Opinion
No. HHD CV 09-5030131S
May 4, 2011
MEMORANDUM OF DECISION
The plaintiff, Suntech of Connecticut, Inc., brings this action against Lawrence Brunoli, Inc. and Safeco Insurance Company of America. There are four counts as to Lawrence Brunoli, Inc. which allege breach of contract, unjust enrichment, delay, and an action under Connecticut General Statute Section 49-41a which is entitled "Enforcement of payment by general contractor to subcontractor and by subcontractor to its subcontractors." The one-count against Safeco Insurance Company of America alleges a violation of Connecticut General Statute Section 49-42 (Enforcement of right to payment on bond).
Suntech of Connecticut, Inc. (Suntech) is a Connecticut corporation in the business of glass and curtain wall fabrication and installation. Its principal location is North Branford Connecticut.
Lawrence Brunoli, Inc. (LBI) is also a Connecticut corporation with its principal place of business in Farmington Connecticut. It is a general contractor in the construction business.
Safeco Insurance Company of America (Safeco) is an insurance company under the laws of the State of Washington, which has issued a payment bond to LBI for the project involved in this lawsuit.
On or about April of 2005, Suntech, as a subcontractor, entered into a contract entitled "Subcontract Purchase Order" with LBI. The contract called for Suntech to provide a number of services for a project known as "Renovations to Terminal A at Bradley Airport." LBI was the general contractor of that project. The owner of the project was the Connecticut Department of Transportation (CDOT). As the general contractor, LBI contracted directly with CDOT.
Suntech was to provide glass doors, glass and glazing, an aluminum framing system and metal panel system all under the specific requirements of said contract.
The anticipated project completion date was April 30, 2007.
Discussion
Under the contract, Suntech was to construct and install a large glass wall, known as a curtain wall, which was to form a substantial portion of the airport terminal. The curtain wall was formed by the installation of aluminum frames in a grid (glazed aluminum framing system) which supported glass panels. The finished product was designed to look like a curtain of glass.
However, there was a discrepancy in the architectural plans that CDOT prepared and distributed to prospective bidders so that estimates could be submitted for this project. In particular, there was a discrepancy between the elevations of the curtain wall, which appeared as one height on the architectural plan and a different height in the structural plan. The difference in height was approximately fourteen (14") inches. The curtain wall, if built according to the structural plans, would not have reached the roof of the building. These plans had been prepared by CDOT or contractors hired by CDOT. The plans had been reviewed by Suntech prior to their bid for this contract, and prior to entering into the agreement with LBI. The bids or estimates submitted by Suntech were based, in part, on these plans, however, the discrepancy in the curtain wall height had not been noticed at that time. The discrepancy was not discovered until January 3, 2006 when Suntech detected it.
Upon that discovery, Suntech submitted a form known as a "Request for Information" (RFI). As a result of this RFI, Suntech revised the plans for the glazed aluminum framing system (GAFS) and provided a new GAFS shop drawing which was submitted to CDOT on or about March 31, 2006 for their review and approval. Among other changes, the upper span of the mullions had to be increased in length. The longer span of the curtain wall resulted in a recalculation of the "deflection criteria." The new deflection criteria required the hollow interior of the aluminum mullions to be filled with steel reinforcement.
A mullion is an aluminum frame which supports glass panels.
The "deflection criteria" is a calculation relative to the movement and stress bearing capacity of different materials.
This change was referred to as the "geometry change" and was approved on or about May 8, 2006. The revised plans called for a reinforced 1" x 6" steel bar to be placed inside each mullion. It also required that the steel reinforcement be extended to a greater height within the mullions than was previously called for. The resulting change added 44,000 pounds of steel to the mullions. Eventually, the deflection criteria was changed again after the steel reinforcement and new specifications were ultimately agreed upon.
As a further consequence of these changes, the equipment required to install the mullions had to be changed due to the added weight of the steel reinforcement. The original plan called for the use of "two men and a hoist" to install the GAFS. This was no longer possible with the increased weight of the mullions.
