Connecticut construction lawyer Archives - Page 2 of 6 - Attorney Scott S. Orenstein

Slander of Title is Almost Always an Inappropriate Response to a Mechanic’s Lien

On rare occasions, I have had to contend with a claim of “slander of title” being filed in response to a mechanic’s lien. A slander of title claim requires:

The making of a false statement pertaining to the owner’s title;

The making of the false statement must have been made “with malice”; and

The false statement must result in actual damages.

Neri Corp. v. McDermott Rd., LLC, 2016 Conn. Super. LEXIS 2067, *18 (Conn. Super., July 26, 2016). The requirement for the statement to have been made “with malice” means that the lienor either had acknowledged that the statements in its mechanic’s lien were false or that the lienor acted with “a reckless disregard of the truth.” Id. Both are very unlikely in the context of a mechanic’s lien.

As stated previously in this blog, the purpose of a mechanic’s lien is to provide security for an alleged debt arising out of work performed. Notwithstanding the foregoing, the “[f]iling of a mechanic’s lien like that of any other lien can be the basis of a slander of title action as long as all of the elements of the tort are met.” Id.

Recent Decision Demonstrates the Importance of Complying with Contract Notice Provisions

A common provision in construction contracts requires a contractor to give notice to the owner within a certain number of days of an event giving rise to a claim. Such provisions have a reasonable basis insofar as they ensure an owner will have a reasonable opportunity to investigate the conditions for which a claim for additional compensation is being made. Traditionally, such notice provisions were not strictly enforced. The general approach seemed to be that — provided the owner was not prejudiced by any delay in giving notice of claim — a claim that was not submitted within the specified time limit would not be barred. The more recent trend, however, has been to more strictly construe such provisions.

In J. Wm. Foley, Inc. v. United Illuminating, the Appellate Court held that the contractor’s failure to submit its delay claim within the ten-day time limit specified by the contract was a bar to the claim. This decision is potentially troublesome for a couple of reasons: First, there is no reference to the owner suffering any prejudice as a result of the delay. Second, the decision indicated that the submission of the delay claim required a critical path analysis of the delay.

There’s a New Proposed Law Regarding Emergency Services That Everyone Should Support

Parties are free to enter into contracts with any terms and conditions to which they both agree — but that right is not absolute. Certain contract terms are void by statute or case law based upon public policy considerations. For example, in Connecticut, the General Statutes do not allow contractors to prospectively waive their mechanic’s lien rights and the General Statutes do not allow contracting parties to have another state’s laws govern a dispute arising out of a construction project within Connecticut. However, the most onerous example of a statute that potentially voids an otherwise enforceable contract is the Home Improvement Act.

As previously discussed here, the Home Improvement Act can lead to unfair results. As upheld by the Connecticut Supreme Court, any contract that does not contain certain elements required by Conn. Gen. Stat. § 20-429 is unenforceable and the contractor that enters into such an agreement with an owner may also be held liable for a violation of the Connecticut Unfair Trade Practices Act. Under the terms of the Home Improvement Act, a contract that does not include notice of cancellation rights violates the statute. Thus, the owner of any home improvement project must be allowed three business days to cancel a home improvement contract after it is executed.

Scott Orenstein
02.21.2017
Connecticut Construction Law, Construction Attorney, Construction Law, Contract Law, Home Improvement Act
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An Interesting Decision Discharges a Mechanic’s Lien

As discussed numerous times on this blog, the mechanic’s lien laws provide a security interest in privately owned real property in favor of those that improve it. According to Conn. Gen. Stat. §49-33, “[i]f any person has a claim for more than ten dollars for materials furnished or services rendered in the construction, raising, removal or repairs of any building or any of its appurtenances or in the improvement of any lot or in the site development or subdivision of any plot of land …then the plot of land, is subject to the payment of the claim.” While it is true that the type of work for which a mechanic’s lien may be enforced is sometimes subject to dispute, prior to the recent decision in CLW Real Estate Developments, LLC v. SAB Construction Management, LLC, the issue had been fairly well resolved.

