A Cautionary Tale for All Subcontractors

The Connecticut Appellate Court recently handed down a decision that should have all subcontractors carefully reviewing their subcontracts.  In Suntech of Connecticut, Inc. v. Lawrence Brunoli, Inc., 143 Conn. App. 581 (2013), Suntech of Connecticut, Inc. (“Suntech”) agreed to “provide glass doors, glass, glazing, an aluminum framing system, and a metal framing system” as a subcontractor on a state project.  Id.  As a result of an error in the plans and specifications, Suntech incurred substantial additional costs. Typically, when an error in the plans and specifications results in a contractor incurring additional costs, the contractor is entitled to a change order but that is not what occurred in this case.

The Suntech decision appears to go against two principles of Connecticut construction law.  First, in Southern New England Contracting Co. v. State, 165 Conn. 644, the Connecticut Supreme Court issued a decision consistent with the Spearin doctrine which states that, because the contractor agrees to build the project in accordance with the plans and specifications, the contractor will not be held responsible for damages should the plans and specifications end up being defective.  Second, while not conclusively determined,

Connecticut Statutes Provide Assistance with Receiving Prompt Payment on Public and Private Construction Projects

Under Connecticut law, an owner should pay its general contractor within 30 days of having received the general contractor’s application for payment; the general contractor, in turn, is required to pay its subcontractors and suppliers within 30 days of having received payment from the owner; and the subcontractors should then pay their sub-contractors and suppliers within 30 days of having received payment from the general contractor and so on down the line.  See Gen. Stat. § 49-41a and Conn. Gen. Stat. § 42-158j.

The provisions in § 49-41a and § 42-158j are substantially similar except that:

1.) Only private owners are required to make payment to their general contractors within a specified number of days after receiving an application for payment; and

2.) The statute only applies to public projects for which a payment bond is required, which is any public works project whose contract amount exceeds $100,000.

Both statutes also have similar enforcement procedures.  Either a subcontractor on a public project to which the statute applies or general contractors and subcontractors on a private project can make demand for payment by way of registered or certified mail and, within 10 days,

You Should (Almost) Never Request a Jury for a Construction Case

Construction Contract disputes are complicated legal matters.  Both sides usually have valid points to make.  The winner is determined by the application of relatively complex facts to the law.  Such cases often involve information beyond the knowledge and understanding of the average juror.  Although it is true that most judges do not have a construction background either, judges have likely heard a prior construction case; and, as trained jurists, have a good understanding of the legal arguments that are being raised.  In addition, judges are being paid to pay attention to your case.  Conversely, the average juror has no understanding of construction or the law; typically does not want to be serving as a juror; and is missing out on a day’s pay. In light of the foregoing, I almost never recommend that my clients request a jury.

There is one area, however, where choosing a jury may be the right choice.  Until relatively recently, it was understood that a contractor had no claim for damages arising out of a bid protest.  See Lawrence Brunoli, Inc. v. Town of Branford, 247 Conn. 407, 412 (1999) (holding that the only remedy to be afforded unsuccessful bidders under the municipal bidding statutes is injunctive relief);

Restarting the 90 Day Clock to File a Mechanic’s Lien

As most contractors are aware, in Connecticut, you have 90 days after the last day that you supply labor and/or materials to file a mechanic’s lien.  Many other states have the same or a similar requirement pertaining to when a mechanic’s lien can be filed.  The question that is often asked is which “last day” starts the clock.

In a common scenario, additional work is performed more than 90 days after what was originally thought to be the last day worked and the contractor then claims that the second last day starts a new 90 days clock to file a mechanic’s lien.  Sometimes such mechanic’s liens are upheld but they are typically invalidated.  The reason is that the typical scenario involves a contractor – who has not been paid – realizes that his time to file a mechanic’s lien has expired so he returns to the site to perform a minor punchlist item that was inadvertently left undone initially.  Generally speaking, to restart the mechanic’s lien clock, a contractor must perform substantive work that was authorized by the owner or someone rightfully acting on the owner’s behalf.  The most recent guidance on this issue was provided by the Connecticut Appellate Court in Cianci v.

Court Upholds A Mechanic’s Lien Served More Than A Year After It Was Filed

Under Connecticut Law, “a mechanic’s lien shall not continue in force for a longer period than one year after the lien has been perfected unless the party claiming the lien commences an action to foreclose it.”  Conn. Gen. Stat. § 49-37.  Similarly, “[w]henver a bond has been substituted for any [mechanic’s] lien . . . , unless an action is brought to recover upon the bond within one year from the date of recording the certificate of lien, the bond shall be void.”  Thus, in both instances, the law requires a lawsuit to be commenced within one year of the mechanic’s lien having been recorded or the right to make a claim on the lien or a bond substitute therefor is gone.  In Connecticut, a lawsuit is commenced when the Writ, Summons and Complaint is served upon the defendant by a marshal.  Yet, recently, a Superior Court Judge refused to dismiss an action on a bond substituted for a lien that was not served until after the one year time limit had expired.  See Frank Lill & Son, Inc. v. O&G Indus., 2012 Conn. Super. LEXIS 2844 (Conn. Super. Ct. Nov. 26, 2012)

The Lill decision is surprising because it is often said that,

Different Treatment for Different Mechanic’s Lien Deadlines

The Connecticut courts have often been schizophrenic in their interpretation of Connecticut mechanic’s lien law.  On one hand, the courts refer to mechanic’s liens as a right created by statute and, therefore, must be strictly interpreted.  On the other, the courts refer to mechanic’s liens as remedial in nature and, therefore, should be liberally construed.  Based upon some recent decisions, it appears that that deadline to record and serve the mechanic’s lien is being strictly interpreted but the deadline to foreclose the lien is being liberally construed.