Suntech submitted several revised cost estimates which incorporated the changes contemplated in the materials. On or about September 29, 2006, LBI approved two change orders which were designated as Change Order 200 and Change Order 209 and provided for additional payment of $110,000.
In November of 2006, CDOT informed Suntech that the revised drawings for the GAFS were not acceptable because they exceeded the maximum deflection criteria required in the contract specifications. This resulted in another series of discussions and submissions which were ultimately resolved in July 2007. Suntech submitted a request for a change order based on additional work and expenses resulting from the issue with respect to the deflection criteria. That request was transmitted to CDOT through LBI, and ultimately rejected by CDOT.
Despite the fact that CDOT had rejected Suntech's request, LBI did issue a change order (#427) on or about August 20, 2007. Change Order 427 was approved under the general heading of "increased costs to curtainwall (GAFS) system" and authorized payment in the amount of $110,440. This payment was made by LBI. LBI claims the payment was made under duress, in that Suntech had threatened to discontinue work on the project unless the pending financial issues were resolved to their satisfaction.
After the issue of Change Order 427, LBI pursued an appeal through the CDOT contract board of review which consisted of submitting Suntech's claim for these charges brought about by the changes in plans. The submission was again rejected by CDOT.
Eventually, the project was finished more than three years after the anticipated completion date.
Count One — Breach of Contract
In its complaint, Suntech alleges that "LBI agreed to evaluate Suntech's progress and pay Suntech on a monthly basis for any work completed on the project." Suntech also alleges that "LBI has failed to request payment from CT DOT and has failed to remit payment to Suntech for certain completed and approved change order work by Suntech on the project." Further, Suntech claims that there is a balance owed on the original contract of approximately $164,600 in addition to unpaid change orders in the amount of $657,675. Finally, the complaint alleges that LBI has failed to request payments from CDOT and that LBI has failed to pay Suntech in full for its performance under the terms of the agreement.
The terms of the contract between Suntech and LBI provided specifically that Suntech would "furnish all materials, labor and equipment to perform all work as described in the contract drawings and special provisions, Connecticut DOT standard specifications for Roads, Bridges and Incidental Construction Form 816, 2004, Addendums 1, 2 and 3: 08450 Glass Doors, 08800 Glass Glazing, 08900 Glazed Aluminum Framing System, 07420 Metal Panel Systems."
The contract provides that:
[T]he subcontractor [Suntech] is hereby bound by these conditions to Lawrence Brunoli, Inc. just as Lawrence Brunoli, Inc. is bound to the Owner. The Contractor agrees except as amended herein to be bound to the Subcontractor by the terms of the hereinbefore described documents and to assume to the Subcontractor all the obligations and responsibilities that the Awarding Authority by the terms of the hereinbefore described documents assumes to the Contractor, except to the extent that provisions contained therein are either terms or by law applicable only to the Awarding Authority except as amended herein . . .
The contract provided that billing invoices for the project would have to be approved by LBI as well as the "Authority" having jurisdiction, that is, CDOT.
Section 6 III provides that: "All billings must be approved by Lawrence Brunoli, Inc. and the Authority having jurisdiction; all billings must be submitted to this office by no later than the 25th day of the month; all payments are subject to retainage and/or other applicable provisions as contained in the contract documents; payments will be made to be Subcontractor within 30 days of receipt of funds from the Owner provided the conditions as identified in Paragraphs I and II have been satisfied . . ."
The contract required Suntech to send monthly billings to LBI for work they had completed under a "schedule of values." The procedure followed consisted of LBI taking Suntech's requisitions, those of other subcontractors, and their own, and submitting them to CDOT for review and payment. CDOT would pay the invoices according to their own inspection and their opinion as to the amount of work which had been completed. Payment was made from CDOT to LBI, and then in turn to the subcontractors, including Suntech.
By reference, the contract incorporated the State of Connecticut Department of Transportation, Standard Specifications for Roads, Bridges and Incidental Construction, Form 816 (Form 816).
