to get all the cable tied into the electrical closets and completed before the main power was turned on in the building and that required that walls, floors and lockable doors be completed. By September 28, 2004, all the first step masonry, with the exception of the roof line, was finished in the academic wing, ex. 892.

5 On July 13, 2004, KCC had advised McPhee that it needed "to have permanent power energized in early December." Ex. 56.

In October, rough electrical work continued in Areas A through E. On October 5, 2004, Rasile attended a job meeting and stressed McPhee's need for interior framing and completed electrical rooms, ex. 44. On October 18, 2004, Lynes wrote a letter to Strauss expressing similar concerns and stating that McPhee "cannot establish any consistency in our working sequence," ex. 98. Michael Tighe (Tighe), KCC's project executive for the NHHS project, responded in a letter dated October 19, 2004, ex. 99, that "[t]he issues that you have raised in your letter are for the most part coordination issues and not schedule issues . . . the Contract Documents and your Subcontract Agreement clearly define your responsibility to coordinate and schedule your work with the Construction Manager and the work of others." Tighe then referred Lynes to specific sections of those documents. In his letter, ex. 98, Lynes also complained that McPhee had to reduce its manpower⁶ to which Tighe responded: "The addition and reduction of manpower based on the availability of work is the sole responsibility of the installing contractor."

6 In the letter dated October 18, 2004, ex. 98, Lynes wrote, "we have reduced our manpower by 25%." The accuracy of this representation is questionable. In September, McPhee averaged 10.14 workers for each working day. In the first 11 working days of October, it averaged 11.27 workers per day. Then, on the day Lynes wrote to Strauss, McPhee reduced its work force to 8 workers. However, for the entire month of October McPhee averaged 9.3 workers for each working day, a reduction of approximately 9% from the September average. See ex. 44.

A subcontractor weekly meeting was held on October 20, 2004, ex. 730. Both Lynes and Mackie were there on McPhee's behalf. McPhee expressed its concerns about getting permanent power to the building by the end of the year. The minutes reflect that KCC planned to issue a "letter to KBA detailing direction that will be taken to keep the flow of work going to McPhee." Modifications were planned for the electrical rooms so that the electrical panels could be installed. At this meeting, Konover expressed concerns that the fireproofing had not yet been completed and stated they "are focusing on finishing Building C and moving into B and A on one line." Konover distributed and went over a look ahead schedule for the academic wing, ex. 101, which showed that it wanted the subcontractors to focus on working on the second floor. This was precipitated by the fireproofing issues as well issues related to the height of the third floor and dormer defects.⁷

7 A design defect in dormers constructed on the front of the academic wing was causing water infiltration where the dormer met the roof because the slope was too low. On November 5, 2004, the architect provided a design clarification for the dormers, ex. 869. The issue of the dormers continued for several months until KBA ultimately approved a new design. Exhibits 690, 689, 688, 687, 686.

Meanwhile, there were still issues regarding the MC Cable. On October 7, 2004, McPhee advised KCC they would not patch fireproofing, ex. 44. On October 20, 2004, KBA issued a field observation report that stated: "Throughout the building on various floors it was noted that the instructions for running cable thru [sic] the flutes of the decking were not being followed. Holes were poked thru [sic] the fire proofing with no clips holding it up to the top of the deck." Other problems regarding fireproofing were noted and the report ended with the observation that "[t]here seems to be an excessive amount of patching required in these areas before it will be accepted." KCC faxed this report to Lynes on October 26, 2004, ex. 559.

By October 28, 2004, the McPhee Field Report notes that sheet rocking of electrical rooms had started which permitted it to perform additional work in the electrical rooms in November, ex. 44. Rough work also continued in Areas A through E, ex. 903, in November. By mid-November the roofing contractor had completed insulation and the installation of ice and water shield on the sloped roof in Areas A through E, ex. 124, 887. Ice and water shield is a barrier that keeps water out until a permanent roof is installed. Flat roof systems had also been completed in Areas C and B at the mechanical area, ex. 124.

In early November, KCC notified all the trades that there were issues regarding clean up, ex. 528, a daily requirement under the subcontract agreement, ex. 84, Rider "A" ¶ KK. At a job meeting on November 11, 2004, KCC advised the trades that it was going to hire laborers if the job site was not cleaned up and expressed concerns that there had been thirteen accidents to date on the job site, ex. 648. KCC ultimately did hire laborers to do the clean up on December 9, 2004 and the subcontractors were advised at the December 22, 2004 weekly meeting that the cost would be divided among them, ex. 529.

On November 15, 2004, a coordination meeting was held regarding the sequencing of spray fireproofing with the MEP overhead rough on the third floor of the academic wing, as well as some other issues related to fireproofing, ex. 116. The relevant trades were present. Lynes and Mackie attended for McPhee; KCC was represented by Tighe, Strauss, Gary Hicks (Hicks), the project superintendent, and Greg Walsh (Walsh), the assistant project manager. At the meeting, it was agreed that MEP rough would not occur on the third floor "until the spray fireproofing has been completed with the exception of the installation of MEP hangers and metal framing standoff clips attached to overhead structure."

Towards the end of November, an issue arose regarding cables that McPhee had installed in the top of the gym roof decking, with the roofer expressing concern that it might penetrate the electrical conduit with insulation fasteners because of the way in which the cable was installed in the flutes of the deck, ex. 736, 563. As a result, KBA advised Konover, which in turn advised McPhee, that the electrical work had to be removed before the roof was installed, ex. 604. McPhee responded that "the wiring as installed meets the requirements of . . . Code . . . contract specifications and has been inspected and approved . . .," ex. 569, and it refused to reinstall the work without additional compensation. The impasse lasted for many months, ⁸ delaying the installation of the gym roof until McPhee and Konover reached a compromise at a meeting held on February 4, 2005, ex. 605, 610. On February 7, 2005, McPhee removed the open fire alarm cable from the roof decking, ex. 779, pursuant to that agreement, and later reinstalled it in the gym ceiling The gym roof installation was completed on February 13, 2005, ex. 394.

8 On December 29, 2004, Strauss told Lynes to submit an RFI (request for information) about the cable in the roof flute decks, ex. 144, but that was not done. It would have been KBA's responsibility to respond to any RFI. In any event, KBA, through its electrical consultant Diversified Technology Consultants (DTC), investigated the issue and advised Strauss that the installation did not conform with the electrical contract documents. Strauss then wrote to Lynes on January 14, 2005 directing McPhee to "immediately remove this work so as not to impact the project schedule," ex. 583, and attaching the correspondence from KBA and DTC.

By the end of December 2004, Konover reported to the town, ex. 145, that the project was on schedule for completion for the September 2005 occupancy date, but since the window delivery date had not been met the completion of the finishes in the academic wing, specifically the second floor, would be affected. Interior partition framing on the first floor of the academic wing had been completed, the electrical rooms switchgear was set, the main electrical room was being built, and electrical distribution systems were being installed on all floors of the academic wing. Much of the first step masonry had been completed for the academic wing and asphalt waterproofing had been applied, ex. 892.

On January 3, 2005, Lynes wrote to Strauss, ex. 146, about the December 21, 2004 revised project schedule, for the academic wing, ex. 140. In his letter, Lynes complained that the revised schedule did not take into account "time required to wire, device, test and start-up" the security system, telephone system, data system, Co-Ax system, fire alarm system⁹ as well as mechanical equipment connections and electrical switchgear. He also complained that electrical work could not be performed because the building was not weather tight and precedent activities, such as spray fireproofing, metal stud installation and sheetrocking had not been completed. He wrote:

9 There was testimony referring to these systems as the low voltage systems.

Your latest 12/20/2004 [sic] schedule compresses 85% of the identified electrical work into a four month period and does not contemplate other significant scopes of electrical work that must be addressed in any comprehensive schedule. Although we have made every effort to install our work ahead of schedule, our ability to mitigate the cost for these delays has passed. Current schedule delays and the subsequent compression of work has significantly impacted our productivity and labor costs. Although we cannot quantify the total cost impact at this time, we will be submitting these cost impacts when we are able to accurately quantify them. We estimate at this time that our current cost impacts are about 400k and are increasing everyday that schedule slips.

At that time, according to the pay requisitions McPhee had submitted to Konover, ex. 365, and its own payroll records, ex. 886, McPhee had completed 35.4% of the project, had expended 9148 hours of labor and had incurred cumulative payroll costs of $491,836.85.¹⁰

10 There is a slight discrepancy between the pay requistions, which cover a monthly period, and the payroll data which cover a weekly period. Nonetheless, the relevant facts are that by the end of December 2004, McPhee had represented to KCC that it had completed 35% of the labor, for which it had been paid, cumulatively, $697,376.00, and its cumulative payroll through January 2, 2005 was $491,836.85. The actual number of hours that McPhee's workers put in doesn't have any bearing on the pay requisition in which the labor component is billed based on the percentage of work completed.

In January, McPhee worked primarily in the academic wing, ex. 903. On January 13, 2005, Lynes wrote to Tighe complaining about the lack of work in Areas D and E, ex. 153. As he did in his letter dated January 3, 2005, Lynes relied on the timeline in the August 30, 2004 schedule, ex 69. This correspondence was exchanged at around the same time that McPhee and Konover had reached an impasse regarding the cable in the gym roof decking, see n. 8 and text accompanying, supra. At around the same time, on January 12, 2005, KBA conducted a field observation, ex. 152 and noted continuing problems with the MC Cable in the flutes of the decking that were identical to the ones noted in its report dated October 20, 2004, ex. 559. The KBA field observation report, which also noted certain problems with electrical rooms on the second floor in Area B, was sent to Lynes on January 18, 2005 by Strauss, ex. 584.

By January 13, 2005, the main electrical room in Area D was watertight, ex. 153. On January 20, 2005, the electrical inspector for the town approved the main electrical installation, ex. 159. By the end of January, steps were taken to complete the main electrical room, including testing of the equipment, ex. 44, so that the equipment could be energized in February, ex. 165. The main switch gear was energized by the end of February after testing was completed, ex. 599-603, ¹¹ and United Illuminating finished its work, ex. 779.

11 Northeast Electrical Testing was on site on February 1 and 2, 2005 testing the circuit breakers in the main electrical room, as a result of which six breakers were replaced. They were also on site on February 3, and 16, 2005, testing breakers in electrical closets and recommended that additional breakers be replaced.

At the end of January, KCC advised the town that the extremely cold weather since January 12, 2005 had created a problem in completing the roofing system in Areas D and E because its installation was temperature dependent, ex. 851. There was some uncertainty as to whether these areas could be completed for the 2005-2006 school year. On January 26, 2005, KCC issued a revised schedule that showed Area D completed by July 12, 2005 and Area E completed by August 16, 2005, ex. 162. In the end, the only part of the building that was not ready in September 2005 was the auditorium. The January 26, 2005 schedule addressed completion of the interior of the academic wing and sequenced the work by floor, in the same manner as the December 21, 2004 schedule, ex. 140.

In February 2005, Konover sent out Joseph Minoski (Minoski), a licensed electrician it had hired in late January 2005, to review the site conditions at the NHHS project and to determine McPhee's progress. Minoski reported to Tighe. Tighe was concerned about the low voltage systems in particular, see n. 9 and text accompanying, supra. Minoski visited the site for the first time on February 18, 2005 and forwarded a report to Tighe on February 21, 2005, ex. 171, 172. His report noted areas that he felt McPhee could be working on to meet the schedule. He also recommended that KCC frame all the electrical closets. Minoski's job was to report about the work that McPhee had done and the work that had to be done based on the schedule that was issued on January 26, 2005, ex. 162. He did not have any direct contact with McPhee nor was it his function to make recommendations as to how any particular electrical work was to be scheduled. Minoski provided Konover with a series of reports between February 2005 and September 2005, ex. 172, 179, 216, 220, 225, 228, 230, 232, 256.

Before the end of February, McPhee began to do finish work in Areas D, C and B, along with the rough. During the month of March, it also performed rough and finish work simultaneously and it increased the number of workers on site.¹² By March 3, 2005, the exterior masonry for the academic wing was substantially complete, ex. 892. In a memorandum to Tighe dated March 11, 2005, ex. 183, Lynes noted that McPhee was behind the January 26th schedule in completing the third floor rough, largely because of missing metal studding. On March 24, 2005, KCC asked McPhee to add manpower for the third floor rough but Rasile indicated that McPhee had enough manpower, ex. 44, 639. On March 31, 2005, Rasile reported in the field notes, ex. 44, that McPhee's third-floor rough was being held up by Acoustics, the framing and drywall subcontractor. On April 1, 2005, McPhee took out one rough-in crew, ex. 44.

12 In February 2005, McPhee averaged 12.5 workers per work day. In March 2005, the daily average increased to 20.7 workers.

Meanwhile, there were still issues regarding the MC Cable, ex. 757, as of the end of March. McPhee was aware, as of March 30, 2005, that Noyes wanted it to strap the cable, and that it, rather than Wesconn, was required to patch the fireproofing after the strapping was completed, ex 44. On April 8, 2005, Wesconn abandoned the job, ex. 44, 240, 77, but another subcontractor, Island Lath and Plaster, had already been brought in to do fireproofing.

In April 2005, McPhee continued to do rough work in Areas A through E and finish work in Areas A through C and E. On April 13, 2005, Konover issued another revised academic wing schedule, ex. 197, which changed the completion date for Area D from July 12, 2005 to July 14, 2005. On both April 12, and 15, 2005, Robert Smedley (Smedley), the project superintendent for Konover at NHHS, noted in the daily diary, ex. 779, that McPhee's manpower was light which meant that there was available electrical work that could have been done but was not being accomplished. On April 18, 2005, Lynes sent a letter to Tighe, ex. 201, following up on his January 3, 2005 letter, ex. 146, in which he wrote: "McPhee . . . has had the opportunity to quantify the cost impact to us due to schedule delays, compression of work and subsequent decrease in productivity and added labor costs. We are requesting that our subcontract agreement . . . be increased by an additional $754,295.82 . . ." At that time, according to McPhee's payroll records, it had expended 17,994 cumulative labor hours at a cost to it of $960,142.55, ex. 886.¹³

13 Based on the pay requisitions, ex. 365, 841, at the end of March 2005 McPhee had cumulatively requisitioned $1,172,621.00 for labor representing that 59.5% of the total labor on the project had been completed and at the end of April 2005, it had cumulatively requisitioned $1,408,764.00 for labor representing that 71.5% of the total labor for the project had been completed.

On April 22, 2005, Lynes sent a letter to Konover detailing areas of concern regarding completion of systems, ex. 203, including the low voltage system. According to Lynes, it was not unusual for him to write a letter such as this, he viewed it as providing a "heads-up" to Konover about the work that needed to be completed. On May 4 and 5, 2005, McPhee was working on security, fire alarm and data wiring (all part of the low voltage system) and was working with the masons in the A-E connector, ex. 779. Smedley noted that McPhee was behind on light finishes in Area C, ex. 779. On May 13, 2005, there was a meeting between Lynes and Strauss in which they went over an agenda of 39 items, ex. 208, including many issues that were raised in Lynes' letter of April 22nd. Lynes and Strauss exchanged additional correspondence in May regarding open issues, ex. 209, 213. According to Lynes, eventually these items were resolved.

On May 19, 2005, Konover forwarded the punch list for the second floor of the academic wing to McPhee, ex. 625.¹⁴ The next part of the academic wing that was scheduled for completion was the first floor, ex. 197, 162. On May 27, 2005, Lynes wrote Strauss, ex. 214, to request an extension of 35 days to the base schedule stating "we will not be moving manpower from other areas to make-up for time lost in area `C1' unless we are additionally compensated."

