Connecticut construction attorney Archives - Page 3 of 6 - Attorney Scott S. Orenstein

Changes to the Prevailing Wage Law Considered

According to Conn. Gen. Stat. §31-53, all public works construction contracts require the wages paid on the project to “be at a rate equal to the rate customary or prevailing for the same work in the same trade or occupation in the town in which such public works project is being constructed. Any contractor who is not obligated by agreement to make payment or contribution on behalf of such persons to any such employee welfare fund shall pay to each mechanic, laborer or worker as part of such person’s wages the amount of payment or contribution for such person’s classification on each pay day.” The reason for the “prevailing wage” requirement is to level the playing field for those bidding on public projects by requiring non-union companies to pay the equivalent of union wages on such projects. In the last legislative session, Connecticut lawmakers considered an expansion of the prevailing wage law beyond projects owned by the state or its subdivisions.

The considered legislation expands the prevailing wage law so that it would apply to any project which receives financial assistance from the state. For example, if your project is funded—or even partially funded—by a loan or a grant from the State Department of Economic Development,

Public Owners Have Substantial Discretion in Determining the Lowest Responsible Bidder

In a recent decision, the Appellate Court reminded us that it is the lowest responsible bidder and not merely the bidder that submits the lowest price that shall be awarded the contract for a public project. In Good Earth Tree Care, Inc. v. Town of Fairfield, 2014 WL 3408914 (Conn.App.), 2 (Conn.App., 2014), the plaintiff brought an action against the Town of Fairfield (the “Town”) because of the Town did not award the plaintiff the contract to operate the Town’s leaf and yard waste facility (the “Facility”) despite the plaintiff having submitted the lowest bid. The lawsuit was dismissed after the plaintiff presented its evidence because it failed to prove that the Town engaged in “fraud, corruption, or favoritism.” Based upon the facts of this case, however, it is easy to understand why the plaintiff thought that there might have been an element of favoritism involved. Specifically, the Town awarded the 5 year contract to the contractor that had operated the Facility for the previous five years at a higher price than the plaintiff had offered.

In the private sector, it is perfectly permissible for an owner to say that it is willing to pay a familiar entity a higher price than a new company if the private company is happy with the existing company’s performance but public owners do not have that type of discretion.

With Payment Bond Claims, Different Rules Apply to the Bond Claimant and the Surety

As previously discussed in this Blog, Conn. Gen. Stat. § 49-41 requires each general contractor on a public works projects valued over $100,000 to post a payment bond that guarantees payment to the general contractor’s subcontractors and suppliers. The payment bond also guarantees payment to each subcontractors’ sub-subcontractors and suppliers.

The procedure by which such subcontractors, sub-subcontractors, and/or suppliers may make claim against such payment bonds is described in Conn. Gen. Stat. § 49-42. With the exception of claims for retainage, the statute requires those making claim on the payment bond to submit their “notice of claim” within 180 calendar days after the last day that it worked and/or supplied materials. The statute then provides the surety that issued the payment bond with 90 calendar days to pay or deny the claim. Until recently, both time provisions were mandatory. See Barreira Landscaping & Masonry v. Frontier Ins. Co., 47 Conn. Supp. 99, 110, 779 A.2d 244, 252 (Super. Ct. 2000)(holding that both the notice of claim and the surety’s response both much be made within the time specified by statute.)

With regard to the 90 day time limit, the court in Barreira Landscaping &

Mechanic’s Liens – Legislative Update

Every year, state legislatures across the country pass new laws and revise old ones. In fact, these state legislatures often tinker with existing statutes that have been in place for many years and are working as intended. This year, the Connecticut legislature has raised a bill, Raised Bill No. 887, “An Act Concerning the Requirements for the Filing of a Mechanic’s Lien” (the “Act”), that may have an adverse effect on the construction industry through unintended consequences.

The Act would add a new requirement for a mechanic’s lien to be valid. Specifically, the Act states that the contractor performing the work must hold “the appropriate registration or license to perform the services.” On one hand, the Act has the valid purpose of discouraging unlicensed individuals from performing construction services. On the other hand, this revision to the mechanic’s lien laws would be duplicative of the laws and regulations pertaining to licensure already in place insofar as the existing laws and regulations prohibit certain work from being performed without a license. In addition, the mechanic’s lien statutes are not the best place to address this issue.

The mechanic’s lien laws were established in all fifty states to provide contractors and suppliers with recourse in the event of nonpayment for their labor,

Recent Decision Discusses Procedure for Challenging the Arbitrability of a Dispute

Arbitration is a private dispute resolution procedure that is intended to be more efficient and less expensive than a traditional court trial. In arbitration, a private individual or panel of private individuals act as both judge and jury and decide the outcome of a matter in controversy. Because arbitration is a private process, parties can only be forced to arbitrate issues that they agree to arbitrate. The arbitrability of any particular issue is based upon the parties’ agreement. Of course, once a contractual relationship breaks down, the parties may disagree over the arbitrability of their dispute.

In construction contracts, arbitration clauses tend to be sufficiently broad that, in general, it is difficult to successfully challenge the arbitrability of any dispute arising out of or pertaining to the subject agreement and/or project. In Girolametti v. Rizzo Corp., 152 Conn.App. 60 (Conn.App.,2014), the Connecticut Appellate Court elaborated on the procedure for preserving the issue of arbitrability for judicial review and the severable nature of arbitration clauses.

