HERE’S AN UPDATE ON THE EFFECT OF PRIOR RULINGS ON SUBSEQUENT LITIGATION

In a prior post, this blog explained how the Supreme Court held that an owner’s claims against subcontractors were barred because they were either brought or could have been brought in the owner’s prior arbitration against the general contractor. Girolametti v. Michael Horton Assocs., Inc., 332 Conn. 67, 71 (2019). The court ultimately determined that the contractual relationship between a general contractor and its subcontractors was sufficient to determine that they were “sharing the same legal right.” Therefore, “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,” applied in this case even though the subcontractors did not participate in the arbitration. Id. at 75.

Girolametti involved a situation where the dispute between the owner and general contractor included claims that the work performed by subcontractors was defective. Although the subcontractors were not parties to the arbitration, they were no doubt happy with the result and more than willing to have that decision applied to the owner’s subsequent lawsuit against them.

In my prior post, I theorized that, in future cases where the owner/general contractor arbitration is decided in owner’s favor, a subcontractor may argue that it did not have a full hearing of its case because the general contractor did not adequately rebut the owner’s claims. The court in Girolametti did not indicate whether there would have been a different result if the arbitrator had found the work the subcontractors’ work defective, but now there has been trial court decision that provides some guidance.

In its first test, the trial court reinterpreted the decision in Girolametti. In Strazza Bldg. & Constr., Inc. v. Harris, 2020 Conn. Super. LEXIS 327 (February 18, 2020), a trial court held that claim preclusion did not allow an owner to have its contractor’s claim dismissed on summary judgment despite previously litigating the same issue that the contractor’s lawsuit raised.

In Strazza Bldg. & Constr., Inc., a general contractor had brought a breach of contract action against the owner seeking payment of an unpaid contract balance. In reliance on Girolametti, the owner filed a motion for summary judgment in which the owner argued that she had already had a mechanic’s lien filed by a subcontract discharged because there was no lienable fund. In other words, there was no money due the general contractor from the owner. Therefore, the owner argued that, because the lien discharge hearing already determined that there was no money due the general contractor, the general contractor’s lawsuit should be dismissed, but the court disagreed.

The court in Strazza Bldg. & Constr., Inc., determined that claim preclusion did not apply because, in this case, “the general contractor did not have the opportunity to fully participate” and the litigation involved issues were “well beyond the normal purview of the plumbing subcontractor.” Id. at *1. The court also stated that “[w]hile it would seem intuitive that if, as a principle of law, a subcontractor is in privity with a general contractor, that the general contractor must be in privity with the subcontractor. … at most, [that relationship] renders a rebuttable presumption.” Id. at *14. Thus, the trial court said that it had to take a closer look at the relationships involved. Id.

In analyzing the case, the trial court felt there were a number of issues where the contractor would have had more knowledge than the subcontractor that lost the mechanic’s lien discharge hearing. Of course, the courts may be setting up a system where the party that does not participate in the prior action may only be subject to the prior action’s result if it is in its favor.

The Girolametti court did not specify whether its decision would have been different if the arbitration did not end in the subcontractors’ favor, which is why the decision caused some concern. Obviously, no one would ever want to be held to a decision that was against its interest without having had the opportunity to participate in that dispute. However, if Girolametti is only going to bar future claims that are decided in favor of the party that did not originally participate, then it may be less onerous then originally assumed. We’ll have to continue to follow these decisions to see if the future results are consistent with Strazza Bldg. & Constr., Inc.

If you should have any questions about your rights with regard to any prior matters, please give me a call at (203) 640-8825.

Scott Orenstein

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