14 The last revised schedule for the academic wing, dated April 13, 2005, ex. 197, showed a completion date for the second floor of May 26, 2005, which was the same date that had been listed on the January 26, 2005 schedule, ex. 162.

In May and June, while there was still rough electrical work taking place, the bulk of the electrical work was finished, ex. 44, 903.¹⁵ Minoski visited the site on June 3, 2005 and reported to Tighe that "[t]he pace of the project seems very aggressive and things are coming together at a very quick pace," but he also thought there was a variety of electrical work available to be done at any time, ex. 216. Similarly, after a site visit on June 16, 2005, Minoski reported to Tighe that "[t]he project is nearing completion in the Academic Wing and the Auditorium is progressing at a rapid pace," but again noted electrical work that could be done at any time, ex. 220, including many of the items he had noted on his June 3rd report. On June 21, 2005, KCC issued an auditorium schedule, ex. 223, showing a completion date of August 25, 2005. Minoski reported again on June 24, 2005, ex. 225, this time to Strauss, and again noted work completed and work available to McPhee. A photograph that was taken of the NHHS on June 24, 2005, ex. 892, shows substantial exterior completion of the academic wing, metal panel roofing installed in Areas D and E and rooftop equipment in place on Area D, masonry column enclosures for the canopy that led to the entrance in the A-E corridor, and site preparation work along the exterior of the academic wing. By the end of June, McPhee was also doing work on the site lighting, ex. 44. According to Mackie, by the end of June McPhee had probably completed 90% of its work in areas A, B and C.

15 Out of 43 days that McPhee worked between May 2, 2005 and June 30, 2005, rough work was done on 33 days and finish work on 42 days, ex. 44, 903.

During the month of July 2005, McPhee continued to perform finish in all areas and rough electrical work in areas D E, ex. 228, 230, 232, 903. By the end of July, Minoski reported to Tighe, ex. 232, that "[t]he overall Project seems to have a lot of work completed since the last visit. The pace is fast and the project appears to be in good condition." McPhee also did work on the site lighting, but due to top soil in the parking lot it was unable to install bases for a number of light poles, ex. 44. A photograph taken on July 28, 2005, ex. 892, does show a light pole and installed bases, as well as completed sidewalks and final grading on the exterior of the building.

Approximately one month before the scheduled opening date for the new NHHS, McPhee sent a lengthy letter to Tighe, ex. 233, seeking an equitable adjustment to its contract in the amount of $835,441.00. The letter, dated August 5, 2005, was signed by Ronald Stawecki, a vice-president of McPhee, but represented a collaborative effort on the part of Michael McPhee, Lynes, Mackie and Rasile, and was written by Michael McPhee. The purpose of the letter was to follow up after a meeting that took place some time in June 2005, ¹⁶ which itself was in follow-up to McPhee's April 18, 2005 letter, ex. 201, seeking an additional $754,295.82 to compensate it for what it had represented to be "schedule delays, compression of work and subsequent decrease in productivity and added labor costs." The August 5th letter itemized thirteen areas of claimed damages and thirteen open change orders. Konover responded to McPhee's letter on August 12, 2005, ex. 237, stating, in part, "given the nature of the assertions set forth in your correspondence and given KCC's contractual obligations to the Owner . . . a detailed analysis is required. We will, in good faith, review, analyze and evaluate the assertions . . . We will likely need additional information from McPhee in order to complete our analysis."¹⁷ Michael McPhee believed that this response was consistent with the discussions he had with Konover about McPhee's claim in June.

16 There is some dispute as to when the June meeting occurred and who attended the meeting. Although the August 5, 2005 letter says the meeting occurred on June 22, 2005, the court finds that the meeting actually took place on June 15, 2005. The purpose of the meeting was for McPhee to provide documentation in support of its April claim for additional compensation, but documentation was not provided. Ex. 399, item 15-4.

17 This language had been suggested to Konover in an e-mail from the town's counsel to Tighe, ex. 238.

Shortly thereafter, there was an exchange between McPhee and KCC regarding electrical work that had to be completed in order for the school to open on time, ex. 239, 241, 245, 246, 247. In addition to asking for consideration of its equitable adjustment claim, ex. 246, McPhee requested an additional payment of $69,698.00 for overtime on August 15, 2005, ex. 239. On August 23, 2005, McPhee reduced its overtime request to $35,616.00, ex. 711, while noting it had increased its manpower on the project.¹⁸ This followed an August 19, 2005 letter from Strauss to Lynes, ex. 245, in which KCC gave McPhee formal notice "to provide additional manpower and work extended hours/workweek" pursuant to its contractual obligations or KCC would supplement McPhee's forces. On August 26, 2005, KCC wrote to McPhee that, with the town's approval, it was prepared to issue a change order authorizing $35,616.00 for additional hours and Saturdays provided that McPhee completed a list of tasks, ex. 249, in time for the opening of school and McPhee accepted the change order, ex. 250, on the same day. It had sixteen workers on site the next day, August 27, 2005, ex. 44, which was a Saturday. According to Tighe, McPhee was the only subcontractor that requested overtime in August 2005.

18 This representation is not borne out by the evidence, ex. 44, 903. In July, McPhee averaged 22.4 workers per day and in the weeks preceding the August 23, 2005 letter it averaged 23.5 workers, or just about one worker per day more than the month of July. For all of August, McPhee averaged 22.9 workers per day.

In August, McPhee did finish work primarily in areas C, D and E, rough work in areas D and E including the gym and auditorium and exterior light installations, ex. 44, 903. By August 22, 2005, the academic wing of the NHHS was in its final stage of completion and being fitted out by the town. The auditorium was still under construction and there was ongoing work in areas D and E. A photograph taken on August 22, 2005 shows completed sidewalks, landscaping and exterior lighting, ex. 892.

On August 31, 2005, Konover prepared a list of items that required completion or correction by the subcontractors for the certificate of occupancy, ex. 663. Out of 46 items, 29 were exclusively the responsibility of McPhee and four items were a joint responsibility of McPhee and another subcontractor. This list was supplemented on September 2, 2005 by a list, ex. 764, containing another 39 items, eight were attributed to McPhee only and six involved McPhee jointly with another subcontractor. An updated list issued on September 7, 2005, ex. 767, showed that McPhee still had 14 items to complete and 70 items that had failed inspection. Except for punch list work, Mackie believed McPhee had completed all its finish work in areas A, B and C by September 2005 which was when he left the project.

The first day of classes in the new high school was September 8, 2005, Joint Statement ¶ 16.¹⁹ However, the work at the NHHS was not complete. On September 14, 2005, Konover issued a schedule for the auditorium calling for completion on October 2, 2005, ex. 254. On September 15, 2005, Minoski issued an electrical report to Konover, ex. 254, in which he identified thirteen items of work available to McPhee and recommended that it increase its manpower to concentrate on the lighting and dimming in the auditorium and the fire alarm and security system. On the same day, Lynes wrote to Strauss complaining that the stage lighting could not be installed or assembled until the stage area was cleaned off, ex. 257. McPhee reduced its crew size at the project after September 16, 2005.²⁰

19 The court will infer that a temporary certificate of occupancy was issued by the town. As of March 20, 2006, the town was still looking for resolution of certain items, including labeling of electrical panels and measuring auditorium floor lighting for code compliance, before it would issue a permanent certificate of occupancy, ex. 548.

20 The McPhee Field Notes, ex. 44, show the following number of workers on site: 9/16-10, 9/19-10, 9/20-9, 9/21-8, 9/22-9, 9/23-10, 9/26-8, 9/27-8, 9/28-7, 9/29-7, 9/30-8, 10/3-10/7-4 each day, 10/10-10/14 and 10/17-10/26 — 6 each day, 10/27-10/31 — 2 each day. The field notes also indicate that McPhee had laid off 13 men on September 7, 2005. There were no field notes with dates after October 31, 2005 put into evidence.

On November 17, 2005, KBA issued a "Certificate of Substantial Completion" for the new NHHS, ex. 264, to Konover. By December 2005, McPhee had completed all the electrical work within the school. McPhee had already issued its warranty of the electrical work on August 4, 2005, ex. 253, effective September 1, 2005.

B. Athletic Fields /Sports Lighting

The electrical milestone schedule that was part of the bid package, ex. 13, and was subsequently appended as Rider D to McPhee's subcontract agreement with KCC, ex. 84, did not specify dates when the work on the athletic fields was to be performed. However, the bid documents that McPhee received contained information regarding the general plan for construction of the athletic fields and it was known that some of the athletic fields were to be located on the site of the existing high school, which would have to be demolished before the work could commence.²¹ Those documents also indicated that the Brookside/North Field, where the ball fields were to be located, had to be constructed after grading at the former high school area, ex. 890A. It was also known that the demolition of the existing high school would be bid as a separate phase known as Phase IV, ex. 504.

21 Addendum 8 to the Phase 2 bid package incorporated all the Phase 1 documents for reference, ex. 891, including a milestone schedule for site work contained in ex. 890, with the following schedule: "Abate Demo Existing High School" starting 8/1/05 and finishing 11/28/05, "Complete Athletic Fields Court — Area 5 (Old High School)" starting 8/20/05 and finishing 1/24/06 and "Complete Athletic Fields Area 4 (North East Fields)" starting 2/10/06 and finishing 5/9/06. It also included responses to Requests for Information, ex. 890A, indicating "Abate and Demo old High School Begins 9/20/05" and "Construction of the athletic fields in the old high school area is scheduled to follow demolition of the existing building."

In Amendment No. 3 to the contract between the town and Konover, ex. 265, a revised milestone schedule dated July 29, 2005 shows the demolition of the existing high school, including "Hazmat Removal," starting on September 23, 2005 and specified Phase IV work finished by June 2, 2006. At some point in time that is not clear from the evidence, the Phase IV work was divided into IV(A) which included demolition and hazardous material abatement at the existing high school and IV(B) which covered "Outdoor equipment and grandstand improvements" ex. 284. In a revised milestone schedule dated April 21, 2006, Phase IV was shown as commencing on December 14, 2005, the actual start date, and finishing on September 20, 2006, ex. 285. Konover has admitted, ex. 302, that the demolition and "Hazmat" work at the existing high school started some three months beyond the anticipated start date of September 2005, see n. 21 supra. Those delays, as well as delays occasioned by the Connecticut Department of Health regarding contamination at the existing high school site, resulted in a 90-day delay in the start of the site development work, ex. 302, which began on June 5, 2006. On June 13, 2006, Lynes wrote to Strauss, ex. 284, stating "we cannot complete the electrical portion of the sports field for the dollar amount as estimated in May of 2004 and would request the opportunity to re-negotiate the dollar amount for the remainder of the contract." At that time, McPhee mistakenly believed that it still had to purchase materials for the sports field lighting when, in fact, it had requisitioned 100% of its scheduled value for sports lighting materials in September 2005 and had been paid for them in November 2005, ex. 882, 382.

On July 5, 2006, at a coordination meeting for the athletic field work, Lynes submitted a proposed change order (PCO), ex. 884, to Strauss requesting an additional $196,105.00 for "additional cost differentials due to escalation in material, labor and direct job costs" to McPhee to complete their contracted work on the athletic fields. The materials portion, which had previously been requisitioned, of the PCO amounted to $165,457.10. On July 24, 2006, KCC authorized McPhee to commence the Phase IV work, ex. 676. On July 28, 2006, Robert Dunn (Dunn), Konover's General Counsel, wrote an e-mail to Attorney Robert Trowbridge, ²² ex. 382, stating, "the work in the ball field area is ready to begin and McPhee's work is ripe for commencement in this area," and indicated that Konover wanted McPhee to start the work immediately. McPhee maintained it could not start the work because there was still debris on the site of the fields and because it was waiting for precursor activities to be completed.

22 McPhee had retained Attorney Trowbridge, its present counsel, and the firm of Murtha Cullina in May 2006 and Trowbridge wrote to Dunn on May 17, 2006 advising him of that fact and of McPhee's intent to institute litigation against Konover, ex. 898.

On September 5, 2006, McPhee remobilized at the NHHS site to perform the sports lighting work, ex. 676. On November 27, 2006, McPhee began setting the sports lighting poles, ex. 291, 553. Issues arose regarding missing anchor bolts for the poles which delayed the installation, ex. 538. On December 28, 2006, Strauss authorized the fencing contractor to complete its work although he was aware that McPhee had not installed all its poles. As of January 29, 2007, five or six sports lighting poles and assemblies were still on the ground which was creating problems for another of the subcontractors, ex. 825.

On January 23, 2007, McPhee submitted an application for payment, ex. 295, that showed the sports light work was 100% complete. However, work on the sports lighting continued during 2007 and into 2008. On November 6, 2007, KCC notified McPhee that KBA had determined that McPhee should not be paid $17,124.45 for labor for the sports lighting because McPhee had failed to re-aim the sports lights, ex. 318, 352. In 2008, there was an on-going dispute regarding responsibility for testing the sports lighting, with the town, through KCC, indicating it expected McPhee to have the testing done, ex. 804, and with McPhee claiming that testing was the town's responsibility, ex. 330. In April 2008, McPhee agreed to perform this work under protest, ex. 345. On May 27, 2008, McPhee submitted an invoice, ex. 377, to Konover for the sports lighting quality control testing in the amount of $18,618.19. KBA continued to have issues regarding the lighting as late as July 2008, but McPhee disputed that it had any responsibility to remediate light intrusion into neighboring property, ex. 352.

C. Change Orders

There were procedures in place for the submission and processing of various change orders. According to Lynes, when KCC initiated a change order, McPhee would work up the pricing, submit it to KCC for review and approval and, upon receipt of an approved change order, McPhee would perform compensable work. A second type of change order could be initiated by McPhee when it believed that there was a discrepancy between the contract documents and the work it was being asked to perform. Under those circumstances, McPhee would perform the work under protest if Konover rejected McPhee's proposed change order.

On September 28, 2004, McPhee submitted an RFI regarding the rigging for the loudspeaker clusters in the auditorium (speaker rigging). On February 24 and 25, 2005, KBA issued supplemental instructions regarding the speaker rigging, ex. 368, 655. KCC forwarded that information to Lynes along with a quotation in the amount of $6,860.00 from Shepard Steel Co., Inc. for the fabrication and erection of the structural steel supports as shown on the drawings attached to KBA's supplemental instructions. On March 7, 2005, Strauss wrote to Lynes, ex. 368, directing McPhee to proceed with the speaker rigging pursuant to Article 9 of the subcontract agreement. In response, Lynes wrote that McPhee was proceeding with the work under protest and that it would file a claim for extra time and compensation, ex. 368. On December 1, 2005, McPhee submitted a proposed change order in the amount of $6,860.00 which was the cost of the labor and material for the fabrication and erection of the steel speaker supports. On January 20, 2006, KCC advised McPhee that this change order was denied because the work was within McPhee's scope, ex. 667.

On January 3, 2005, McPhee submitted a proposed change order in the amount of $18,860.00 regarding the installation of wiremold, in lieu of standard duplex receptacles, in 41 classrooms, ex. 367. However, on December 28, 2004, KBA had issued an RRFI which advised McPhee that the installation of the wiremold strip was within the scope of its work under the contract documents and was also reflected on the architectural drawings, ex. 574. Subsequently, there was some confusion regarding whether KBA was recommending the installation of the wiremold which was clarified when KCC wrote to Lynes, on April 22, 2005, directing McPhee to proceed with the wiremold installation as outlined in the December 28, 2004 RRFI, ex. 367. McPhee did so under protest. KCC advised McPhee on January 10, 2006 that it would not pay for the wiremold because it was within the scope of McPhee's work, ex. 667.