In Girolametti, the plaintiff sought to vacate the arbitration award that had entered in the defendant’s favor. The court first questioned whether the plaintiff had properly preserved the arbitrability issue for judicial determination and noted that,

Beware of No Damages for Delay Clauses

It is common for construction contracts to state that, if the project is delayed by the owner, the contractor shall be entitled to an extension of contract time but will not be entitled to any addition compensation. Such a contract provision is known as a “no damages for delay” clause. The Connecticut Supreme Court has held that “‘no damages for delay’ clauses are generally valid and enforceable and are not contrary to public policy. [unless]: (1) [the] delays [are] caused by the [owner’s] bad faith or its willful, malicious, or grossly negligent conduct, (2) [the delays] uncontemplated …, (3) [the] delays so unreasonable that they constitute an intentional abandonment of the contract …, and (4) [the] delays [result] from the [owner’s] breach of a fundamental obligation of the contract. White Oak Corp. v. Department of Transp., 217 Conn. 281, 288-89, 585 A.2d 1199, 1203 (Conn.,1991). The list of exceptions; however, may not actually be that broad. In a recent decision, the Superior Court analyzed the applicability of the aforesaid exceptions to a typical “no damages for delay” clause.

In C & H Elec., Inc. v. Town of Bethel, an electrical contractor was substantially delayed because of the additional asbestos abatement work that was required.

An Examination of a Recent Court Decision Discharging a Mechanic’s Lien

As previously discussed in this blog, after a property owner files an application to discharge a mechanic’s lien, a hearing is held in which the contractor is required to demonstrate that there is “probable cause to sustain the validity of the lien.” Sheriff v. Harris, 2014 WL 566150, *5 (Jan. 13, 2014). “The legal idea of probable cause is a bona fide belief in the existence of facts essential under the law for the action and such as would warrant a man of ordinary caution, prudence and judgment, under the circumstances, in entertaining it.” Id. The requirement of “probable cause” is a lower burden of proof than would be required at a full trial on the merits; however, the Sheriff decision evidences that a low burden of proof is not the same as requiring no proof at all. Nonetheless, the decision of illustrative of the evidence that must be presented to establish “probable cause” to sustain a lien.

The court in Sheriff noted that, “[t]o establish probable cause to support a mechanic’s lien, a person must first show that he is entitled to claim a lien.” Id. According to Conn.

An Explanation of The Home Improvement Act’s Licensed Contractor Exception

Chapter 400 of the Connecticut General Statutes is known as the Home Improvement Act. “The purpose of the Home Improvement Act is to ensure that home improvements are performed by qualified people.” Santa Fuel, Inc. v. Varga, 77 Conn.App. 474, 495 (Conn.App.,2003). A “[h]ome improvement contract” means an agreement between a contractor and an owner for the performance of a home improvement.” Conn. Gen. Stat. § 20-419. As a general rule, a home improvement contract is not enforceable against a homeowner unless the contract complies with the writing requirements of the Home Improvement Act. Laser Contracting, LLC v. Torrance Family Ltd. Partnership, 108 Conn.App. 222, 226, (Conn.App.,2008).

The Home Improvement Act serves a valid purpose but may be heavy handed in its application. In holding that the failure to comply with the statutory requirements for a home improvement contract bars all recovery, including claims sounding in implied contract and unjust enrichment, the Connecticut Supreme Court said the following:

We recognize that our decision may lead to a harsh result where a contractor in good faith but in ignorance of the law performs valuable home improvements without complying with § 20-429.

It is Not Always Clear Cut Which Services May Be the Basis of a Mechanic’s Lien

Conn. Gen. Stat. § 49-33 provides that those furnishing labor, materials or services for the improvement of real property are entitled to claim a lien on said premises. “Prior to the statute’s amendment by the legislature in 1974, our cases construing the language of § 49–33 required, as a condition of lienability, that the work done be incorporated in or utilized in the building (or the appurtenance ) to be constructed, raised, removed or repaired.” Santa Fuel, Inc. v. Varga, 77 Conn.App. 474, 482, 823 A.2d 1249, 1255 (Conn.App., 2003). In 1974, the legislature amended Conn. Gen. Stat. § 49-33; however, “the 1974 amendment was not intended to expand the scope of [our mechanic’s lien laws] to include persons whose services do not enhance the property in some physical manner or lay the groundwork for the physical enhancement of the property.” Nickel Mine Brook Associates v. Joseph E. Sakal, P.C., 217 Conn. 361, 363-364, 585 A.2d 1210, 1212 (Conn.,1991). For that reason, numerous services pertaining to land cannot be the basis for a mechanic’s lien such as pipe removal, temporary electrical work, trash removal, cleaning services, and lawn mowing. See Landscape Management Services, Inc.

Arbitration Awards May Be Amended by the Arbitrator

Arbitration is a procedure by which parties to a contract agree in advance that any disputes arising out of that agreement will be submitted to a private individual or a panel of private individuals to issue a final decision referred to as an “award” that is final and binding upon the parties. Much like a court trial, in an arbitraiton, a single arbitrator or panel of arbitrators will hear testimony and take evidence presented by the parties or their legal counsel and then make findings of fact and law that lead to one party prevailing over the other.

Arbitration has become a very popular dispute resolution procedure in construction contract disputes because of its intended efficiency and finality. In general, the courts favor arbitration and, as a result, judicial interference in arbitration awards is very limited. In Connecticut, as in most states, a court will only vacate, modify or correct an arbitration award for a handful of statutory reasons, which do not include re-litigating the matter. In other words, you cannot convince a court to throw out an arbitration award merely by pointing out the arbitrator made a mistake of fact or law.

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