Most Construction Disputes Do Not Involve Unfair Trade Practices

Generally speaking, the legal profession is not currently held in high esteem. In my opinion, there are a couple of reasons for this situation. First, I believe that the general public does not fully understand the adversarial process used in our legal system or the reasons why lawyers are allowed to “argue in the alternative,” which, in normal parlance, would negatively be referred to as talking out of both sides of your mouth. Second, the negative public opinion is (unfortunately) deserved by virtue of how some attorneys approach their cases.

Attorneys that draft complaints that go beyond any reasonable interpretation of the facts hurt themselves and the legal profession as a whole. I once received a complaint that was far beyond the pale because, in a case where a subcontractor asserted a claim for nonpayment, the attorney not only alleged breach of contract, but also asserted a human rights violation against my client because the subcontractor was a Minority Business Enterprise (“MBE”) and my client was allegedly a racist. Of course, my African American client and I had a good laugh when I called to let her know that she was being accused of being a racist. (Practice tip to new attorneys: If you are going to make a claim based upon race,

A RECENT APPELLATE COURT DECISION PROVIDES SOME VALUABLE INSIGHT INTO MITIGATION OF DAMAGES, PAYMENT BOND CLAIMS, AND ALLEGED UNFAIR TRADE PRACTICES

The Appellate Court has issued an opinion that arises out of a very common situation on a construction project – the late delivery of materials.  The decision is insightful with regard to understanding a general contractor’s obligations when such a situation arises.  In addition, the decision describes how a single instance of improper conduct can lead to an unfair trade practice.  Finally, the decision provides a reminder that, if you go to trial, no specific outcome is guaranteed no matter how straightforward you may believe the law to be.

In United Concrete Products, Inc. v. NJR Construction, LLC, the defendant general contractor, NJR Construction, LLC (“NJR”) had entered into a contract with the Department of Transportation, whereby NJR had agreed to replace a bridge over the Hockanum River (the “Prime Contract”).  United Concrete Prods. v. NJR Constr., LLC , 207 Conn. App. 551, 555-58 (2021).  The Prime Contract allowed NJR an 8-week window to perform the bridge replacement work during which time the road would be closed to through traffic.  Id.  The Prime Contract further provided a bonus for the project’s early completion and liquidated damages for the project’s late completion. 

IN CASE YOU WERE WONDERING, MECHANIC’S LIENS AND PAYMENT BONDS REALLY DO PROTECT THOSE THAT SUPPLY LABOR, MATERIALS AND/OR SERVICES

In poker, you have to play the cards you are dealt, but, if you have a bad hand, you can fold. In litigation, if you do not have a strong argument, you should negotiate a settlement, but that is not always possible because the opposing party’s demands may be so unreasonable that you might as well go to trial and see what happens. It is at those times where an attorney might attempt to get creative. Recently, our Appellate Court upheld a trial court decision that held a surety liable on both a payment bond and a mechanic’s lien substitution bond despite the nine special defenses that it raised. See O & G Indus. v. Am. Home Assur. Co., 204 Conn. App. 614 (2021). Some of these special defenses were novel, and, as a result, this decision gives us some greater insight into lien and bond claims.

In O & G Indus. v. Am. Home Assur. Co., the plaintiff brought an action against a surety that had issued both the subject project’s payment bond and a bond that was substituted for the plaintiff’s mechanic’s lien. Id. By way of brief background,

Are Contractors and Subcontractors Allowed to Rob Peter to Pay Paul When it Comes to Paying Subcontractors and Suppliers?

One of the main problems most contractors (and subcontractors) face is cashflow. When the economy is going well, most contractors still find their payments lagging 60 to 90 days behind the 30 days required by most construction contracts. When an owner fails to make timely payment, general contractors end up in arrears with their subcontractors, who end up in the arrears with their subcontractors (i.e. sub-subcontractors) and suppliers. Often well intended contractors (and subcontractors) may end up using monies received from one project to pay subcontractors (and/or sub-subcontractors) on another. The reasons for paying subcontractors from one project with funds received from another may be because the subcontractors on the second job have gone longer without payment and/or are more in need. The question is whether that is legal.

In Connecticut, it has recently become riskier for contractors to pay their subcontractors (and for their subcontractors to pay their sub-subcontractors and suppliers) with funds received from another project. Connecticut has long had prompt payment statutes which require contractors to pay subcontractors “not later than twenty-five days after the date the contractor receives payment from the owner” on private projects and “within thirty days after payment to the contractor by the state or a municipality” on public projects.

NEGOTIATING A CONSTRUCTION CONTRACT CLAIM CAN FEEL LIKE LEGALIZED EXTORTION

Contractors often end up with monetary claims for nonpayment, changed conditions and/or additional work that are difficult to negotiate. Such claims are often met with counterclaims for defective work, and/or contractual defenses such as lack of notice and/or the lack of a written change order. Defeating such counterclaims are often difficult, but, when it comes to negotiating a settlement of a contractor’s monetary claim, the real difficulty is with the potential attorneys’ and/or costs associated with litigation or arbitration. Even a contractor with a six figure claim amount must seriously consider the attorney’s fees associated with litigating a matter to a final judgment or award in addition to the costs associated with the time its organization spends preparing for and attending any dispute resolution proceeding not to mention the risks associated with putting your fate in the hands of a third party whether that be a judge, jury or arbitration panel.