On September 28, 2005, McPhee submitted a series of change orders to KCC for work that had been performed prior to that date including the following: (1) relocated duct detector performed August 13, 2005, ex. 369, (2) electrical work for the gymnasium de-humidifiers performed July 8, 2005, ex. 371, and the auditorium de-humidifiers performed July 11, 2005, ex. 372, (3) re-work of chiller conduits performed April 19, 2005, ex. 374, and (4) relocate horn/strobe performed July 29, 2005, ex. 376. The next day, September 29, 2005, KCC advised McPhee that it required more information to process many of these change orders, ex. 666. Ultimately, Lynes and Strauss met on February 15, 2006 to attempt to resolve all outstanding change orders. At that time, many were resolved. For the purposes of trial, Conroy prepared a list purporting to summarize the unresolved change orders, ex. 366, but there is no evidence before the court as to whether McPhee provided KCC with the requisite information as to the enumerated items from Conroy's summary. Several other items on that summary were addressed at the February meeting including a PCO that was submitted on November 17, 2005, ex. 370, for "prep doors for security installation," which KCC advised McPhee it needed more detail to submit, and a PCO for changes to fixtures in room A120, ex. 373, which was determined to be null and void because there had been a negotiated change in the field prior to its submission.

D. Building Committee Meeting on April 21, 2008

On April 21, 2008, Dunn, KCC's general counsel, attended a meeting of the building committee at the request of Prasad and the town's attorney, Jeffrey Donofrio. Dunn was invited to discuss Konover's position regarding requisitioning McPhee's retainage. Dunn's purpose was to persuade the building committee to revisit its November vote regarding the release of the retainage. In addition to Prasad, the minutes reflect the names of the other building committee members and members of the board of education who attended the April 21st meeting, ex. 341. Tighe, Michael McPhee and Conroy were also there, Ex. 395, 341. Conroy videotaped the meeting and subsequently McPhee had it privately transcribed. Typically, the building committee issued cursory minutes of its meetings and it did so for this meeting, ex. 341.

On November 19, 2007, the building committee had voted to release McPhee's retainage, ex. 317. No representative of Konover had been able to attend that meeting. Dunn told Donofrio in December 2007 that he thought it was inappropriate for the town to engage in direct discussions with McPhee regarding its retainage claim when it knew both that McPhee had filed this case against Konover and that Konover had asserted a number of claims²³ against McPhee which potentially could be set off against the claimed retainage. Although Dunn thought he had an agreement with Donofrio that the issues between McPhee and Konover would be addressed exclusively in this litigation, Donofrio wrote Dunn on March 31, 2008 directing Konover to release the retainage, ex. 329.

23 Konover had asserted substantive special defenses against McPhee in the answer it filed on August 3, 2007 (#107). See n. 25, infra.

Konover opposed the release of McPhee's retainage on a number of grounds which Dunn set forth in an e-mail to Donofrio in response to the March 31st letter, ex. 333. At the April 21st building committee meeting, Dunn expressed his concerns that the committee had voted to release the retainage at its November meeting even though no one from Konover was present to educate the committee on its position. He explained that Konover "purposely" had not billed McPhee's retainage to the building committee "because as I believe you know, there's significant litigation ongoing between Konover and McPhee in Connecticut Superior Court. That suit was filed . . . in February of 2007, and the monies that are being held for retainage against McPhee are there to secure McPhee's continued performance requirements²⁴ as well as to set off potential and existing counterclaims that we have in the pending litigation." Ex. 395, pp. 5-6. Dunn explained that Konover had "significant issues" with McPhee that he believed the town did not consider in authorizing the release of the retainage, including backcharges, extra work tickets that other contractors had submitted, allegations made in litigation brought by Wesconn that McPhee had interfered with its work, the improper installation of the MC cable, and other complaints regarding McPhee's work on the NHHS project that he specifically itemized. Id., pp. 7-12.

24 At that time, the sports lighting work remained incomplete. McPhee agreed to perform the work under protest after the April 21, 2008 meeting. Ex. 345.

Dunn stated that McPhee lacked "cooperation and coordination" during the project and described McPhee as "constantly at odds with Konover with respect to working as a team." Id., p. 7-8. He stated that McPhee interfered with the work of other subcontractors, "had significant deficiencies at various stages of the project [and] performed defective work." Id., p. 8. He further stated: "Recently, McPhee's lack of cooperation and recalcitrant behavior has been reflected in the following. McPhee began making direct communications and threats to the Town to the exclusion of KCC . . . The Town does not have a contract with McPhee. There is absolutely no basis whatsoever for them to be contacting the Town directly; certainly not without copying Konover. McPhee has delayed returning to complete the commissioning of the sports lighting . . . they don't have any reasonable basis to do that. The last communication at the end of last week was that they were not going to complete that work without additional compensation." Id., pp. 10-11.

Dunn also stated that "McPhee is seeking approximately $800,000 in alleged delay and interruption claims in their pending litigation. To date, despite formal and informal requests, McPhee has produced no credible substantiation for their claims, and we consider their claims wholly meritless. This is also indicative of a loathsome business practice by McPhee as they are attempting the same extortionate claim practice on other projects." Id., p. 6. At the time he made this statement, Dunn was aware that McPhee had made similar claims and had filed suit against a construction manager for labor inefficiency and disruption damages in connection with a public project for the renovation of and addition to a public school in Hartford, ex. 857, 867, and against a general contractor in connection with a mixed residential and commercial property in Hartford, ex. 862.

When Dunn finished his presentation, Michael McPhee was given an opportunity to speak to the building committee and respond to Dunn's statements, ex. 396. He stated, "I take great offense to Mr. Dunn's representation that we have loathsome business practices, but somebody will get a chance to decide that at some other time." Id., p. 19. As to Konover, he said, "you know, they're used to bullying people around, and quite honestly, their bullying hasn't helped your job any." Id., p. 21. However, during this trial Michael McPhee candidly testified that he had no way of identifying the impact of Dunn's statement on McPhee's business nor could he identify any particular job that McPhee did not get because of Dunn's statements at the building committee meeting. He agreed that bringing lawsuits against general contractors and construction managers can, in and of itself, affect a subcontractor's ability to attract new business.

II.

In the first count of the complaint, McPhee alleges breach of contract.²⁵ There are three components to McPhee's breach of contract claim: (1) Konover's failure to pay the contract balance it claims it is due, (2) Konover's refusal to compensate it for eleven change orders and(3) Konover's responsibility to compensate it for a 10,887 hour labor overrun. The labor overrun claim is also at the core of McPhee's claims that sound in negligence in the second count. The court will discuss the first two claims in this section of the memorandum and address the labor overrun in the next section.

25 The specific allegations against Konover are that "it failed to make work available to McPhee in a sequential, timely and reasonably efficient manner as provided in the contract documents," ¶ 11, it "made unreasonable and contractually impermissible adjustments to the Project Schedule and . . . imposing upon McPhee unreasonable demands relating to the scheduling, sequencing and completion of the work," ¶ 12, it made "it clear to McPhee that no time extensions would be granted in connection with McPhee's work," ¶ 13, and by its "actions and inactions or the actions or inactions of others for whom Konover was responsible" it prevented McPhee "from performing its work in the manner set forth in the plans and specifications and in accordance with customary and accepted construction practices and as contemplated by the parties." ¶ 9. McPhee further alleged, ¶ 10, that: "The foregoing actions or inactions resulted in the following: a. McPhee having to continually start and partially complete a work task, stop go on to the other work or virtually demobilize, return to complete the work task; b. an increase in time to complete work tasks over that which was reasonably and in accordance with customary and accepted construction practices; c. an acceleration of McPhee's work to complete its work with accompanying stacking of trades and resultant inefficiencies; d. McPhee's work being unreasonably difficult and inefficient to perform; e. a complete disruption of the Project Schedule; f. moving much of McPhee's work into higher wage periods . . ." Further, McPhee alleged that Konover failed to pay "the balance due on McPhee's contract (including retainage) plus for extra work ordered by Konover." ¶ 16.
Konover filed a special defense to the first count in which it alleged that McPhee breached the contract as follows: "a. failing to supply the project with a sufficient number of skilled workers; b. failing to perform its work consistent with the project schedule, thereby delaying their own work and the work of others; c. failing to properly manage its work efficiently and effectively to achieve the schedule objectives of the project; d. failing to follow the directives of Konover as the Construction Manager; e. making unreasonable and untimely demands for additional compensation before proceeding with the work under the subcontract; f. failing to provide the proper materials and equipment to the project in a timely manner; g. representing to Konover that areas of work were complete when they were not, thus requiring additional work by Konover and other subcontractors; h. failing to coordinate its work with other trades on the project; i. failing to timely comply with directives of the local building officials; . . . j. failing to perform its work properly, requiring the plaintiff to troubleshoot and correct the work; k. in failing to remobilize when directed; and l. in engaging in direct communications with Town of North Haven officials and the architect for the Project without Konover's . . . involvement." (First Special Defense as to the First and Fifth Counts). Konover also alleged by way of special defenses to all counts that: if McPhee suffered an injury it was the result of the acts or omissions of persons or entities that Konover did not control (First Special Defense), that McPhee failed to mitigate or minimize its damages (Second Special Defense) and that McPhee has waived its claims "through the terms of the subcontract, written periodic waivers, and a lack of proper and timely notice pursuant to the terms of the subcontract."

"The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." (Internal quotation marks omitted.) Pelletier v. Galske, 105 Conn.App. 77, 81, 936 A.2d 689 (2007), cert. denied, 285 Conn. 921, 943 A.2d 1100 (2008). There is no dispute that there was a valid fully executed contract between McPhee and Konover, ex. 84 (the subcontract agreement), which incorporated the contract between Konover and the town, ex. 6 (the contract), except to the extent of a conflict between the two.²⁶ "[W]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law." (Internal quotation marks omitted.) Gateway Co. v. DiNoia, 232 Conn. 223, 239, 654 A.2d 342 (1995). "The individual clauses of a contract, however, cannot be construed by taking them out of context and giving them an interpretation apart from the contract of which they are a part. A contract should be construed so as to give full meaning and effect to all of its provisions . . ." (Citations omitted; internal quotation marks omitted.) Levine v. Advest, Inc., 244 Conn. 732, 753, 714 A.2d 649 (1998). When, as was the case here, the "parties execute a contract that clearly refers to another document, there is an intent to make the terms and conditions of the other document a part of their agreement, so long as both parties are aware of the terms and conditions of that other document." Allstate Life Insurance Co. v. BFA Ltd Partnership, 287 Conn. 307, 315, 948 A.2d 318 (2008). Finally, "every provision of the contract must be given effect if it can reasonably be done, because parties ordinarily do not insert meaningless provisions in their agreements." Connecticut Co. v. Division 425, 147 Conn. 608, 617, 164 A.2d 413 (1960).

26 Article 2.b of the Subcontract provides: "Subcontractor shall assume all obligations, risks and responsibilities which Contractor has assumed towards Owner in the Contract Documents, except as may be expressly modified herein. In case of a conflict between this Subcontract and the Contract Documents, the subcontract shall govern."

"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; quotation marks omitted.) EF Construction Co., Inc. v. Rissil Construction Associates, Inc., 181 Conn. 317, 320, 435 A.2d 343 (1980). "[T]he intent of the parties [to a contract] is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . 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 import 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). "[C]ourts do not unmake bargains unwisely made. Absent other infirmities, bargains moved on calculated considerations, and whether provident or improvident, are entitled nevertheless to sanctions of the law . . . Although parties might prefer to have the court decide the plain effect of their contract contrary to the agreement, it is not within its power to make a new and different agreement . . ." (Internal quotation marks omitted.) Id., 505-06.

The court has reviewed the subcontract agreement and the contract in detail and finds both documents to be clear, unambiguous, harmonious and definitive. The court further finds that both parties in this case were sophisticated commercial entities with lengthy experience in the construction field with McPhee having been an electrical contractor since 1974 and Konover having been in construction management for many years as well. When, as here, sophisticated parties enter into commercial contracts, the court may presume under Tallmadge Bros., Inc., id. at 494-97, that the contract language is clear and unambiguous. See United Illuminating Co. v. Wisvest-Connecticut, L.L.C., 259 Conn. 665, 674-75, 791 A.2d 546 (2002). Further, McPhee was aware of the relevant contractual language from the beginning of the bidding process and knew that it had to accept the subcontract agreement without alteration if its bid were accepted. The court will review the specific breach of contract claims in light of these findings.

A.

McPhee claims that Konover owes it a contract balance of $169,966.81 consisting of payments it claims it is due on two pay applications, #18, ex. 273, and #21, ex. 295, as well as $128,368.41 in retainage, Joint Statement ¶ 17. Konover maintains that it was entitled to withhold these sums under the contract as a set-off based on claims it has against McPhee.

McPhee relies, in part, on Article 3 of the subcontract agreement. Article 3.a. specifies that: "Partial payment shall be due Subcontractor in the amount of 95% of the work in place for which payment has been made to Contractor by Owner." Article 3.b. spells out the requisition procedure that was followed in this case, ex. 365. Under Article 3.c. once Konover received payment from the town on account of McPhee's work, McPhee would be entitled to payment.

I.

McPhee's application 18 for January 2006 showed its work as 100% complete except for "Sports Lighting-Labor" and called for payment of $28,459.85. On February 7, 2006, Konover asserted PCO 036, ex. 668, seeking to back charge McPhee $21,369.06 for clean-up during the period of February through October 2005. Although McPhee denied the back charge at a meeting on February 15, 2006, Konover only partially paid McPhee's application 18 and McPhee claims it is owed $20,300.60.

McPhee has failed to prove that Konover improperly back charged it for clean-up. The subcontract agreement required all the trades to clean up daily. Under Article 3.15.3 of the contract, if Konover concluded that "the cleanliness of the project was unsatisfactory" and it could not "determine the source" it was permitted to "have the site cleaned and charge every contractor based on total hours of man-hours worked by each trade contractor that week." As early as November 2004, Konover advised the trades that unless clean up improved it intended to hire laborers and by the end of December 2004 it had advised the trades that it had hired laborers to clean up and the cost was to be divided among them. In PCO 036, Konover documented the back charge in accordance with the provisions of Article 3.15.3

Article 5.d. of the subcontract agreement provided that Konover "is hereby given the right to withhold amounts otherwise due under this Subcontract or any other contractual arrangements between the parties to cover any costs or liability Contractor has incurred or may incur for which Subcontractor may be responsible hereunder." "`Hereby' is an adverb meaning `by virtue of this act' or `by this means.' The American Heritage Dictionary of the English Language, New College Edition; Merriam-Webster's Collegiate Dictionary (10th Ed.)." Snydergeneral Corp. v. Lee Parcel 6 Associates Ltd. Partnership, 43 Conn.App. 32, 37, 681 A.2d 108 (1996). Thus, Article 5.d. gave Konover the means to withhold the permitted and documented clean-up back charge against Application 18. Konover did not breach its contract with McPhee in this regard.

2.