Among other provisions, this allowed CDOT's engineer discretion to determine the rate of progress of the work performed, whether to accept or reject performance, and the extent, if any, to which the contract had been fulfilled. By exercising this authority, the engineer determined what invoices were paid to both the general contractor and the subcontractors, and to what extent they were paid. The authority of the CDOT engineer was essentially the last word, short of the CDOT internal appeal process.
Specifically, Form 816 at Section 1.05.01 contains the following language: "Authority of Engineer: All work shall be subject to the review of the Engineer. He shall decide all questions as to interpretation of the plans and specifications, and questions of mutual or respective rights of the Contractor and other Department contractors. The engineer shall decide on an acceptable rate of progress, on the manner of performance, and on what shall be deemed acceptable fulfillment of the contract . . ."
Section 1.09.06-Partial Payments: ". . . Once each month, the engineer will make, in writing, current estimates of the value of work performed in accordance with the contract, calculated at contract unit prices, including but not limited to the value of materials complete in place and materials not yet incorporated into the project, but approved by the engineer for payment . . ."
The terms of the contract are clear and unambiguous. Both parties are sophisticated commercial entities.
Suntech has claimed that its invoices were not submitted for payment. The evidence shows that Suntech provided invoices on a periodic basis. The invoices were not in the same format that LBI was using. LBI was submitting bills to CDOT in accordance with a "schedule of values" which it had developed. However, LBI's schedule of values did not divide Suntech's work into the same segments as Suntech had done itself. Accordingly, there was difficulty in correlating Suntech's bills with the payments that they were receiving, as the amount of the bill and the amount of the payment were almost never the same. There was also a significant lack of communication and understanding between Suntech and LBI.
Nonetheless, the evidence does not support the claim made by Suntech that its invoices were not submitted to CDOT. In fact, the invoices submitted by Suntech were in turn submitted to CDOT by LBI in accordance with their obligation under the terms of the contract. Even though there is extensive evidence with respect to the disagreement between Suntech and LBI as to the submission of the invoices and the methods of accounting, the claim that LBI failed to submit Suntech invoices has not been proven. Further, the provisions of the contract make it clear that the ultimate decision for approval of any particular invoice and payment for such invoice rested with CDOT.
Suntech claims additional fees in the amount of $591,171. Those fees consist primarily of extra work and delay costs ($120,509), deficiency in payment of change order #658 ($2,000), interest ($16,357), cost for the extended length of the project ($91,667), costs of additional on-site equipment ($64,887), costs of extended home office overhead ($156,354), increased labor costs ($51,347), increased labor costs due to winter inefficiency ($20,700), cost due to work interruption under the "measured mile" valuation ($59,612), costs of replacing expired security badges ($650), and return/credit of certain "back charges" ($7,088).
The claims for those fees must be considered in the context of the difficulties encountered by subcontractors who undertake construction contracts on projects where the State of Connecticut is the owner. Under such circumstances, where a dispute arises, the state is protected by sovereign immunity. Section 4-61 of the Connecticut General Statutes is the only waiver of that immunity. However, § 4-61 only applies to parties who have contracted directly with the state, that is, the general contractor. It has long been held that a subcontractor has "no contract with the state and, therefore, could not sue the state directly." Federal Deposit Ins. Corp. v. Peabody, N.E., Inc., 239 Conn. 93, 102, 680 A.2d 1321 (1996).
Under the limitations created by the statute, a general contractor cannot implead the state for indemnification when it is sued by a subcontractor. In addition, the general contractor cannot bring a claim against the state in a lawsuit where the liability to the subcontractor is contingent. ". . . [A] general contractor who has entered into a contract with the state cannot bring a third-party action against the state based on the mere prospect that the contractor may be liable to a subcontractor at some point in the future." Id. at 102.
This legal posture has given rise to what are known as "pass through" claims. A pass-through claim is:
a claim (1) by a party who has suffered damages . . . (2) against a responsible party with whom it has no contract . . . and (3) presented through an intervening party . . . who has contractual relationship with both . . . Instead of one lawsuit between a subcontractor and general contractor and another between the general contractor and the owner, pass-through claims permit a contractor to pursue its subcontractors' claims directly against the owner . . . Under the typical pass-through arrangement, the contractor remains liable to the subcontractor, but only to the extent the contractor receives payment from the owner . . .
