An Owner’s Refusal to Issue Payment Might Amount to a Violation of the Unfair Trade Practices Act — But That’s Not Usually the Case

Litigation arising out of construction contract disputes obviously will include claims for breach of contract, but also tend to include claims that are based upon alleged violations of the Connecticut Unfair Trade Practices Act (CUTPA). Because there must be a good faith basis for any alleged claim, a set of facts should exist that reasonably supports any such allegations. However, given the requirements of a CUTPA claim and the frequency with such claims are alleged, a cynical person might suspect that CUTPA claims are often asserted merely as a way to circumvent the “American Rule,” which requires each party to be responsible for its own attorneys’ fees and costs.

The cost of litigation can make pursuing certain claims cost prohibitive. However, a plaintiff that prevails in a CUTPA claim may be awarded punitive damages and/or its reasonable attorneys’ fees and costs. Conn. Gen. Stat. § 42-110g. In addition, the mere threat of this additional liability may intimidate an opposing party into entering a settlement that it would not otherwise consider. Thus, alleging a violation of CUTPA may give a plaintiff a strategic advantage in litigation but such a claim is not likely to succeed in most situations.