McPhee's application 21, ex, 295, for the period January 22-31, 2007, showed the sports lighting work as 100% complete and requested payment of $16,267.80. In fact, the sports lighting was not complete as of January 2007. The evidence indicates that as of November 2007, McPhee had failed to re-aim the lights and Konover withheld payment per KBA's direction, ex. 318, 352. There was an additional dispute between McPhee and the town regarding responsibility for testing the sports lighting, ex. 330, 804. In April 2008, McPhee agreed to perform this work under protest, ex. 345, ²⁷ KBA continued to have issues regarding the lighting as late as July 2008, but McPhee disputed that it had any responsibility to remediate light intrusion into neighboring property, ex. 352. There is no evidence before the court as to how this issue was resolved by KBA. McPhee concedes that KBA had to approve all payment applications after determining that the construction met the intent of the contract documents.

27 On May 27, 2008, McPhee submitted an invoice to Konover for testing the field lights in the amount of $18,618.19.

In order to establish its contractual entitlement to payment for application 21, McPhee had to prove to the court not only that KBA had approved the payment but also that Konover received payment from the town because that is a contractual "condition precedent to the right of the Subcontractor to receive payment" under Article 3.c. of the subcontract agreement. The court has searched the voluminous record and cannot find any evidence that Konover received payment for the contested application. Accordingly, the court concludes that McPhee has failed to meet its burden of proof on this issue.

3.

It is undisputed that Konover holds $128,368.41 in retainage on McPhee's subcontract, joint statement ¶ 17, and it has not requisitioned the town for this retainage. McPhee asserts that Konover's refusal to requisition the retainage is a breach of the subcontract agreement because it substantially completed its contracted work as evidenced by KBA's issuance of a "Certificate of Substantial Completion" on November 17, 2007, ex. 264, and Konover's payment of the majority of its requisitions, ex. 365, with the exception of applications 18 and 21. McPhee also cites evidence that KBA had approved the release of McPhee's retainage to a balance of either $10,000, ex. 317, or, $5,000.00, ex. 319 by the end of 2007, and that the town sought to have Konover requisition the retainage, ex. 318, 329, 335.

Konover maintains that it was entitled to withhold the release of the retainage under Article 5.b. and 5.d. of the subcontract agreement to set off outstanding claims against McPhee, ²⁸ including for certain back charges and for legal fees incurred in its litigation with McPhee. Konover's position is that this court does not have to determine the legitimacy of these claims, but simply must determine the effect of Article 5 of the subcontract agreement on McPhee's claim for retainage.

28 In KBE Building Corporation v. McPhee Electric, LTD., Judicial District of Hartford, Docket No. CV09-5029901, Konover's successor corporation filed a complaint on May 11, 2009 alleging breach of contract, tortious interference with business expectations, negligent misrepresentation, fraud and CUTPA violations against McPhee arising out of the NHHS project. The allegations are similar to those contained in the counterclaims stricken in this case on December 10, 2008 and February 13, 2009.

"In construction parlance, the term `retainage' ordinarily refers to the percentage of the contract price that a project owner may withhold from a contractor pending completion and acceptance of the contractor's performance under the terms of a construction contract." PSE Consulting, Inc. v. Frank Mercede and Sons, Inc., 267 Conn. 279, 284, n. 3, 838 A.2d 135 (2004). Cf. General Statutes § 42-158i. Konover's obligation to requisition the retainage is defined by the terms of its contract with McPhee. F Welding Services, Inc. v. ADL Contracting Corp., 217 Conn. 507, 517, 587 A.2d 92 (1991).

The subcontract agreement does not define retainage; rather, in Article 3.a. it defines "partial payment" as payment "in the amount of 95% of the work in place for which payment has been made to Contractor by Owner," and then specifies in Article 3.d. that "[f]inal payment shall be made the sooner of written acceptance by Owner . . . of subcontractor's work, or 90 days after the entire project is completed." Article 9.8. of the A201 portion of the contract between the town and Konover, ex. 6, provides that once the architect, here KBA, issues a certificate of substantial completion and the owner, here the town, and the contractor, here Konover, accept it, the "Owner shall make payment of retainage applying to such work or designated portion thereof. Such payment shall be adjusted and permit the Owner to withhold an amount sufficient to cover the cost to complete Work that is incomplete or not in accordance with the requirements of the Contract Documents." Ex. 6, A201, Article 9.8.5. Thus, final payment is clearly governed by Article 9.8 of the contract.

Although Article 5.d. of the subcontract agreement specifies that Konover has "the right to withhold amounts otherwise due under this subcontract or any other contractual arrangements between the parties to cover any costs or liability [it] has incurred or may incur for which [McPhee] may be responsible hereunder," and Article 5.b. specifies those costs and liabilities, it does not explicitly or implicitly permit Konover to refuse to requisition a final payment that falls within the terms of Article 9.8. of the contract. In other words, the court concludes that the subcontract agreement does not conflict with the contract in this regard, that the subcontract does not trump the contract and that Article 9.8 of the contract is operative.

Konover agrees that KBA, not it, was the ultimate arbiter of whether work was completed in accordance with the contract documents. Since KBA approved the release of McPhee's retainage, subject to a small balance, and the town endorsed that release, the court concludes that Konover breached its contract with McPhee in failing to requisition the release of the retainage pursuant to those instructions.

B.

McPhee claims it is entitled to payment on eleven outstanding change orders and that Konover has breached the contract by failing to pay. As is typical in a construction project, there were procedures in place for the submission and processing of various change orders. First, Konover could initiate a change order by submitting a proposed change order, then McPhee would work up the pricing, return it to Konover for review and approval and, upon receipt of an approved change order, McPhee would perform compensable work. A second type of proposed change order could be initiated by McPhee when it believed that there was a discrepancy between the contract documents and the work it was being asked to perform. Under those circumstances, McPhee would perform the work under protest if Konover rejected the change order.

McPhee claims it is entitled to payment in the amount of $18,860.00 for the installation of wiremold strips in place of standard outlets in 41 classrooms and to payment in the amount of $6,860.00 for the cost of fabrication and erection of the structural steel supports for the speaker rigging in the auditorium. Konover denied change orders for these items based on KBA's determination that they were within the scope of the electrical work as provided for in the contract documents and also under the provisions of Article 9 of the subcontract agreement.

Article 9.a. provides that Konover "may, at any time, unilaterally or by agreement with Subcontractor . . . make changes including additions and deletions, in the work covered by this Subcontract. Any unilateral order, or agreement, under this Article 9.a. shall be in writing. Subcontractor shall perform the work as changed without delay, provided Subcontractor has received a written order from Contractor to proceed with the changed work." Konover complied with this provision by directing McPhee in writing to perform the wiremold and speaking rigging work in accordance with KBA's instructions.

McPhee has failed to prove that KBA incorrectly determined that the wiremold and speaker rigging installations were within the scope of the electrical work specified in the contract documents. Article 1.2.4 of the contract provides that "[s]pecifications will determine the `extent' of the work [but] each item of the work is not necessarily mentioned in both the drawings and specifications." Moreover, the same article expressly states that "the Architect shall make the final decision as to which stipulation [i.,e., the drawings or specifications] shall provide the best installation and will be the most consistent with design intent." The wiremold installation appeared on the architect's drawings and the speaker rigging was provided for in supplemental instructions, with attached drawings, from KBA. The court concludes that KBA's determination as to the nature of the work that McPhee had to perform, and that it was within the scope of McPhee's electrical work, fell within the contractual duties delegated to KBA and Konover simply communicated that decision. Konover did not breach its contract with McPhee when it denied the change orders regarding the wiremold and the speaker rigging.

As to the remaining change orders on Conroy's list, ex. 366, for which McPhee claims payment is due to it, one item is the quality control testing of the sports field lighting. On May 7, 2008, McPhee submitted an invoice in the amount of $18,618.99, ex. 377, for the sports lighting work. Conroy conceded that McPhee did not follow the subcontract procedure for change order requests for this item. Thus, the court concludes that McPhee has failed to prove that Konover breached the subcontract agreement in refusing to consider this invoice as a change order.

Another item submitted as a change order was for $5,841.55 for 15 spools of copper wire²⁹ that McPhee claimed had been stolen at the NHHS site some time between the end of the work day on April 22, 2005 and the resumption of work on April 25, 2005, ex. 375. Under "Rider A" to the subcontract agreement, McPhee assumed responsibility to protect its stored materials. Furthermore, the Instructions to Bidders included in the Invitation to Bid package, ex. 10, expressly stated, in paragraph 22, that: "Subcontractor is responsible for protecting material from, [sic] theft, loss or damage and for any losses resulting there from." Konover did not breach its contract with McPhee by refusing to pay for a loss that was solely McPhee's responsibility.

29 The police report indicates that Mackie had advised the investigating officer that "six (6) spools of copper wire were missing." Ex. 375.

In its post-trial brief, McPhee claims that it is entitled to payment for five unspecified items on a time and materials basis, relying on M.J. Daly Sons, Inc. v. West Haven, 66 Conn.App. 41, 50, 783 A.2d 1138, cert. denied, 258 Conn. 944, 786 A.2d 430 (2001), which stands generally for the proposition that if McPhee performed work at Konover's request that was "not contemplated at the time of the formation of the original contract," then a new binding agreement would have arisen that would obligate Konover to pay McPhee for the unforeseen work. See Brian Construction Development Co. v. Brighenti, 176 Conn. 162, 169, 405 A.2d 72 (1978) (When "an unforeseen, burdensome condition was discovered during the performance of an original contract, [t]he promise of additional compensation in return for the promise that the additional work required would be undertaken [constitutes] a separate, valid agreement"). The court finds M.J. Daly inapposite because the contractual agreement between McPhee and Konover contemplated the submission of change orders and McPhee has failed to prove that any of the other items were unforeseen or uncontemplated.

Article 9.b. of the subcontract agreement required McPhee to submit change orders "within ten days after the start of the occurrence giving rise to the claim" and provided that, "No claim for an adjustment in the contract time or price shall be valid if not submitted in accordance with this Article 9 and shall be barred if not so submitted." As to the remaining claims for outstanding change orders, the court finds that McPhee failed to comply with this provision³⁰ and further finds that McPhee's proof is insufficient to establish their validity.

30 The court rejects McPhee's argument that the term "occurrence" contained in Article 9.b. is ambiguous in the context of a change order initiated by McPhee that refers to work performed by it on a specific date.

III.

McPhee claims that it suffered a labor overrun of 10,887 man hours because Konover breached duties owed to it both in contract, as alleged in the first count, and tort, as alleged in the second count based on the same facts pleaded in the first count.³¹ The essence of McPhee's claim is that its labor productivity was affected because Konover negligently failed to schedule, sequence and coordinate McPhee's work as contractually required and that Konover's failure to act reasonably created conditions that resulted in what McPhee characterizes as "labor inefficiencies." (Post-Trial Brief, p. 7.) Although McPhee maintains that Konover may be found liable both for directly breaching its contractual obligations and also for negligent performance of its contractual obligations, there is no doubt that it seeks relief under these alternative theories for the same harm. Furthermore, McPhee agrees that to find liability under either theory the court must determine whether Konover acted reasonably.

31 Specifically, the second count incorporates the allegations of ¶¶ 1-16 of the first count. The operative allegations, contained in ¶¶ 9, 10, 11, 12 and 13, are set forth in note 25, supra.

A.

Konover maintains that the court cannot determine whether it acted reasonably in the absence of expert testimony as to the standard of care required for construction managers. There is some merit to Konover's position. In the second count, ¶ 17, McPhee alleged that Konover owed it three specific duties of care: a. "to exercise reasonable care in preparing and modifying the Project schedule" and in generally scheduling McPhee's work, b. "to exercise reasonable care in coordinating the work of its subcontractors on the Project," and c. "to use the degree of skill and care which could reasonably and normally be expected from construction managers holding themselves out as being capable of performing construction management services in connection with school construction projects."

At the close of the plaintiff's case, Konover orally moved for dismissal of the second count pursuant to Practice Book § 15-8. This court granted the motion in part, concluding that the allegations of ¶ 17.c required expert testimony to establish the standard of care "which could be reasonably and normally expected from construction managers holding themselves out as being capable of performing construction management services in connection with school construction projects." This court reasoned that this allegation of negligence was essentially a claim of professional negligence, which is defined as "the failure of one rendering professional services to exercise that degree of skill . . . commonly applied under all the circumstances in the community by the average prudent reputable member of the profession with the result of injury, loss, or damage to the recipient of those services." (Internal quotation marks omitted.) Davis v. Margolis, 215 Conn. 408, 415, 576 A.2d 489 (1990).

In "cases in which the fact finder's decision requires specialized knowledge, expert testimony is necessary to assist lay people, such as . . . the presiding judge, to understand the applicable standard of care and to evaluate the defendant's actions in light of that standard." (Internal quotation marks omitted; citations omitted.) Santopietro v. New Haven, 239 Conn. 207, 227 (1996). Expert testimony is also required to establish that a standard of care has been breached. Id., 229. This requirement has been applied not only to claims against those who render traditional professional services, such as physicians and lawyers, but also to others who render services based on specialized knowledge, training and experience that is beyond the ordinary knowledge or experience of the fact finder. Id., 227 (softball umpire); Keeney v. Mystic Valley Hunt Club, Inc., 93 Conn.App. 368, 374-75, 889 A.2d 829 (2006) (riding instructor of novice riders).

The provision of construction management services specifically in connection with school construction projects is a highly technical and specialized area. In the absence of any expert testimony on the requisite standard of care for the provision of these specific services, this court determined that McPhee had failed to establish a prima facie case as to the allegations contained in ¶ 17.c of the negligence count. The court adheres to that ruling.

Additionally, McPhee has maintained that Konover owed it a duty, both under the terms of the contract and under the common law, to provide certain construction management services, "in accordance with customary and accepted construction practices," First and Second Counts, ¶¶ 5, 9, 10.b. What constitutes a "customary and accepted construction practice" is not a matter of common knowledge and is beyond the ken of this fact finder. Although there was no disclosed expert on this topic, many of the witnesses had considerable experience and knowledge about construction practices. Thus, the court will look to the evidence which was presented to determine if McPhee has met its burden to establish the customary methods of practice in similar construction projects. The court is mindful that claims of the type which McPhee is asserting here, such as loss of productivity, acceleration or compression of work resulting in inefficiency, and disruption of labor, generally require the presentation of credible expert testimony. See, e.g., Southern Comfort Builders, Inc. v. United States, 67 Fed.Cl. 124, 143 (Ct.Fed.Cl. 2005).

B.

McPhee claims that Konover had and breached an implied contractual duty to keep the work in a "state of forwardness" so that McPhee could complete its work in the manner it contemplated when bidding the project. McPhee relies on Stehlin-Miller-Henes Co. v. Bridgeport, 97 Conn. 657, 663, 117 A. 811 (1922), where the court implied a duty on the part of a general contractor to keep the work on the project "in such a state of forwardness" to enable its subcontractor "to complete its contracts within the time limited," when the parties had executed a contract that expressly provided for "[t]he work to be installed as fast as the building is in condition for it to be done, and this contractor is not to cause any delay in the progress of the work of the general contractor." Id., 658. Relying on Stehlin-Miller-Henes, the court in Li Volsi Construction Co. v. Shepard, 133 Conn. 133, 136, 48 A.2d 263 (1946), held that "[i]n the absence of an express covenant there is an implied one that the contractor shall be permitted to proceed with his construction in accordance with the contract and that he shall be given possession of the premises to enable him to do so. A delay caused by the owner may constitute a breach excusing performance as required by the contract." However, to constitute a breach, the conduct "must be wrongful, and accordingly, in excess of . . . legal rights . . . [P]ermitted conduct . . . by one promisor [that] renders unpleasant or inconvenient performance by the other of his agreement effects no discharge of that obligation." (Citations omitted, internal quotation marks omitted). Id., 136-37.

