Connecticut construction lawyer Archives - Attorney Scott S. Orenstein

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,

Contractors: Don’t Inadvertently Give Up Your Lien Rights – How Subordination Agreements and Lien Waivers Affect Mechanic’s Liens

As most contractors know, if they are not paid for their work, they are entitled to file a mechanic’s lien against the property where the work was performed. While the main purpose of a mechanic’s lien is to provide security for the debt, it can be a powerful tool in helping contractors receive payment. However, the reasons why filing a mechanic’s lien can result in a contractor receiving payment are not widely understood, and, for that reason, contractors may inadvertently waive all or some of their rights.

A mechanic’s lien is an attachment to “real property,” which is similar to but not exactly the same as a mortgage. Like a mortgage, a mechanic’s lien is recorded on the land records. Unlike a mortgage, however, a mechanic’s lien’s “priority” may not be based upon the date it is recorded. Thus, a property owner may need to discharge a mechanic’s lien to refinance, to avoid a default on its mortgage and/or to convert a construction loan into a regular mortgage. Therefore, an owner’s potential need to obtain a lien discharge may result in a contractor receiving payment.

Generally speaking, mortgages and liens (other than mechanic’s liens) take effect on or have “priority” from the date they are recorded.

Scott Orenstein
10.11.2022
Construction Attorney, Contract Law, Lien Waiver, mechanic's lien, Subordination
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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.

VERBAL AGREEMENTS ARE JUST AS GOOD AS WRITTEN CONTRACTS (ALMOST)

I have often heard many people say that they did not have a contract and/or change order when they actually meant that they did not reduce their agreement to writing and/or sign a written document. Whenever someone performs work in exchange for a promise of payment, they have a legally enforceable agreement. The question is whether the contract was verbal or written.

There are two areas where the issue of not having a fully executed written agreement repeatedly arises in construction. The first is when the parties exchange a written contract but do not fully execute it, and the second is when the parties ignore the requirement in their contract that any changes in the work only be performed pursuant to a written change order. In both these cases, there can still be an enforceable verbal contract.

As you might expect, having a written contract is often better than a verbal, which is why there are many publicly available forms that can be obtained for construction projects. The American Institute of Architects (AIA) produces the most well-known and widely used forms of agreement, but there are competitors that offer similar (if not better) products. The point is that there is no excuse for not having a signed written agreement for any construction project,

Scott Orenstein
03.29.2021
Connecticut Construction Law, Connecticut construction lawyer, Construction Attorney, Contract Law
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A RECENT APPELLATE DECISION THAT PURPORTS TO EXPLAIN THE MEANING OF “CARDINAL CHANGE” ACTUALLY ONCE AGAIN DEMONSTRATES THE IMPORTANCE OF NEGOTIATING A FAIR CONTRACT

Change order provisions, which appear in most constructon contracts and contemplate changes being made to the work, contradict a fundamental premise of contract law. Specifically, in order for there to be a legally enforceable agreement, “there must be mutual assent or a meeting of the minds.” C.A.D.S., LLC v. Sundance Realty, LLC, 2019 Conn. Super. LEXIS 29, *25 (July 2, 2018). A contract is supposed to be “based on an identical understanding of the parties.” Id. at *25-26. Yet, as anyone in construction is aware, the project owner may order changes during the performance of the work that the contractor is contractually bound to perform, subject to appropriate adjustments in monetary compensation and the time to complete the work.

Notwithstanding the foregoing, there are limits in an owner’s ability to order changes in the work, because the owner is not allowed to require a contractor to perform “cardinal changes.” “A ‘cardinal’ change is a change outside the general scope of the contract.” Philip L. Bruner & Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law § 4:13. The significance of a cardinal change is that it is not covered by a standard change order provision.

A RECENT SUPREME COURT DECISION DRAMATICALLY AFFECTS SUBCONTRACTORS’ RIGHTS

In Girolametti v. Michael Horton Assocs., Inc., the Supreme Court determined when a subcontractor’s rights will be affected by an arbitration in which the subcontractor did not participate. Girolametti v. Michael Horton Assocs., Inc., 332 Conn. 67, 71 (2019). This decision was based upon “the rule of claim preclusion,” which prevents the re-litigation of a claim once the claim has had a full and fair hearing “regardless of what additional or different evidence or legal theories might be advanced in support of it.” Id. at 75. In order for claim preclusion to apply, the following requirements must be met:
(1) The prior judgment must have been rendered on the merits by a court of competent jurisdiction;
(2) The parties to the prior and subsequent actions must be the same or in privity;
(3) There must have been an adequate opportunity to litigate the matter fully; and
(4) The same underlying claim must be at issue.
Id. After applying these requirements in Girolametti, the Supreme Court held that the owner’s claims against the subcontractors were barred because they were either brought or could have been brought in the owner’s arbitration against the general contractor.

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.

Scott Orenstein
04.07.2019
Connecticut construction attorney, Connecticut Construction Law, Connecticut construction lawyer, Construction Attorney, Damages, Negligence, OSHA
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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,

WHAT TO DO WHEN YOU ARE NOT BEING PAID

The most common issue I confront as a construction attorney is what to do when my client is not being paid. The standard approaches include sending a demand letter, making a demand for disputed funds to be placed in escrow in accordance with the prompt payment statute, and, of course, filing mechanic’s liens and/or bond claims. The larger issue becomes what to do when my client can no longer to perform its work without payment.

As a general rule, a contractor is better off completing its work, and then fighting about the monies due, as opposed to walking off the job. While it is true that there are Connecticut cases which hold that a contractor is excused from finishing its work if progress payments are not made when due, but reliance on such cases is fraught with potential problems.

If you ever forced to litigate, you want to be viewed as the one wearing the white hat. You want to be the injured party that is as pure as the driven snow. If at all possible, you do not want to give the other side any arguments to raise. Thus, if you walk off the job for nonpayment,

Remedial Work Does Not Extend the Deadline to Commence an Action on a Payment Bond

As most contractors are aware, if they are not paid for their labor, materials, and/or services, they can strengthen their position prior to filing a lawsuit by filing a mechanic’s lien, or by making a claim against the project’s bond claim. Of course, both options are not generally available. Typically, the choice is based upon whether the project is private or public. On private projects, a contractor (or supplier) is allowed to gain a security interest in the property by filing a mechanic’s lien. On public projects, federal and local governments passed laws requiring the general contractor on public projects to post “payment bonds,” which guarantee the payment of those who supply labor, materials, and/or services to the property. In other words, because governments were not willing to let public lands be subject to foreclosure, on public projects, statutorily required payment bonds were created to take the place of mechanic’s liens. Of course, private owners may require general contractors to post payment bonds on private projects as well, but this post only addresses the statutory payment bonds required on public projects.

The law that requires payment bonds on federal projects is known as the Miller Act. The various state laws that require payment bonds on state projects are often referred to as “Little Miller Acts.” The requirements are the Miller Act and the various Little Miller Acts are generally similar.

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