For a mechanic’s lien to be valid, it must be recorded within 90 days of the last day worked.  The mechanic’s lien, however, will expire if not foreclosed within one year of its recording.  Recently, the courts examined whether: 1.) the 30 day time limit for service was included within the 90 days for recording; and 2.) if the 30 days a marshal has to serve papers extended the one year deadline to foreclose.  Based upon the language of the statutes, the decisions came out the exact opposite as you might expect.

Conn. Gen. Stat. §49-34 states that the lien must be recorded within 90 days after the last date worked and served upon the owner within 30 days of recorded the certificate.

Pending Legislation Concerning Mechanic’s Liens

Right now, the Connecticut Legislature is considering Proposed Bill No. 5682 (the “Proposed Act”), which states as its purpose “[t]o establish a process for the holder of a mechanic’s lien to establish priority for the lien effective upon the filing of a ‘Notice of Commencement of Work’ with the town clerk for recording with deeds of land.”  The text of the Proposed Act states, however, that the lienor must be an architect and that the lienor’s priority is established upon the date of filing.  Such language raises many questions.

The “priority” of a mechanic’s lien pertains to where the mechanic’s lien stands in line with regard to the other claims against a property such as mortgages and other interest should the property go into foreclosure.  Presently, the priority of a mechanic’s lien relates back to the first date that the lienor, i.e. the person filing the mechanic’s lien, worked on the project.  There is some logic in creating a separate statute for design professionals because – unlike an excavation contractor – no one can see when a design professional starts work but, if that were the reason for the change, why does the Proposed Act only pertain to architects and not engineers as well. 

Another Step Closer to Understanding Pay-When-Paid Clauses

No provision in a standard construction contract has been more debated than the requirement for the general contractor to pay its subcontractors after its receipt of payment from the owner.  In situations where the owner does not pay the general contractor, the general contractor typically argues that it has no obligation to pay the subcontractor even if the reason for the owner’s nonpayment had nothing to do with the subcontractor.  Conversely, the subcontractor argues that – when the reason for the owner’s nonpayment is not the subcontractor’s fault – the general contractor must pay the monies the subcontractor is due.  Generally, the courts have said that contract language which states that the subcontractor shall not be paid until after the general contractor’s receipt of payment from the owner merely sets forth the time for payment and does not transfer the risk of the owner’s insolvency from the general contractor to the subcontractor.  “Normally and legally, the insolvency of the owner will not defeat the claim of the subcontractor against the general contractor.”  Sil/Carr Corp. v. Bartlett, 2012 Conn. Super. LEXIS 1665 (Conn. Super. Ct. June 26, 2012).  It is, however, possible for the contractor to transfer the risk of the owner’s nonpayment to the subcontractor. 

Subcontractors Only Have Very Limited Rights Against Public Owners

On private construction projects, subcontractors and/or suppliers that furnish labor, material, or services but are not paid by the project’s general contractor have a variety of claims that they may assert against a private owner.  For example, such subcontractors and/or suppliers may assert claims for unjust enrichment or file a mechanic’s lien.  No such rights exist, however, where the project owner is the State of Connecticut or one of its cities or towns.

As an alternative to the typical claims a subcontractor or supplier has against a private owner, Conn. Gen. Stat. § 49-41 requires general contractors that enter contracts for public projects over a certain dollar amount to post surety bonds that guarantee payment to their subcontractors and suppliers.  The exact language of Conn. Gen. Stat. § 49-41 states that “[e]ach contract . . . [for] any public building or public work of the state or a municipality shall include a provision that the person to perform the contract shall furnish . . . a bond . . . for the protection of persons supplying labor or materials . . .”  By the plain language of the statute, the onus is put on the general contractor to supply the bond;

A Contractor That Acts as His Own Expert Witness May Inadvertently Waive Attorney Client Privilege

The general rule is that a party does not have to disclose communications with its attorney seeking legal advice.  A recent Superior Court decision, Noble v. the City of Norwalk, 2012 Conn. Super. LEXIS 2017, however, has found an exception to the attorney client privilege that contractors need to be aware about.

During a trial, witnesses are not allowed to give their opinion unless they are qualified as an “expert.”  Under the legal definition, an “expert” is anyone that has knowledge through education, training or experience that would be helpful to the jury given the subject matter of the lawsuit.  Based upon the foregoing definition, almost anyone can qualify as an expert if the right case came along.  For example, my 13-year-old daughter has been taking ballet lessons since she was 3.  If ballet ever became relevant to a key issue in a lawsuit, my daughter would qualify as an expert on that subject.

In construction litigation, there are always questions that are not clearly fact or opinion.  For example, the amount of time that the forms have to remain in place after a concrete pour is a subject upon which there is disagreement and often depends upon the structure that was poured and the conditions under which the concrete was placed.