Thus, the general rule is that when time is of the essence, the party with the right to direct the progress of the work, here Konover as construction manager, may not wrongfully hinder or delay the performance of a subcontractor and, "in the absence of contractual provisions to the contrary," the subcontractor may "recover increased-cost-of-performance damages resulting from delay caused by the default of the contractee." Amp-Rite Electric Company, Inc. v. Wheaton Sanitary District, 220 Ill.App.3d 130, 151, 580 N.E.2d 622, 636, 162 Ill.Dec. 659 (Ill.App. 1991), appeal denied, 143 Ill.2d 635, 587 N.E.2d 1011, 167 Ill.Dec. 396 (1992). Since the general rule "may be made inapplicable by the express and peculiar provisions of the subcontract" (citations omitted; internal quotation marks omitted), Walter R. Cliffe Co. v. DuPont Engineering Co., 298 F. 649, 651 (D.Del. 1924), this court must examine the applicable provisions of the subcontract agreement, both with respect to the provisions that McPhee relies upon as creating an implied obligation and with respect to Konover's defense premised on the "no damages for delay" clause. See Frank T. Hickey, Inc. v. Los Angeles Jewish Community Council, 128 Cal.App.2d 676, 685, 276 P.2d 52, 59 (Cal.App. 1954) (express provision of subcontract waiving damages for delay renders any implied obligation to move forward inapplicable).

McPhee asserts that Article 8.a., 8.c., 8.e. and Article 14.a. of the subcontract agreement implied obligations on the part of Konover to schedule and coordinate McPhee's work and "to take reasonable steps to protect McPhee from stoppages, delays, interruption and interference by other subcontractors." (Post-Trial Brief, p. 5.) To the contrary, however, Article 8, which stated that time was of the essence, clearly and unambiguously obligated McPhee to "proceed with the work in a prompt and diligent manner, in accordance with Contractor's schedule as reasonably amended from time to time, or as reasonably directed by the Contractor's authorized representative," to "coordinate its work with the work of Contractor, other subcontractors . . . so no delays, interference or interruption will occur," and to "supply a sufficient number of skilled workers to perform" its work. Article 14.a.³² gave Konover the authority to take necessary steps to overcome specified conditions created by McPhee's conduct including terminating McPhee. Under these provisions, McPhee was obligated to take reasonable steps to perform its work diligently, to keep itself apprised of any changes to the schedule that Konover may have put in place, to coordinate with the other MEP subcontractors and to provide sufficient labor to complete the work within the specified time. These provisions were known to McPhee at the time it submitted its winning bid, as was the fact that the town intended for the school to open in September 2005.

32 Article 14.a. entitled "Subcontractor's Failure to Perform and Termination for Cause" provides that the contractor can take steps to overcome the condition or terminate for cause if, "in the opinion of contractor, subcontractor shall (1) refuse or fail to provide a sufficient number of properly skilled workmen, adequate supervision or materials or the proper quality, (2) fail in any respect to prosecute the work according to the current schedule or as directed by the Contractor, (c) cause . . . the stoppage, or delay of, interruption or interference with the work of Contractor or any other builder of subcontractor or (4) fail to comply with any provisions of this Subcontract or the Contract Documents . . ."

McPhee also claims Konover had a duty to it to properly perform its scheduling and coordination responsibilities under the contract with the town, ex. 6, and that it was negligent in performing these obligations. Under the "General Conditions of the Contract for Construction," form A201 Article 3.3.4, although Konover was "responsible for the coordination and supervision of all trade contractors," the subcontractors had a correlative duty to "cooperate with the Construction Manager" and were held "responsible for scheduling their own labor and material which shall be available to complete all work during the time periods listed." Furthermore, under Article 2.b. of the subcontract agreement, the specific coordination requirements of the subcontract trump the general requirements of the contract. See n. 26, supra. Article 8.c. of the subcontract provided that "Subcontractor will coordinate its work with the work of Contractor, other subcontractors and Owner's other builders, if any, so no delays, interference or interruption will occur in the completion of any part or all of the Project."

Article 3.10.1 of the contract required Konover to prepare construction schedules, including subcontractor milestone schedules, and submit them for the owner's and architect's information. Konover was also responsible, pursuant to Article 3.10.3, for "taking such actions as are necessary to make sure that all contractors perform their work in such sequence and in such separate stages as required by the project and the work of the other contractors. The work must be carried out in strict accordance with the approval of schedule which may involve intermittent work in any particular area. The work shall be done expeditiously with adequate forces and shall be completed in the specified time." Again, the subcontractors had a correlative duty, under Article 3.10.4, to perform their work "in a manner so as not to delay any other contractor and/or the project completion."

The court therefore concludes that although Konover and McPhee had mutual obligations under the contract and subcontract agreement for scheduling and coordination of McPhee's work, Konover had broad powers to modify the schedule and direct McPhee's work in light of the fixed and specified time in which the work had to be completed. The court further concludes that McPhee has failed to establish that Konover acted wrongfully or unreasonably in fulfilling its obligations to schedule, sequence and coordinate the work, and therefore Konover cannot be found in breach of its contract with McPhee or to be negligent.

1.

McPhee maintains that the milestone schedule for electrical work dated March 24, 2004, ex. 13, which was attached as "Rider D" to the subcontract agreement, and the August 30, 2004 schedule, ex. 69, which was a copy of a master schedule for the entire project that had been posted in the Konover trailer, were both inadequate for its use in scheduling "material procurement, staff planning" and for scheduling its work performance. (Post-Trial Brief, p. 6.) James Lynes, its project manager, testified that he relied on the August 30, 2004 schedule, as well as modified schedules that Konover issued, to prepare ascending order schedules for his use. While Lynes questioned Konover's decision in November 2004 to change the sequencing of the work in the academic wing to floors³³ from areas, ex. 118, 119, Konover had the discretion to make this change under Article 8 of the subcontract agreement and Lynes prepared an ascending order schedule based on the changed sequence in December 2004. Indeed, according to Henry Mackie, who had worked as a foreman for McPhee for 18 years and had experience working on many large commercial construction projects, out of sequence work is not an uncommon occurrence.

33 This change, which sequenced the work starting on the second floor in areas C, B and A and then went to the first floor and finally to third floor, most likely came about due to the issues concerning the fireproofing and dormer defects, see n. 7 and accompanying text, supra.

Konover issued a number of modified schedules between August 30, 2004 and September 14, 2005 and it was within its rights under Article 8 of the subcontract agreement to issue revised schedules. In addition, McPhee's two foremen on the project, Mackie and Anthony Rasile, testified that they relied on the ascending order schedules that Lynes prepared, as well as two-week "look-aheads" that Konover regularly provided, to determine how many workers were needed on site. Neither Mackie nor Rasile testified that they found the schedules or look-aheads to be inadequate for their purposes. Furthermore, Rasile testified that he did not rely at all on Rider D in scheduling manpower and had only seen it for the first time in connection with this litigation.

2.

McPhee complains that it was misled by the bid documents with respect to scheduling and to the sequencing of precursor work. It claims, for example, that before the second bids were submitted Konover should have disclosed a baseline schedule, ex. 176, prepared for it by its consultant Kevin Jennings in May 2004. It relies on Michigan law that, in the context of public construction bidding, imposes a duty of disclosure with respect to known existing conditions. Earl L. Reamer Co. v. Swartz Creek, 76 Mich.App. 227, 256 N.W.2d 447 (1977); Valenti v. Adrian, 347 Mich. 530, 79 N.W.2d 885 (1956); Hersey Gravel Co. v. State Highway Dept., 305 Mich. 333, 9 N.W.2d 567 (1943). The cited Michigan cases involve the failure to disclose known natural conditions such as soil condition or quality. There is a significant difference between failing to disclose a known fact that may impact the scope of the work for which a bid is submitted and failing to disclose more predictive items, such as estimates and draft schedules. See Walter D. Giertsen Co. v. State, 34 Wis.2d 114, 119, 148 N.W.2d 741 (1967). There is no obligation for a prime contractor to disclose all its draft schedules to subcontractors. "Schedules may be goals or may be deadlines." Crawford Painting Drywall Co. v. J.W. Bateson Co., Inc., 857 F.2d 981, 985 (5th Cir. 1988), cert. denied, 488 U.S. 1035, 109 S.Ct. 850, 102 L.Ed.2d 982 (1989).

McPhee concedes that there is no Connecticut appellate authority that imposes a duty to give bidders all relevant information. As a matter of policy, such a duty could create the risk, as noted by the concurring opinion in Earl L. Reamer, supra, 76 Mich.App. 235-36, 256 N.W.2d 451, of "encouraging public contractors to seek to convert their fixed price contracts to a kind of cost plus fee contract by the device of claiming the public body had information which it did not disclose to the bidder."

McPhee had to be aware at the time of the submission of the second bid that Konover had broad powers under the contract documents to make schedule modifications within the specified time frame for a September 2005 opening date and that, given the nature of a complicated school construction project with much work occurring during winter months, it would be likely that some compression or acceleration of work would occur, as well as some disruptions or interferences occasioned by other subcontractors. Furthermore, according to the credible testimony of the defense expert, who prepared an "as built" chart based comparing Rider D with the actual work performed, ex. 903, this project was staged in such a way that required the electrical subcontractor to return to certain areas to perform rough work. McPhee apparently miscalculated in adjusting its labor hours downward in the second bid but, given the nature of the bid process here, it is the one that must bear the risks associated with underestimating its labor hours.

3.

The evidence fails to establish that Konover acted wrongfully or unreasonably in fulfilling its obligations to schedule, sequence and coordinate McPhee's work. The court concludes that McPhee itself bears significant responsibility for its claimed labor inefficiencies. For example, as early as July 26, 2004, concerns were expressed regarding McPhee's installation of the MC cable in the decking flutes and whether it conformed to code. Ultimately, McPhee had to return to areas where it had installed cable to implement an acceptable solution, yet problems persisted with McPhee's work well into 2005. See I.A., supra, pp. 9, 10, 13, 14, 19. A second and similar issue regarding installation of cable in the gym roof decking arose in November 2004 and was not resolved until February 2005, when again McPhee had to return to remove and reinstall cable. See fn. 8 and accompanying text, supra. As early as October 2004, McPhee was aware that, due to issues with the fireproofer and the dormer defects, Konover intended to change the sequence of work in the academic wing from areas to floors but there is no evidence that it took any concerted efforts to adapt its work to this change. Rather, McPhee began to complain, starting in January 2005, that it would not have enough time to complete its work and suggested to Konover that it "consider delaying the opening of the school or portions thereof," ex. 146, although it knew, from the time it bid on this project, that the opening date was fixed for September 2005. Similarly, although McPhee was aware from the inception of the bid process that the A-E connector was to be one of the last portions of the building to be constructed and that the low voltage systems were to terminate in that part of the building, it does not appear to have planned well for the completion of those systems.

The evidence establishes that Konover acted reasonably in adjusting the schedule and taking other steps to address on-going issues at the project site. When, for example, extremely cold weather in January 2005 created problems that delayed completion of the roofing system in areas D and E, Konover issued a revised schedule extending the completion dates for the work in those areas. When the original fireproofing subcontractor abandoned the job in April 2005, another subcontractor was already in place to do that work. After Lynes detailed his concerns regarding the completion of the low voltage systems and other work in a letter sent on April 22, 2005, Strauss met with him on May 13, 2005 to go over an agenda of some 39 items that included the concerns addressed in the April letter and they were able to resolve most of the issues. When McPhee was the only subcontractor to request overtime in August 2005, Konover authorized a change order for $35,6161.00 in overtime so that McPhee could complete a list of tasks that had to be done in order for the school to open on time.

C.

Konover maintains that McPhee's labor overrun claim is barred by what is commonly known as a "no damages for delay" clause that was set forth in Article 9.d. of the subcontract agreement and provides:

Subcontractor acknowledges that delays resulting from changes in the work, extreme weather, changes to the sequencing of the work, material shortages, transportation, strikes and other causes are inherent in the construction process. Subcontractor acknowledges that it has accounted for delays in its prices and agrees to bring no claims for money damages as a result of any delay or hindrance. In the event that Subcontractor claims that it has been delayed or hindered, it shall submit a request for a time extension to Contractor in the manner and pursuant to the time periods set forth in the Contract Documents. If it is determined that Subcontractor has been delayed or hindered through no fault of its own, the time for performance hereunder will be extended and the extension of time will be Subcontractor's sole remedy for the delay. Under no circumstances will the Contractor or Owner be liable to the Subcontractor for damages resulting from any delays or hindrances.

In White Oak Corp. v. Dept. of Transportation, 217 Conn. 281, 288-89, 585 A.2d 1199 (1991), the court concluded that such exculpatory clauses "are generally valid and enforceable and are not contrary to public policy," subject to four specific exceptions "(1) delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delay, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee's breach of a fundamental of the contract."

McPhee's response is four-fold. First, it asserts that Article 9.d. does not apply because its loss of labor productivity did not result from delay but rather from disruption. Second, it asserts that the first and second White Oak exceptions apply to render Article 9.d. inoperative. Third, it claims entitlement to payment under Article 9.b. Fourth, it claims that Article 9.d. does not apply to the delay of its work on the athletic field.

1.

McPhee claims it seeks "disruption damages," and argues that disruption is different from delay in order to avoid Article 9.d. It defines "disruption" as "an activity-specific loss of productivity caused by changes in working conditions under which that activity is performed . . . a material alteration in the performance conditions that were expected at the time of the bid . . . Disruption damages can be traced to specific activities; delay damages cannot." B. Bramble M. Callahan, Construction Delay Claims (2008 Cumulative Supplement, Wolters Kluwer) § 1.03. McPhee reasons that since the NHHS opened on time in September 2005 there was no delay.

Article 9.d. prohibits recovery not just for delay damages, but specifically for "money damages as a result of any delay or hindrance." (Emphasis supplied.) The word "hindrance" is a noun defined as "the state of being hindered . . . the action of hindering . . ., something that hinders." The word "hinder" is a verb defined as "to make slow or difficult the course of or progress of . . . to keep from occurring, starting or continuing;" "hinder indicates a checking or holding back from acting, moving or starting . . ." Webster's Third New International Dictionary. Cf. Cleveland Construction Co. v. Ohio Employees Public Retirement System, 2008 Ohio App. LEXIS 1403, appeal denied, 119 Ohio St.3d 1447; 2008 Ohio 4487; 893 N.E.2d 517 (2008) (broadly defining "delay" as "`[h]indrance to progress; (a period of) time lost by inaction or inability to proceed.' Oxford English Dictionary (6 Ed. 2007) 635. Delay is the result caused when something is postponed, hindered, or slowed. See Black's Law Dictionary (8 Ed. 2004) 458").

To establish its disruption claim, McPhee cites to nine specific events it claims caused its labor overrun including incomplete or extended precursor work, ³⁴ work stoppage, stacking of trades, unavailability of certain areas, and interference. (Post-Trial Brief, p. 7.) It is not necessary to evaluate each of these independently because the court concludes that the impact of these events was either to extend the completion dates of certain work beyond the dates contained in the original milestone schedule, Rider D, a form of delay, or "to make slow or difficult" the progress of the work or to hold McPhee back from acting on or continuing a course of work, all forms of hindrance. Thus, even if Konover were responsible for these events, a finding the court has not made, any damages resulting from them are not compensable under Article 9.d. Additionally, assuming McPhee was delayed or hindered through no fault of its own, Konover complied with Article 9.d. by extending completion dates through the issuance of numerous revised schedules and allowing McPhee to continue to do electrical work within the school after it opened on September 8, 2005.