A pass-through claim is normally based on a liquidation agreement where the contractor acknowledges liability to the subcontractor and "the subcontractor releases all claims it may have against the contractor in exchange for the contractor's promise to pursue those claims against the owner and remit any recovery to the subcontractor.
Interstate Contracting Corp. v. Dallas, 135 S.W.3d 605, 610 (Tex. 2004).
This case however, is not a pass-through claim. The allegations made by Suntech in this claim are directly against LBI and CDOT is not a party to this action. There is no pending case between LBI and CDOT, and therefore, there is no pass-through claim.
As such, the court cannot create a liquidation agreement between Suntech and LBI so that LBI can pursue Suntech's claims against the state. Nor can the court enter a conditional judgment against LBI which would permit it to bring action against the state for Suntech's claims. The court is limited to adjudicating claims for which LBI is directly responsible.
The majority of Suntech's claims are due to additional costs and expenses incurred as a result of the many delays in this project. The fact that the project was delayed by a substantial period of time is not in dispute, however the reasons for the delay are very much in dispute. The parties have introduced evidence with respect to difficulties in the installation of several specific mullions by reason of other subcontractor's work not being completed in time, engineering issues as previously discussed, difficulties related to the steel reinforcement inside the mullions, problems with the surface finish of the glass panels, paint failure of the mullions, and difficulties that the suppliers experienced both in manufacturing and in providing products to the work site. This evidence constitutes only a partial list of the reasons for the delay in this project.
Section 1.08.08 of Form 816 contains the following language:
The Contractor may present to the Engineer a request in writing for an extension of Contract time if the time necessary for the completion of the Project has been increased due to extra or added work or delays resulting from unforeseeable causes beyond the control and without fault or negligence of the Contractor . . .
. . . For all Project delays or time increases, except as provided below, additional Contract time is the sole remedy that the Contractor may have, and such periods of additional contract time shall be deemed "Non-Compensable Delays." For delays caused by the State in its Contractual capacity, the Contractor may, in addition to a time extension, request additional compensation to reimburse them for damages as a direct result of such delay, and such periods of extended contract time may be deemed "Compensable Delays."
The period of a compensable delay . . . may not include periods of delay for which the State was responsible, but during which the Contractor experienced concurrent delays for which the State was not responsible. Damages for periods of Project delay for which the State had sole responsibility shall be limited to the increased costs incurred by the Contractor (which shall not include lost profits), which the Contractor substantiates and which the Contractor shows were caused by such delays.
There is no provision in the contract which makes LBI directly responsible to Suntech for delay damages barring evidence that LBI was itself the cause of those delays. The evidence does not support the claim that LBI caused delays. Nor is there evidence which would permit the court to quantify LBI's responsibility for the delays. Additionally, there is no legal principle under which the court could make LBI responsible to Suntech for the delay caused by CDOT itself, or delays caused by other subcontractors. To find LBI liable under these circumstances would be tantamount to making LBI a guarantor of CDOT.
While Suntech has undoubtedly incurred additional costs, expenses, and damages as a result of the delays in this project, they cannot be laid at the feet of LBI. Accordingly, to the extent that Suntech has asserted claims against LBI for which CDOT or others are responsible, those claims cannot be adjudicated in the context of this action. The plaintiff's premise in its post-trial brief that "whatever this Court decides will only assist LBI in its further remedy against CTDOT" is only partially correct. To the extent that it is an invitation for the court to find against LBI so that LBI will acquire the capacity to initiate a lawsuit against CDOT, the court is obligated to decline. To the extent that it supports the statement that . . ."should the court decide that Suntech is owed for the work performed, then LBI and it's compensated surety are liable to Suntech . . ." that is a conclusion which is not inescapable. It is possible, and indeed the case, that Suntech is owed for some or all of the damages that they claim. However, the conclusion that LBI and its surety must be liable is not proven under these circumstances. Therefore, judgment is entered in favor of the defendant, LBI, under Count 1.