Anyone who has participated in a mediation has likely heard a mediator say, “Well, if you don’t like that offer, you are going to have to pay your attorneys a majority and/or all of the difference between your claim amount and what is being offered now, and,

UNDERSTANDING HOW THE COURTS WILL INTERPRET YOUR CONTRACT

A well drafted, written contract expresses the intent of the parties in clear language without any ambiguity. For that reason, when a court interprets a written contract, it seeks “to determine the intent of the parties from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction.” MJM Indus. v. Henley Co., 2020 Conn. Super. LEXIS 427, *6. In fact, according to the “parol evidence rule,” if the written contract contains the full expression of the parties’ agreement, a court is generally not allowed to look beyond the language of the written agreement itself. The prior negotiations between the parties will be considered irrelevant. Anything that may have been said verbally or in writing during the parties’ contract negotiations that was not made part of the final written contract is typically not enforceable by either party.

A contract that contains the full agreement of the parties is referred to as a fully integrated agreement. Again, “[i]n order to determine whether a written agreement is integrated, a court must look to the intention of the parties.” Giorgio v. Nukem, Inc., 31 Conn. App.

How to Successfully Deal with OSHA

At the outset, I want to stipulate that it is important to protect worker health and safety. At the end of the day, the most important thing is to have everyone go home safe and sound. The Occupational Safety and Health Administration (“OSHA”) is an administrative agency charged with promoting the health and safety of workers across many industries. While I do not want to belittle OSHA’s mission, there is no question that government regulation can be detrimental to business, and it could be argued that OSHA is unnecessary.

Without question, there is not a single employer who wants anything to happen to its workers. While there might be an occasional employer who does not fully value its employees, even the most callous individual would recognize that employee injuries and/or deaths are detrimental to productivity and profits. Therefore, the last thing anyone wants is for there to be any accidents.

Notwithstanding the foregoing, OSHA is not going to be going way any time soon. Thus, if you are working in the construction industry, it is important to know your rights and to know how to handle both a routine inspection and/or an accident situation.

Connecticut is one of four states that has both federal and state OSHA.

When the Breach of a Construction Contract is not a Breach

The doctrine of substantial performance holds that a contractor’s breach of a construction contract does not entitle the owner to damages because the contractor’s performance was close enough to that which the contract required. “Technical violations are excused not because compliance [is] impossible, but because actual performance is so similar to the required performance that any breach that may have been committed is immaterial. Substantial performance occurs when, although the conditions of the contract have been deviated from in trifling particulars not materially detracting from the benefit the other party would derive from a literal performance, [the other party] has received substantially the benefit [it] expected, and is, therefore, bound to perform.” United Concrete Prod., Inc. v. NJR Constr., LLC, No. CV176011932S, 2018 WL 5733720, at *4 (Conn. Super. Ct. Oct. 17, 2018). The classic example of this doctrine is a situation where the contract specifies a product manufactured by Company A but the contractor provides the same product manufactured by Company B. Because the contract expressly stated that the product shall be manufactured by Company A, the installation of the same product manufactured by a different company is a breach of the contract. However, because the products are identical other than the name of the manufacturer,

FILING A MECHANIC’S LIEN WITHOUT AN ATTORNEY IS ALLOWED BUT DIFFICULT TO DO SO CORRECTLY

I don’t recommend that contractors file their own mechanic’s liens without the aid of an attorney. Every client and/or potential client that has ever come to me asking that I foreclose a mechanic’s lien that they filed on their own had some fatal defect. The reason for that is the arguably conflicting laws in the statutes and in the court decisions interpreting those laws.

A prime example of something that is not readily apparent by reading the mechanic’s lien laws is the notice and service requirements. According to our courts, “[r]ead together, [Sections] 49-34 and 49-35 [of the Connecticut General Statutes] require the [contractor filing the lien] to serve a copy of the certificate upon each owner of the property within 90 days after he ceased performing services or furnishing materials.” Steeltech Bldg. Prod., Inc. v. Viola, 2000 WL 726367, at *2 (Conn. Super. Ct. May 16, 2000). Of course, one may not reach that same conclusion reading [Sections] 49-34 and 49-35 on their own. According to Connecticut General Statutes § 49-34, “[a] mechanic’s lien is not valid unless the person performing the services or furnishing the materials [records a certificate of mechanic’s lien in the land records] within ninety days after he has ceased to do so…” However,

The Importance of Reading and Understanding Your Construction Contract

Everyone knows that they ought to eat right and exercise; yet, far too few of us do it. Similarly, proper construction contract management requires a contractor to thoroughly understand their contracts but many fail to do so. Of course, the reason that contractors are often largely ignored are understandable. Most construction contracts have the same substantive provisions with which contractors are already familiar; the specific requirements for any given project will be discussed at the preconstruction meeting; and the more specific details of any contract tend to only really matter in the rare occasions that the parties end up in a dispute they cannot resolve on their own. However, the few instances that result in litigation may make having proper practices in place for every project worthwhile.

On a positive note, most contractors that I encounter are now reading their contracts before signing them, as opposed to only reading them after a problem develops. As obvious as this may sound, actually taking the time to thoroughly read a contract before a project begins is the only way to be certain that you will fully comply with all your obligations. In addition, reading a contract before signing can prevent a contractor from experiencing an unfortunate surprise.