34 Henry Mackie, however, described the impact of precursor work not being done as delay, not disruption. McPhee also has claimed it was delayed in connection with the work that had to be done in the athletic fields. In fact, the work on the athletic fields was delayed due to issues regarding contamination and the demolition of the existing high school. See I.B. supra.

Not all disruption is compensable. "The mere occurrence of a disruption to a contractor's planned performance does not automatically entitle the contractor to compensation. An obvious example . . . is when the event should have been anticipated by the contractor, as, for example . . . that the contractor will have to work in conjunction with another contractor. [Foreseeable] events would not support a claim for disruption because . . . the contractor should have anticipated them based on the contract documents. In other words . . . the contractor was not reasonable in planning its performance around them. Also included within this type of noncompensable disruption are those caused by the contractor's own actions, such as improper scheduling . . . The contractor cannot complain when its disrupted performance is based on unreasonable assumptions or its own poor planning or performance." R. Cushman, et al., Proving and Pricing Construction Claims (3d. Ed. Aspen Law Business) § 3.03. The court has already found that McPhee contributed significantly to its labor overrun based on unrealistic assumptions and poor planning. See III.B.3., supra.

Generally, it is difficult to prove legal entitlement to compensation for disruption damages. See Id., § 3.06. "A claimant must show not only that the disruption resulted solely from the defendant's actions, but . . . must also show the extent of the disruption and the harm it caused." Aetna Casualty Surety Co. v. The George Hyman Construction Co., 1998 U.S.Dist. Lexis 22627 (E.D.Pa. 1998). McPhee has not met its burden of proof on these issues.³⁵

35 The court did not find McPhee's damages expert, Robert Dieterele, to be a credible witness. Thus, even if Article 9.d. did not preclude disruption damages, there is no credible evidence upon which the court could make an appropriate finding regarding these damages.

2.

McPhee argues alternatively that its labor overrun claim is not barred by Article 9.d. because the delay or hindrance falls under two of the White Oak exceptions: (1) it was uncontemplated and (2) it resulted from bad faith or willful, malicious or grossly negligent conduct on Konover's part.

(a)

"For a delay to be uncontemplated, it must be uncontemplated by both parties, or more objectively stated, must not be reasonably foreseeable." (Internal quotation marks omitted.) White Oak Corp. v. Dept. of Transportation. supra, 217 Conn. 291. Whether a delay is reasonably contemplated is a question of fact. JWP/Hyre Electric Co. v. Mentor Village School District, 968 F.Sup. 356, 360 (N.D. Ohio 1996). In executing the subcontract agreement here, McPhee acknowledged that "delays resulting from changes in the work, extreme weather, changes to the sequencing of the work . . . and other causes are inherent in the construction process." It seeks to distinguish its agreement from the one upheld in White Oak on the ground that the latter specifically referred to delays relating to moving and installing a gas line while its agreement is more general. This court concludes, however, that the terms "changes in the work," "extreme weather," and "changes to the sequencing of the work," albeit broad, are specific and inclusive of the alleged disruptions that McPhee cites. Moreover, this court cannot disregard McPhee's own role in creating its alleged disruption with respect to the installation of the MC cable in the flutes in the decking in the academic wing and the delays it caused with respect to the installation of the gymnasium roof because of the manner in which it had installed cable in the top of the gym roof decking. Having voluntarily entered into an agreement with a broad exculpatory clause, McPhee must be held bound to it. See Cauldwell-Wingate Co. v. New York, 276 N.Y. 365, 379, 12 N.E.2d 443 (1938) (Lehman, J., dissenting.).

The evidence establishes that it took McPhee longer to complete its rough and finish work than was contemplated by the original electrical milestone schedule; however the delays were not of such a magnitude to make Article 9.d. inapplicable. White Oak Corp. v. Dept. of Transportation, supra, 217 Conn. 293. McPhee was required to prove that the delays were "wholly unanticipated," Manshul Construction Corp. v. Board of Education, 160 A.D.2d 643, 644, 559 N.Y.S.2d 260 (App.Div. 1st Dept.) appeal denied, 76 N.Y.2d 709, 561 N.Y.S.2d 913, 563 N.E.2d 284 (1990), and it has failed to meet this burden.

McPhee complains that it could not have contemplated that the work of other subcontractors, specifically the spray fireproofer and the mason, would exceed the number of days set forth on the milestone schedules in the bid package and that those trades would still be working in the summer of 2005. Although McPhee maintains that trade stacking in the summer of 2005 caused its work to be more difficult and expensive than it originally contemplated at the time of the bid, the evidence establishes that McPhee always contemplated having only two crews (power and systems), always had two crews and did not supplement its labor even when Konover directed it to do so. "The occurrence of delays in the performance or completion of a construction contract is common and foreseeable." S. Stein, Construction Law (LexisNexis Matthew Bender 2008) § 6.09. But the evidence establishes that McPhee did not account for any likelihood of delay or hindrance in preparing its bid or re-bid for the NHHS project, even though it was aware at the time of the re-bid that the project would commence after the dates set forth in the milestone schedules and that a considerable portion of the work would take place during months when the weather was likely to be inclement.

McPhee also complains that the work stoppage on the third floor of the academic wing was uncontemplated; however, the contract specifically contemplated the possibility of subcontractor work interruptions resulting in changes in sequencing. See Ex. 6, A 201, Article 3.10.3. There were problems on the third floor associated with the fireproofing and due to water leakage from a dormer design defect. Problems of this type on a large construction project are reasonably foreseeable. Any delay resulting from the design defect was not caused by Konover which responded appropriately by changing the sequencing of the work to floors rather than areas while KBA developed a solution to the dormer defect. Both McPhee and Konover were aware that KBA had the sole responsibility for the design of the building and any design changes. As to the fireproofing, McPhee participated in the coordination meeting that Konover held where it was agreed that the MEP rough would not occur on the third floor until the fireproofing issues had been completely resolved.

(b)

Alternatively, McPhee claims that its labor overrun resulted from bad faith or willful, malicious or grossly negligent conduct on Konover's part under another exception to the enforcement of a "no damages for delay" clause adopted in White Oak from Corrino Civetta Construction Corp. v. New York, 67 N.Y.2d 297, 309, 493 N.E.2d 905, 502 N.Y.S.2d 681 (1986). In the absence of Connecticut law interpreting the proof required to establish this exception, the court will be guided by New York law which describes the requisite misconduct as that which "smacks of intentional wrongdoing . . . as when it is fraudulent, malicious or prompted by the sinister intention of one acting in bad faith [connoting a dishonest purpose]. Or, when . . . it betokens a reckless indifference to the rights of others." Kalisch-Jarcho, Inc. v. New York, 58 N.Y.2d 377, 416-17, 448 N.E.2d 413, 461 N.Y.S.2d 746 (1983). "A determination of gross negligence requires a finding of something more than active interference, i.e., wilfulness, maliciousness, or bad faith . . . Thus, in order to establish bad faith, [the plaintiff] must make an extraordinary showing of a disingenuous or dishonest failure to carry out a contract." (Internal quotation mark omitted; internal citations omitted.) Premier-New York, Inc. v. Travelers Property Casualty Corp., 20 Misc.3d 1115A, 867 N.Y.S.2d 20, 2008 NY Misc. Lexis 7232 (Sup.Ct. 2008). See Elliott v. Waterbury, 245 Conn. 385, 415, 715 A.2d 27 (1998) (defining tortious "wilful, intentional and malicious" conduct under the common law as "such conduct as indicates a reckless disregard of the just rights of others or of the consequences of the action . . . highly unreasonable conduct, involving an extreme departure from ordinary care . . ."); Markey v. Santangelo, 195 Conn. 76, 78, 485 A.2d 1305 (1985) ("A wilful or malicious injury is one caused by design. Wilfulness and malice alike import intent . . .").

McPhee has failed to prove that Konover did anything that amounts to bad faith or reckless indifference. The cited conduct to support this claim — that Konover is seeking compensation for extended supervision from the town, that it refused to consider a delayed opening date for all or a portion of the school and pushed McPhee to complete its work before the opening date in September 2005, that it allowed precedent work to lag, that it denied McPhee access to critical areas, and that it issued unreasonable and unsubstantiated change orders, withheld progress payments and refused to requisition McPhee's retainage (Post-Trial Brief, pp. 24-28) — does not demonstrate the level of wilfulness or dishonesty required to meet this exception.

3.

McPhee has not proven its claim that "Konover has treated McPhee's disruption claim as one for additional compensation under Article 9b and therefore `Cost of Work' for purposes of Konover's contract with the Town." (Post-Trial Brief, p. 28.) To support this claim, it relies on exhibit 333, an April 4, 2008 e-mail from Robert Dunn, Konover's general counsel, to Jeffrey Donofrio, the town's attorney. In the e-mail, Dunn stated, in part, that the costs incurred with respect to the "pending litigation . . . will be a Cost of the Work and payable by the Town under the Construction Management Agreement." In the contract between the town and Konover, ex. 6, form A 121 is the construction management agreement. Article 6 is entitled the "Cost of the Work for the Construction Phase" and it permits Konover to seek recovery of "[l]egal . . . costs . . . reasonably incurred . . . in relation to the performance of the Work . . . Such costs shall include disputes with subcontractors . . ." Article 6.1.6. The court concludes that Dunn's e-mail is based on this Article and not on Article 9.b. of the subcontract agreement.³⁶ McPhee has failed to prove that its labor overrun claim is recoverable under another provision of its subcontract agreement. See White Oak Corp. v. Department of Transportation, supra, 217 Conn. 293, n. 9.

36 The evidence establishes that after McPhee initiated this litigation, Konover took the position that the litigation costs were recoverable by it from the town as a cost of the work, although the town may not have agreed with this position. See ex. 303.

4.

Finally, McPhee maintains that Article 9.d. does not bar recovery for its work on the athletic fields which it claims was delayed unreasonably and resulted from events outside the contemplation of the parties. The evidence establishes that from the inception of the project the plan was to abate and demolish the existing high school starting in late September 2005 and locate the Brookside/North Field, which included the ball fields that required installation of sports lighting, at that site. The evidence also establishes that there was a 90-day delay in the start of the site development work at the fields located on the footprint of the old high school.³⁷

37 McPhee's claim that it believed the athletic fields would be completed by August 2, 2005 (Post-Trial Brief, p. 29) based on line 01-0100 on the first page of the August 30, 2004 schedule, ex. 69, is not credible. The same schedule showed that Haz-Mat of the existing high school would start on September 19, 2005 and that the demolition of the existing high school would start on October 31, 2005 and be completed on December 9, 2005, lines 95-1010 and 95-1020. The bid documents clearly specified that almost all the site work for the athletic fields on the site of the existing high school would take place after remediation and demolition. See n. 21 and text associated, supra.

The court concludes that this 90-day delay was neither unreasonable nor uncontemplated under White Oak. The fact that additional contaminates might be found in the demolition debris of an existing older high school is reasonably foreseeable. A 90-day delay is not inordinate. Additionally, although Konover authorized McPhee to commence its athletic field work in late July 2006, McPhee did not remobilize to do the sports lighting until September 5, 2006. Accordingly, the court concludes that Article 9.d. applies to the athletic field claims as well.

IV.

The court will briefly address Konover's claim, in its Third Special Defense, that McPhee's claims are barred because it executed periodic lien waivers. Between September 28, 2004 and December 28, 2006, McPhee's assistant treasurer executed documents entitled "PARTIAL WAIVER OF MECHANIC'S LIEN AND PAYMENT BOND RIGHTS" in exchange for payments received from Konover covering work from July 2004 through November 2006. Ex. 596. The body of each of these lien waivers provided: "The Undersigned Subcontractor (hereinafter "Subcontractor") and/or Supplier (hereinafter "Supplier") acknowledges receipt of the amount set forth above as payments received for the period indicated and waives and releases any claim, mechanic's lien and claim of lien which it may now have upon the land and improvements described above in the Project Description for all work pursued and materials supplied through, and including, the period indicated above. The Subcontractor/Supplier warrants that it has not and will not assign any claims for payment or right to perfect a lien against such land and improvements and warrants that it has the right to execute this waiver and release, contingent upon receiving said payment."

The lien waivers must be construed by examining all the quoted language including the caption. Biolowans v. Minor, 209 Conn. 212, 217-18, 550 A.2d 637 (1988). "[A]ll references to `liens' appearing in the language immediately below this caption are necessarily modified by it . . ." Id., 218. Accordingly, the court concludes that McPhee agreed only to waive its right to file mechanic's liens and its payment bond rights, but not its right to file other claims against Konover. Furthermore, McPhee points out that it is not making any claims in this case against the project land or improvements or against a surety payment bond. The lien waivers do not apply to this case.

V. A.

The fourth count of the second revised amended complaint alleges defamation. In its answer dated January 23, 2009 (#164), Konover pled four special defenses to this count: truth (first special defense), communication of an opinion (second special defense), the fair comment privilege (third special defense) and self-publication (fourth special defense). On April 6, 2009, Konover filed a "Request for Leave to File Amended Answer and Special Defenses" (#199) to change the third special defense to read, simply, "The statements are privileged." McPhee filed a timely objection to this request on April 13, 2009, the day evidence began, but the court was not asked to rule upon the request or the objection on the record at that time. When the evidence concluded, the court issued an order directing the parties to brief their legal claims and defenses as raised in the second amended revised complaint dated December 23, 2008 (#159) and the answer dated January 23, 2009 (#164). Neither side brought the request for leave to amend the answer and special defenses to the court's attention at that time. The issue of whether the court would permit the amendment to the third special defense was raised for the first time at oral argument on June 25, 2009. Consequently, before considering the merits of the defamation count, the court must first determine whether to permit the amendment in light of McPhee's objection.

As a matter of policy expressed in statute, General Statutes § 52-130, court rule, Practice Book § 10-60, and case law, see., e.g., Johnson v. Toscano, 144 Conn. 582, 587, 136 A.2d 341 (1957), Connecticut liberally permits the amendment of pleadings. However, "this liberality has limitations. Amendments should be made seasonably. Factors to be considered in passing on a motion to amend are the length of the delay, fairness to the opposing parties and the negligence, if any, of the party offering the amendment." Beckman v. Jalich Homes, Inc., 190 Conn. 299, 302-03, 460 A.2d 488 (1983). "Where a sound reason to amend is shown, the trial court must allow the amendment . . . unless it will cause an unreasonable delay, mislead the opposing party, take unfair advantage of the opposing party or confuse the issues, or if there has been negligence or laches attaching to the offering party." Moore v. Sergi, 38 Conn.App. 829, 836, 664 A.2d 795 (1995). Although Connecticut law permits the court to exercise its discretion to permit an amendment to a pleading even after judgment has entered, see Burton v. Stamford, 115 Conn.App. 47, 58, 971 A.2d 739 (2009), the court must take the circumstances into account in exercising its discretion. In this case, since the evidence had closed before the issue of amending the answer was argued to the court, the court concludes that the overarching consideration is whether permitting or refusing the proposed amendment to the third special defense "will work an injustice to either the plaintiff or the defendant." Smith v. New Haven, 144 Conn. 126, 133, 127 A.2d 829 (1956).