Count Two-Unjust Enrichment
The second count of the complaint alleges a cause of action in unjust enrichment. The elements of unjust enrichment require that: "Plaintiffs . . . must prove (1) that the defendants were benefitted, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the [plaintiff's] detriment." New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 433, 451-52, 970 A.2d 592 (2009).
Suntech has alleged that LBI has benefitted in that if they had not performed, LBI would have been in breach of its own contract with CDOT and may have been charged liquidated damages under the terms of LBI's contract with CDOT, and further, that they would have suffered the consequences of delays or nonperformance. Suntech has not proven these allegations. There is no evidence to suggest that the state would have charged LBI with liquidated damages, nor is there evidence to support the contention that LBI would have been held responsible for Suntech's failure to perform its obligations under the contract.
Again, Suntech is making what is arguably a valid claim, but against the wrong defendant. The party which was benefitted by Suntech's performance was the owner of the project, CDOT.
"In an unjust enrichment case, damages are ordinarily not the loss to the plaintiff, but the benefit to the defendant, for which the fact finder may rely on the plaintiff's contract price when the benefit is too difficult to determine." United Coastal Industries, Inc. v. Clearheart Construction Co., 71 Conn.App. 506, 515, 802 A.2d 901 (2002).
In addition, Suntech's remedies are under the terms of the contract with LBI. There is no showing that there is a lack of remedy under the contract. If LBI were found liable for Suntech's damages, there would be a remedy. The fact that neither the contract nor the statute permit a direct cause of action against the owner of the project cannot be interpreted as a "lack of a remedy" for these purposes. "The lack of a remedy under a contract is a precondition to recovery based on unjust enrichment or quantum meruit." Id. at 513.
Accordingly, judgment is entered in favor of the defendant LBI on Count Two.
Count Three-Delay
Count Three of the plaintiff's complaint is entitled "Delay." In this count, the plaintiff Suntech sets forth the original project completion dates. Suntech correctly alleges that the project was completed more than three years after the date originally projected. The specific allegations of the Amended Complaint with respect to the delays are that:
Suntech was forced to contend with various delays caused by or controlled by LBI due to changes in the deflection criteria, changes in testing requirements, and nonpayment. As a result of the creation of these delays, LBI ordered Suntech not to perform work or did not provide Suntech with access to the places on the project in order to fulfill its subcontract requirements. These delays began on approximately 7/1/05 and continued through the completion of the project in July 2010.
Paragraph 16 of Count Three of the Amended Complaint states: "As this Project is owned by the state of Connecticut, Suntech has no legal recourse against any other entity involved in this project other than LBI."
There is no cause of action alleged under this count which distinguishes it from the delay damages claimed in the first count under the breach of contract claim. There has been no evidence submitted in support of Suntech's delay damages which is different than that discussed in the consideration of the first count.
The language acknowledging that there is no recourse against the owner of the project does not establish a cause of action for delay against LBI in the absence of evidence showing LBI is responsible for those delays.
The Court thus finds the issues in Count Three in favor of the defendant LBI.
Count Four-Violation of Conn. Gen. Stat. § 49-41a
Count Four of Suntech's Amended Complaint alleges an action under Connecticut General Statute § 49-41a. Generally speaking, the provisions of C.G.S. § 49-41 and subsequent sections apply to public building and public works contracts exceeding $100,000. Among other things, the statute requires a bond with appropriate surety for the protection of persons supplying labor or materials on those contracts. Section 49-41a has been called the "Prompt Pay Act" and applies specifically to subcontractors. Subsection (a)(1) mandates a contract provision which requires that ". . . the general contractor, within thirty days after payment to the contractor by the state or a municipality, pay any amounts due any subcontractor, whether for labor performed or materials furnished, when the labor or materials have been included in a requisition submitted by the contractor and paid by the state or a municipality . . ." Subsection (c) provides that if payment is not made by the general contractor in accordance with such requirement, the subcontractor may set forth a claim by registered or certified mail. If the debt is not paid within ten days from the receipt of the notice, the general contractor may be liable for interest on the amount due in accordance with the terms of the statute. Further, the contractor may be required to place funds in escrow.