McPhee objects to the proposed amendment on a number of the grounds. First, it asserts the proposed amendment was untimely filed in a manner that deprived it of an opportunity to challenge its legal sufficiency. See Beckenstein v. Reid Reige, P.C., 113 Conn.App. 428, 437-38, 967 A.2d 513 (2009). Second, it maintains that the assertion of an "open-ended special defense of `privilege,'" as opposed to the more specific special defense of the "fair comment privilege" is not only "misleading, confusing . . . and prejudicial," but also injects new legal theories into the case, specifically claims of quasi-judicial privilege, privilege based on reiteration of the special defenses, and privilege based on Dunn's duties as general counsel to Konover. Third, it argues that Konover has failed to demonstrate why it could not have pleaded the broader privilege defenses initially in response to the defamation claim. Fourth, it claims that it was deprived of an opportunity to introduce evidence to defeat the applicability of the privileges asserted for the first time in Konover's post-trial briefs.

These four grounds provide ample basis to support the court's conclusion that to allow the amendment to the third special defense at this late juncture would work an injustice to McPhee but not to Konover. In particular, the court is persuaded by the second and fourth grounds. "Privilege is an affirmative defense in a defamation action and must, therefore, be specifically pleaded by the defendant." Miles v. Perry, 11 Conn.App. 584, 594, n. 8, 529 A.2d 199 (1987). While the determination of the applicability of a privilege is a question of law, the court must examine the context in which the statement was made and consider the evidence adduced to determine, for example, whether the elements to support a claim of absolute privilege, such as the quasi-judicial proceeding privilege, have been established or whether as a matter of fact, a conditional or qualified privilege is defeated through its abuse. See Gambardella v. Apple Health Care, Inc., 291 Conn. 620, 628, 969 A.2d 736 (2009). By raising certain privileges only in its post-trial brief, Konover denied McPhee the opportunity to introduce evidence to defeat them. Furthermore, Konover has failed to provide a sound reason for the court to grant its request for leave to amend the third special defense.

B.

McPhee alleges that Robert Dunn, on behalf of Konover, "made false and defamatory statements about McPhee and its business practices at a public Town of North Haven Building Committee meeting on April 21, 2008" (Fourth Count ¶ 11). McPhee claims Dunn's statements were defamatory per se because they were false and unsubstantiated ( Id., ¶ 8), were intended "to damage McPhee's reputation in the electrical contracting business" ( Id., ¶ 9) "impugned the basic integrity of the way McPhee conducted business," ( Id., ¶ 13) and charged McPhee with engaging in a "loathsome business practice," "extortionate claim practice" and "recalcitrant behavior" ( Id., ¶ 12). There is no evidence before the court that McPhee suffered actual harm as a result of Dunn's statements. In fact, Michael McPhee admitted that he had no way of identifying the impact of Dunn's statements on McPhee's business and he could not identity any particular job that McPhee did not get because of the alleged defamatory statements. Accordingly, the court must determine, as a matter of law and fact, whether defamation per se has been established. See CT Page 18770 Lowe v. Shelton, 83 Conn.App. 750, 767, 851 A.2d 1183, cert. denied, 271 Conn. 915, 859 A.2d 568 (2004); Lega Siciliana Social Club, Inc. v. St. Germaine, 77 Conn.App. 846, 852-53, 825 A.2d 827, cert. denied, 267 Conn. 901, 838 A.2d 210 (2003).

"A communication is defamatory if it tends to so harm the reputation of another as to lower him in the estimation of the community or deter third persons from associating or dealing with him." 3 Restatement (Second) Torts § 559; see Cweklinsky v. Mobil Chemical Co., 267 Conn. 210, 217, 837 A.2d 759 (2004). Unlike an individual, however, a corporation is only affected by a defamatory statement "with respect to its credit, property or business." (Quotation marks omitted; citation omitted.) Monroe v. Crandall, 3 Conn.App. 214, 221, 486 A.2d 657 (1985).

"Publication and harm to reputation are two necessary elements of the defamation cause of action," Miles v. Perry, supra, 11 Conn.App. 601, n. 11, but harm does not have to be established if the communication is defamatory per se. Id., 602. Defamation "is actionable per se if it charges improper conduct or lack of skill or integrity in one's profession or business and is of such a nature that it is calculated to cause injury to one in his profession or business . . . Spoken words are actionable per se only if they charge a general incompetence or lack of integrity. They are not slanderous per se if they charge no more than specific acts, unless those acts are so charged as to amount to an allegation of general incompetence or lack of integrity." Proto v. Bridgeport Herald Corp., 136 Conn. 557, 566-67, 72 A.2d 820 (1950). "Whether words are actionable per se is a question of law for the court . . . All of the circumstances connected with the publication of defamatory charges should be considered in ascertaining whether a publication was actionable per se. The words used, however, must be accorded their common and ordinary meaning, without enlargement by innuendo." Id., 602-03.

The court has examined Dunn's statements before the building committee at the April 21, 2008 meeting in their entirety. The court concludes that the overall import of his remarks was to charge McPhee with general incompetence in the performance of the work (e.g., describing McPhee's work as defective, lacking cooperation and coordination, interfering with other subcontractors) and to accuse it of lacking integrity in its business practices (e.g., making a "wholly meritless" claim for delay and interruption damages "indicative of a loathsome business practice by McPhee as they are attempting the same extortionate claim practice on other projects"). Accordingly, the court concludes that Dunn's statements, made on behalf of Konover, were defamatory per se.³⁸

38 McPhee has argued, alternatively, that Dunn's statements also were defamatory per se because he asserted McPhee was committing the crime of extortion based on his use of the term "extortionate claim practice." At the time he made this statement, Dunn was aware that McPhee had made similar claims against other construction managers or general contractors in other lawsuits. The court understands Dunn's use of the term in context to mean that McPhee engaged in the practice of seeking to obtain money from parties unwilling or reluctant to pay it by "the abuse of legal . . . authority." See Webster's Third New International Dictionary, definition 1a(1) of the word "extort." This does not bear "a reasonable relation to the legislative definition" of the crime of extortion. General Statutes § 53a-119(5). See Battista v. United Illuminating Co., 10 Conn.App. 486, 492-93, 523 A.2d 1356, cert. denied, 204 Conn. 802, 525 A.2d 1352 (1987). Accordingly, the court concludes that Dunn's use of the term "extortionate claim practice" did not amount to an accusation that McPhee was engaging in criminal activity.

Liability for defamation, even defamation per se, however, can be imposed only if the publication was not privileged. Strada v. Connecticut Newspapers, Inc., 193 Conn. 313, 316, 477 A.2d 1005 (1984). Konover has specially pleaded truth, which is an absolute privilege, Id.; Mercer v. Cosley, 110 Conn.App. 283, 301, 955 A.2d 550 (2008), and "fair comment," which is a qualified privilege. Miles v. Perry, supra, 11 Conn.App. 595. Whether a privilege applies is a question of law, Gambardella v. Apple Health Care, Inc., supra, 291 Conn. 628, but its application must be determined in the context of the statement in its entirety. Goodrich v. Waterbury Republican-American, Inc., 188 Conn. 107, 120-21, 448 A.2d 1317 (1982).

Substantial truth provides an absolute defense to otherwise defamatory statements of fact impugning reputation. Id., 113. The defendant must prove the truth of "the main charge, or gist" of the statement, not the literal truth of every word used. Id. "The privilege of fair comment is applicable only to an opinion or mixed statement of opinion and fact." Stack v. Jaffee, 248 F.Sup.2d 100, 105 (D.Conn. 2003). At common law, "fair comment . . . was a qualified privilege to express an opinion or otherwise comment on matters of public interest [concerning] persons, institutions, or groups who voluntarily injected themselves into the public scene or affected the community's welfare, such as public officials, political candidates, community leaders from the private sector or private enterprises which affected public welfare." (Quotation marks omitted; emphasis omitted; citations omitted.) Goodrich v. Waterbury Republican-American, Inc., supra, 188 Conn. 114-15. The fair comment privilege applies to statements of opinion on public matters, even if defamatory. Id., 117. "Expressions of `pure' opinion (those based upon known or disclosed facts) are guaranteed virtually complete constitutional protection. Expressions of `mixed' opinion, however, are privileged only where made (1) by members of the press or news media; (2) about matters of public interest or concern; and (3) without knowingly or recklessly distorting the facts upon which they are based." Id., 118-19.

The court must first determine whether Dunn's statements are statements of fact, pure opinion or mixed opinion. "Statements of fact . . . usually concern the conduct or character of another." Restatement (Second) of Torts, § 565, Comment a. A statement of pure opinion "occurs when the maker of the comment states the facts on which he bases his opinion of the plaintiff and then expresses a comment as to the plaintiff's conduct, qualifications or character . . . or when both parties to the communication know the facts or assume their existence and the comment is clearly based on those assumed facts and does not imply the existence of other facts to justify the comment." Restatement (Second) of Tons, § 566, Comment b. A mixed opinion is "one which . . . is apparently based on facts regarding the plaintiff or his conduct that have not been stated by the defendant . . . the expression of the opinion gives rise to the inference that there are undisclosed facts that justify the forming of the opinion expressed by the defendant." Id.

The ultimate test is whether an ordinary person who heard Dunn's statements would consider them as stating his opinion or stating an existing fact. Goodrich v. Waterbury Republican-American, Inc., supra, 188 Conn. 112. In this case, the court must decide this issue as a mixed question of law and fact. Id., n. 5. "In making this determination, a court may consider (1) the context and circumstances, (2) the language used, and (3) whether the statement is objectively capable of being proved true or false." Johnson v. Schmitz, 119 F.Sup.2d 90, 101 (D.Conn. 2000).

The court has considered the entirety of Dunn's statements before the building committee in context and in light of the surrounding circumstances, including the events that led to Dunn's presence at the April 21st meeting, the language he used as a whole, not isolated phrases, and the evidence that established what he knew as a matter of fact at the time of the meeting. The court concludes that some of Dunn's statements were of existing facts including: that there was on-going litigation between McPhee and Konover regarding delay and interruption claims, that McPhee had similar lawsuits pending at the time Dunn made his statements, that Konover had claims against McPhee for back charges, that there had been issues regarding McPhee's installation of the MC cable, that Konover had directed McPhee to establish proper manpower and coordinate its work in available areas, that the punch list established numerous errors in McPhee's installation, and that there were on-going issues regarding McPhee's work in the athletic fields. As to those statements, and those that generally charged McPhee with lacking competence in the performance of its work, ³⁹ the court concludes that they were substantially true and absolutely privileged.

39 See Sections I.A and I.B, supra, for detailed findings regarding prosecution, or lack of prosecution, of the work.

The court further concludes that the comments Dunn made that McPhee lacked integrity in its business practices, such as his statement that McPhee had made a "wholly meritless" claim for delay and disruption damages "indicative of a loathsome business practice by McPhee as they are attempting the same extortionate claim practice on other projects," were based either on disclosed facts and or on circumstances known to Dunn and members of the building committee. See Mercer v. Cosley, supra, 110 Conn.App. 301 (Existence of public record confirming information is "persuasive evidence" of its accuracy.) Consequently, Dunn's comments did not state or imply any derogatory or undisclosed facts and amount to pure opinion.

For the privilege of fair comment to apply, however, the court must determine whether Dunn's opinions were expressed on a matter of public interest or public concern because the court concludes that McPhee is not a public figure. Konover asserts that by filing a lawsuit, McPhee "transformed itself into a public figure." If Konover were correct in this position, then any defendant in a civil action would be licensed to impugn the reputation and integrity of the plaintiff. The fair comment privilege cannot sweep so broadly. The fair comment privilege certainly applies to news media accounts about litigation, see Fuller v. The Day Publishing Co., 89 Conn.App. 237, 241, 872 A.2d 925, cert. denied, 275 Conn. 921, 883 A.2d 1244 (2005); indeed, it has sometimes been described as the "fair reporting privilege." Burton v. American Lawyer Media, Inc., 83 Conn.App. 134, 138, 847 A.2d 1145, cert. denied, 270 Conn. 914, 853 A.2d 526 (2004). But in this case, where one business claims to have been defamed by another business, unless Dunn's opinions address a topic of public concern they cannot be deemed to be protected as fair comment.

Generally, defamatory or false speech that is of a purely personal nature, such as speech related to the economic or business interests of the speaker, does not receive special protection under the first amendment, Dun Bradstreet v. Greenmoss Builders, 472 U.S. 749, 105 S.Ct. 2939, 86 L.Ed.2d 593 (1985), or the common law. Miles v. Perry, supra, 11 Conn.App. 596. This is particularly true when both the defendant and the plaintiff are private parties. Id. There is a grey area, however, when speech is directed at a matter of public concern, including matters that may be of concern to the community. See e.g., DiMartino v. Richens, 263 Conn. 639, 667, 822 A.2d 205 (2003) (speech concerning airport security). The court must apply a two-fold test and determine first, as a matter of law, whether the topic is a matter of public concern and second, as a matter of fact, whether Dunn's opinions addressed the topic by looking at their content, form and context. See Daley v. Aetna Life Casualty Co., 249 Conn. 766, 777, 782, 734 A.2d 112 (1999).

In this case, Dunn was invited to a public building committee meeting specifically to discuss the release of McPhee's retainage under the terms of a publicly bid contract. Undoubtedly, the North Haven community would be concerned about issues such as the fiscal integrity of the NHHS project, whether there was adherence to the terms of the contract and subcontract agreement with respect to the manner and method of payments to subcontractors and whether a subcontractor completed work in a timely and proper manner. The court concludes, therefore, that the topic of McPhee's proper and timely completion of the work in accordance with its contractual obligations was a matter of public concern and the building committee meeting provided a proper occasion to address that topic. See Miles v. Perry, supra, 11 Conn.App. 584, n. 5. However, it was wholly unnecessary for Dunn to attack McPhee's business integrity in order to address that topic, yet the transcript⁴⁰ of the meeting which McPhee made demonstrates that he did precisely that in the content, form and context of his stated opinions, when he said, "we consider their claims [for disruption and delay damages] wholly meritless. This is also indicative of a loathsome business practice by McPhee as they are attempting the same extortionate claim practice on other projects."

40 After it videotaped the April 21, 2008 building committee, McPhee had a transcript prepared from the videotape and it introduced portions containing the statements recited in the text into evidence, ex. 395, 396. The minutes of the building committee meeting, ex. 341, do not contain any reference to the defamatory statements, but simply state that Dunn "spoke to the committee about his concerns, counter claims, sub contractors including McPhee . . ."

Dunn's attack on McPhee's business integrity related predominately to Konover's self-interest in defending its decision to refuse to requisition McPhee's retainage. Cf. Connick v. Myers, 461 U.S. 138, 148, 103 S.Ct. 1684, 75 L.Ed.2d 708 (1983) (When the focus of a statement is simply "to gather ammunition for another round of controversy" it is addressed to personal not public concerns). His choice of words was unfortunate and, in the court's opinion, reflected the animosity that existed, and still exists, between the parties resulting from this litigation. Yet, as a lawyer and general counsel for Konover, Dunn certainly could have exercised greater care and refrained from an exercise of pique before the building committee while still communicating the essential facts to support Konover's position. Cf. Senna v. Florimont, 196 N.J. 469, 496, 958 A.2d 427 (2008) (holding that under the common law, a business should "exercise due care in speech that may affect the economic well-being of a competitor" and finding no "significant public benefit in giving business rivals greater protection for . . . defamatory speech they use as an economic club to harm each other"). Accordingly, the court concludes that Dunn's opinions regarding McPhee's business integrity, which the court has already found to be defamatory per se, were not privileged as fair comment.

Having found that some of Dunn's statements were defamatory per se and not protected as fair comment, the court must determine an appropriate award of damages. There are three categories of damages that may be awarded upon a finding of defamation per se: "general damages without any further proof thereof, special damages if proven and punitive damages as a matter of discretion. Where defamation per se has been established, a plaintiff should receive at least nominal damages though not necessarily anything more." De Vito v. Schwartz, 66 Conn.App. 228, 236, 784 A.2d 376 (2001). See Restatement (Second) of Torts, § 620, comment (a) (1977). In the absence of evidence of specific damage to McPhee's business reputation or its business interests, and in light of the totality of the circumstances, the court concludes that McPhee is entitled to a nominal award of $10.00 for the presumed injury to its business reputation resulting from the defamatory per se statements. The court further concludes that this is not an appropriate case for an award of punitive damages.

VI.

In the fifth count, which incorporates the factual allegations of the defamation count (Fifth count, ¶ 1), McPhee alleges that Konover "breached its duty of good faith and fair dealing by engaging in the conduct outlined herein." (Fifth Count, ¶ 18). The gist of McPhee's claim is that Konover's refusal to requisition the retainage that had been approved by KBA and the town amounts to bad faith. (Post-Trial Brief, p. 17.) The court has already concluded that Konover breached its contract with McPhee by refusing to requisition the retainage. See II.A.3, supra.

It is black letter law that there is a duty of good faith and fair dealing implied in every contractual relationship that requires each side to engage in good faith in performing and enforcing the agreed terms of their contract. See e.g., Renaissance Management Co. v. Connecticut Housing Finance Authority, 281 Conn. 227, 240, 915 A.2d 290 (2007); Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 566-67, 479 A.2d 781 (1984). "To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith." (Quotation marks omitted.) De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 433, 849 A.2d 382 (2004). "Bad faith has been defined in our jurisprudence in various ways. Bad 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 more interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose." (Internal quotation marks omitted; citations omitted.) Landry v. Spitz, 102 Conn.App. 34, 42-43, 925 A.2d 334 (2007).

McPhee has failed to meet its burden of establishing that Konover had a dishonest purpose or a sinister motive when it failed to requisition the retainage after the town had approved its release in November 2007. To the contrary, the evidence establishes that Konover had a number of legitimate bases for an honest belief that it was entitled to refrain from requisitioning the retainage at that time. See I.D., supra. Specifically, Konover sought to secure McPhee's continued performance to complete the sports lighting work in the athletic fields and also believed that it was entitled to certain set-offs against the retainage under Article 5.b. and 5.d. of the subcontract agreement and in relation to potential and existing claims and defenses it had against McPhee in this litigation. Notably, the issue of the release of the retainage arose after this litigation had commenced. Konover also had legitimate concerns that McPhee had approached the town directly to engage in discussions regarding the release of the retainage, although McPhee had no direct contractual relationship with the town, in circumvention of McPhee's contractual relationship with Konover. Finally, Konover was not at all furtive or deceptive about its refusal to requisition the retainage, but openly explained its reasons to the town's attorney and the building committee. There is simply no evidence of bad faith to support the allegations of the fifth count.

VII.

In the sixth count, which incorporates the factual allegations of the fifth count (Sixth Count, ¶ 1), McPhee alleges a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., based on McPhee's "tortious conduct." (Sixth Count, ¶ 24.) It claims that "Konover's defamatory opposition to requisitioning McPhee's retainage is the primary basis for McPhee's CUTPA claim." (Post-Trial Brief, p. 17.) There is no allegation or claim that Konover's breach of contract in failing to requisition the retainage amounts to a violation of CUTPA.

This court has concluded that Konover engaged in tortious conduct and defamed McPhee when Dunn stated his opinion that "we consider their claims (for disruption and delay damages] wholly meritless. This is also indicative of a loathsome business practice by McPhee as they are attempting the same extortionate claim practice on other projects." Since this tortious conduct is the "primary basis" for the CUTPA claim, the court must consider the circumstances surrounding Dunn's conduct as well as the impact of his conduct.⁴¹ See Glazer v. Dress Barn, Inc., 274 Conn. 33, 81, 873 A.2d 929 (2005). The court concludes that Konover's tortious conduct fails to rise to the requisite level to find a CUTPA violation. Further, the court concludes that McPhee has failed to prove that the tortious conduct was the proximate cause of any harm it may have suffered because Konover failed to requisition the retainage.

41 The court's factual findings regarding the defamatory statements are set forth with particularity in I.D. and V.B., supra.

There is no doubt that CUTPA sweeps broadly and provides an expansive remedy against unfair business practices "without requiring proof of intent to deceive, to defraud or to mislead." Associated Investment Co. Ltd. Partnership v. Williams Associates IV, 230 Conn. 148, 155-58, 645 A.2d 505 (1994). Whether conduct is unfair and violates CUTPA is a question of fact to be determined under the totality of the circumstances, De La Concha of Hartford, Inc. v. Aetna Life Insurance Co., supra, 269 Conn. 432, and is measured by application of the "cigarette rule" criteria: "(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.) Hartford Electric Supply Co. v. Allen-Bradley Co., 250 Conn. 334, 367-68, 736 A.2d 824 (1999).

For the first time in its post-trial brief, p. 18, McPhee argues that "Konover's refusal to requisition the retainage violated the public policy expressed in [General Statutes] § 49-41a," the Prompt Pay Act. See Saturn Construction Co. v. Premier Roofing Co., 238 Conn. 293, 294, 680 A.2d 1274 (1996). In addition to the fact that McPhee did not allege a violation of this statute as a basis for the CUTPA count, see Keller v. Beckenstein, 117 Conn.App. 550, 569, n. 7 (2009); S.M.S. Textile Mills, Inc. v. Brown, Jacobson, Tillinghast, Lahan King, P.C., 32 Conn.App. 786, 797, 631 A.2d 340, cert. denied, 228 Conn. 903, 634 A.2d 296 (1993), this claim conflates Konover's contractual breach in not requisitioning the retainage with the tortious conduct McPhee alleges as the basis for the sixth count.⁴²

42 The specific tortious conduct alleged to violate CUTPA was that Konover "systemically and continuously made efforts to falsely discredit McPhee. Its efforts have included untrue statements about McPhee's performance and business practices, slanderous remarks about McPhee at a public meeting and concocting claims and assertions of false allegations against McPhee to intentionally interfere with the payment of monies due McPhee and to pressure McPhee to reduce claims that McPhee has made against Konover in this litigation." (Sixth Count, ¶ 23.) With the exception of Dunn's opinions which the court found to be defamatory per se and unprivileged, none of the other allegations of this count have been proven.

Konover was entitled to vigorously defend its position that it was contractually entitled to object to the release of the retainage before the building committee, see Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 156 (2005), although it should have been more circumspect in its choice of language. There is no evidence, however, that in so doing Konover sought to circumvent the Prompt Pay Act or the policy that it implements.⁴³ Even a technical violation of a statute, without more, does not offend public policy or implicate CUTPA's concept of unfairness. Normand Josef Enterprises v. Connecticut National Bank, 230 Conn. 486, 524, 646 A.2d 1289 (1994). There is no evidence that, in expressing his opinion about McPhee, Dunn acted unscrupulously, unethically, immorally or oppressively. And there is no evidence that McPhee suffered a substantial injury as a result of Dunn's statements.

43 The Prompt Pay Act, General Statutes § 49-41a, is "designed to expedite the payment of proper claims to prevent a general contractor from unjustifiably using funds rightfully belonging to subcontractors." Nor'easter Group, Inc. v. Colossale Concrete, Inc., 207 Conn. 468, 482, 542 A.2d 692 (1988). Its purpose is "to facilitate the speedy disposition of subcontractor claims when engaged in municipal construction contracts." Barreira Landscaping Masonry v. Frontier Insurance Co., 47 Conn.Sup. 99, 108, 779 A.2d 244 [ 29 Conn. L. Rptr. 188] (2000). The remedial provision of the statute, § 49-41a(b), is triggered if a general contractor on a public project fails to pay its subcontractor within thirty days after it receives payment from the municipality. Thus, the general policy that § 49-41a implements is that a general contractor on a public construction project must promptly pay its subcontractors when it has received payment. In this case, there was no evidence that Konover received payment of the retainage from the town.
Section 49-41a, however, operates independently from General Statutes § 49-42, which is part of Connecticut's Little Miller Act, American Masons Supply Co. v. F.W. Brown Co., 174 Conn. 219, 223, 384 A.2d 378 (1978). Section 49-42 provides a separate remedy, Nor'Easter Group, Inc. v. Colossale Concrete, Inc., supra, 207 Conn. 482, for a subcontractor "who has performed work or supplied materials on a public works project, but who has not received full payment for such materials or work [to] enforce his right to payment under the payment bond." Blakeslee Arpaia Chapman, Inc. v. El Constructors, Inc., 239 Conn. 708, 716, 687 A.2d 994 (1997). McPhee presumably could have filed suit for the retainage under § 49-42, Acoustics, Inc. v. Travelers Insurance Co., Superior Court, judicial district of New Britain, Docket No. 19565S (Jan. 13, 2004, Cohn, J.) [ 36 Conn. L. Rptr. 476], but there is no evidence before the court that it did so.

"[I]n order to prevail in a CUTPA action, a plaintiff must establish both that the defendant has engaged in a prohibited act and that, as a result of this act, the plaintiff suffered an injury. The language `as a result of' requires a showing that the prohibited act was the proximate cause of a harm to the plaintiff." (Emphasis in original, citation omitted). Stevenson Lumber Co. — Suffield, Inc. v. Chase Associates, Inc., 284 Conn. 205, 215, 932 A.2d 401 (2007). The evidence establishes that the building committee, with the architect's approval, had directed Konover to release the retainage before Dunn spoke at the April 21, 2008 meeting and that nothing he said at that meeting changed that decision. The chair of the building committee, Radha Prasad, testified that he did not know why Konover failed to requisition the retainage. The evidence also establishes that Konover failed to requisition the retainage because it believed that it was contractually entitled to do so in light of its claims against McPhee. Although this belief was reasonable, the court has concluded that Konover breached its contract with McPhee in that regard, see II.A.3., supra. The court now concludes that Konover's breach of contract was the proximate cause of any harm McPhee may have suffered because Konover did not requisition the retainage from the town and thus the CUTPA claim must fail. See Lydall, Inc. v. Ruschmeyer, 282 Conn. 209, 247-48, 919 A.2d 421 (2007), citing Lawrence v. Richman Group Capital Corp., 358 F.Sup.2d 29, 42 (D.Conn. 2005) (A simple breach of contract, without more, does not offend public policy and is insufficient to establish a CUTPA violation).

VIII.

In this case, McPhee alleged, in the first count, that Konover wrongfully refused to requisition and pay out its retainage under the terms of their contract and the court had found in McPhee's favor on this claim. See II.A.3., supra. It is undisputed that the amount of the retainage is $128,368.41, joint statement, ¶ 17. In its prayer for relief, McPhee seeks statutory interest pursuant to General Statutes § 37-3a. Section 37-3a provides in relevant part that "interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable . . ." The court has discretion to consider awarding prejudgment interest under this statute. See, e.g., Rissolo v. Betts Island Oyster Farms, LLC., 117 Conn.App. 344, 358 (2009) and cases cited therein. In order to award prejudgment interest under § 37-3a, this court must make two factual determinations: "(1) whether the party against whom interest is sought has wrongfully detained money due the other party; and (2) the date upon which the wrongful detention began in order to determine the time from which the interest should be calculated." Blakeslee Arpaia Chapman, Inc. v. El Constructors, Inc., 239 Conn. 708, 735, 687 A.2d 994 (1997).

With respect to the first determination, it has been observed that "in the context of the statute, `wrongful' is not synonymous with bad faith conduct. Rather, wrongful means simply that the act is performed without the legal right to do so." Ferrato v. Webster Bank, 67 Conn.App. 588, 596, 789 A.2d 472, cert. denied, 259 Conn. 930, 793 A.2d 1084 (2002). Although a court has discretion to award prejudgment interest, that "discretion is not unbounded" and the statute generally applies when a party claims that it was denied a specified sum owed to it under the terms of a contract. Travelers Property Casualty Co. v. Christie, 99 Conn.App. 747, 764, 916 A.2d 114 (2007), citing Foley v. Huntington, 42 Conn.App. 712, 739, 682 A.2d 1026, cert. denied, 239 Conn. 931, 693 A.2d 397 (1996).

The court has found that Konover breached its contract with McPhee in refusing to requisition the retainage after having been directed to do so by the town upon the architect's approval. Nonetheless, even in a breach of contract case the court may consider all the circumstances in deciding whether to allow prejudgment interest. See Patron v. Konover, 35 Conn.App. 504, 517, 646 A.2d 901, cert. denied, 231 Conn. 929, 648 A.2d 879 (1994). The evidence establishes that the actual amount that Konover was directed to requisition was unclear. See ex. 317 (architect approved release to a balance of $10,000); ex. 319 (directing Konover to amend requisition 33 "to include the release of the McPhee retainage down to $5k from the present $129,311.11 per the recommendation of the architect"); ex. 328 ("KBA advised the Town that . . . McPhee Electric was seeking a release of its retainage. KBA recommended that $22,000 be held pending completion of McPhee's work on Phase IV"); ex. 329 (release $128,455.00). None of these amounts are identical to the undisputed amount of retainage contained in the parties' joint statement. In addition, the evidence establishes that Konover legitimately disputed the process by which the architect and the town had directed it to requisition the retainage. Further, Konover had a legitimate, albeit erroneous, belief that it could refuse to requisition the retainage to secure McPhee's continued performance and to set off claims it had against McPhee. Thus, this is a case in which there was both a dispute over the amount due and Konover had legitimate justifications for its refusal to requisition the retainage. See Travelers Property Casualty Co. v. Christie, supra, 99 Conn.App. 765-66; Maloney v. PCRE, LLC., 68 Conn.App. 727, 756, 793 A.2d 1118 (2002). Under these circumstances, Konover's refusal to requisition the retainage was improper but not wrongful.

More significantly, the court cannot determine, based on the evidence presented, precisely when Konover breached the contract. Without such a determination, the court cannot calculate prejudgment interest. "The date the interest begins to run pursuant to § 37-3a is factual because it necessarily involves a determination of when the wrongful detention began." (Emphasis in original.) Paulus v. LaSala, 56 Conn.App. 139, 150, 742 A.2d 379 (1999), cert. denied, 252 Conn. 928, 746 A.2d 789 (2000). A detention "can only be wrongful, however, from and after the date on which the court, in its discretion, determines that the money was due and payable." Northrop v. Allstate Insurance Co., 247 Conn. 242, 255, 720 A.2d 879 (1998). The court concludes that McPhee has not met its burden of proving the essential factual prerequisites to an award of prejudgment interest.

IX.

Based on the foregoing, judgment shall enter as follows: The court finds in favor of plaintiff McPhee Electric, Ltd., LLC, and against the defendant Konover Construction Corp. on the First Count (breach of contract) and awards damages in the amount of $128,368.41 and on the Fourth Count (Defamation) and awards nominal damages of $10.00. The court finds against the plaintiff, McPhee Electric, Ltd., LLC, and for the defendant Konover Construction Corp. on the Second Count (Negligence), the Fifth Count (Breach of the Covenant of Good Faith and Fair Dealing) and the Sixth Count (CUTPA).