In support of this claim, Suntech alleges that on or about May 30, 2008, it gave notice to LBI of its claim and demanded the sum of $234,882.11 be placed in escrow. LBI subsequently denied that claim and refused to honor the request to place funds in escrow.
This claim lacks the essential evidence to support it. Suntech is unable to prove that LBI received funds which were allocated for Suntech's work, or funds payable under Suntech's contract. As such, Suntech has not satisfied its burden of proof under this statute.
Count Five-Violation of Conn. Gen. Stat. § 49-42 as to SAFECO
General Statutes § 49-42(a), provides in relevant part that "Any person who performed . . . subcontracting work [pursuant to a contract within the scope of General Statutes § 49-41(a)] . . . who has not received full payment for such . . . work . . . may enforce such person's right to payment under the bond [provided for under § 49-41(a)]. . ."
Section 49-42 has be referred to as the "Little Miller Act," a reference to a federal statute (40 U.S.C. §§ 270a-270e) upon which the Connecticut statute was fashioned. "The purpose of the Little Miller Act is to assure prompt disbursement to subcontractors of funds received by the general contractor for their work." Bernhard Thomas Building Systems, LLC v. JPI Apartment Construction, LP, Superior Court, Judicial District of Tolland at Rockville, Docket No. CV 05 4002713 S (Sferrazza, J., Jun. 5, 2007) [ 43 Conn. L. Rptr. 567].
LBI argues that a claim under this statute can only be triggered by the condition that the general contractor has received payment from the owner of the contract, and then in turn, failed to pay the subcontractor per the terms of C.G.S. § 49-41a.
Under the present circumstances, the court agrees with LBI's interpretation. There is no authority to support the proposition that the Little Miller Act allows a subcontractor to prosecute a claim against the contractor for which the contractor would not otherwise be responsible. Nor is there any authority upon which to conclude that the act was meant to circumvent the provisions of the contract between LBI and Suntech in this instance. Having failed to prove that LBI is in possession of any funds which were paid on Suntech's account, or that LBI has violated the terms of its contract with Suntech, the allegations of Count Five must be found in favor of the defendant Safeco.
LBI Counterclaims
LBI has filed a counterclaim consisting of two counts which claim breach of contract and a violation of Connecticut Unfair Trade Practices Act (CUTPA).
Counterclaim — Count One
LBI alleges in its counterclaim that Suntech breached the terms of its contract by failing to obtain CDOT approval of the curtainwall system in a timely manner, by refusing to adhere to a fluctuating project schedule, by demanding payment from LBI before LBI had received payment from CDOT, by refusing to perform work as requested, by attempting to assess delay damages against LBI, and by failing to complete the work mandated by the terms of the contract.
The court finds that the allegations, with respect to Suntech's breach of contract, are not proven. The evidence shows that Suntech did pursue its approval for the curtainwall system in an appropriate manner. Suntech was the entity which discovered the discrepancy in the structural plans. The disagreement which ensued between Suntech and the CDOT engineers with respect to the recalculation of the deflection criteria and other changes does not provide LBI with a basis for a breach of contract claim against Suntech.
Similarly, LBI's claim that Suntech failed to adhere to a fluctuating schedule is not adequately proven. Suntech's request for compensation due to project delays is not unreasonable. Indeed, LBI has made, and successfully prosecuted, a similar request. Suntech's hesitation to continue to perform work without compensation or without some assurance of payment from either LBI or CDOT is justified based on the circumstances surrounding this project The misunderstanding as to the schedule of values and the application of payments made by CDOT toward Suntech's work was certainly a factor in Suntech's hesitation. Both parties played a part in that misunderstanding. By the same token, ultimately, Suntech did perform its obligation under the contract. Judgment in favor of Suntech is entered on Count One of the counterclaim.
Counterclaim-Count Two
The second count of LBI's counterclaim against Suntech alleges a violation of General Statute § 42-110a, the Connecticut Unfair Trade Practices Act. The court finds this claim to be without merit, and accordingly enters judgment for the plaintiff Suntech on this count.