Generally speaking, the types of services that support a mechanic’s lien are those that substantively improve the property. The Connecticut Appellate Court has “observed that a ‘mechanic’ has been defined as ‘a skilled worker who brings about a result by the use of tools, machines or equipment.’” Weber v.

Scott Orenstein
11.21.2016
Connecticut Construction Law, Construction Law, mechanic's lien
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A Recent Supreme Court Decision Found an Owner of a Construction Company Personally Liable to the Owners of a Project

As most people are aware, one of the benefits of doing business as a corporation or limited liability company is that, generally speaking, the owners of the company cannot be held personally liable for the company’s debts. The exception to that general rule is that a court may pierce the corporate veil and hold the company owners personally liable if the company owners are found to have improperly used the corporate form, or have used the corporate form to commit wrongful acts. Nonetheless, even a cursory of the caselaw indicates that plaintiffs do not often prevail when they are attempting to pierce the corporate veil.

The statement of the law with regard to piercing the corporate view is quite simple. In All Phase Builders, LLC v. New City Rests., 2011 Conn. Super. LEXIS 1793, *20-21, 2011 WL 3483368 (Conn. Super. Ct. July 12, 2011), the court ruled:

“In order to pierce the corporate veil, a plaintiff must plead and prove that the corporate shield can be pierced under either the instrumentality rule or the identity rule. The instrumentality rule requires… proof of three elements: (1) Control …; (2) that such control must have been used by the defendant to commit fraud or wrong …;

Contractual Time Limits for Providing Notice of Claim Must be Taken Seriously

The Connecticut Appellate Court recently issued a decision that should cause every contractor some concern. In J. WM. Foley Inc. v. United Illuminating Co., 158 Conn. App. 27 (Conn.App. 2015), the Appellate Court upheld a decision that denied a contractor’s $4.7 million delay claim because the contractor did not provide proper notice of the claim within the 10 days required by the contract. The case is disconcerting because the court’s decision appears to be based upon the contractor’s failure to strictly comply with the contract’s notice provision. There is no discussion indicating that the owner was harmed or prejudiced by the delay in receiving notice of the claim. Moreover, the decision acknowledges that the contractor had provided the owner with notice of events giving rise to the claim. In fact, despite denying the delay claim, the trial court awarded the plaintiff over one million dollars for its direct costs, which arose out of the same facts as the delay claim.

The project underlying the dispute in J. WM. Foley Inc. was the construction of a utility pipeline. The parties’ agreement stated that the contractor was expected to encounter subsurface obstructions and that the contractor would be entitled to additional compensation associated with same.

Recent Local Law Shows that the Law’s Understanding of Blasting is not Improving

In 2003, I published an article in The Journal of Explosives Engineering entitled “The Laws Governing Blasting,” in which I explained that, despite the fact that blasting is the most widely used method for rock removal on construction projects, court decisions pertaining to blasting damage claims often wrongfully hold blasters liable for alleged damage their blasting could not have possibly caused. As my article explains, these decisions reach the wrong conclusion because of a general misunderstanding of the science governing blasting. By citing technical and legal sources, the article demonstrates that courts often ignore scientific evidence in favor of lay testimony that the blasting caused damage because cracks were noticed after the building shook. However, years of research by the United States Bureau of Mines (“USBM”) demonstrates that such anecdotal evidence is not reliable or accurate.

A fundamental principle from the USBM research stated in USBM Bulletin 8507 is that blast generated vibrations that are measured at the nearest structure at less than 2 inches per second at 40 Hz are not likely to cause damage to typical residential construction. (For a full discussion of the scientific information pertaining to the USBM research, see my earlier article).

Recent Supreme Court Case Teaches Important Lessons

It is no secret that public works construction is a difficult business. On any given project there are innumerable ways that things can go wrong. With any project involving excavation and underground utilities, encountering changed conditions should not be a surprise. Of course, such changed conditions are not the contractor’s responsibility. What is the contractor’s responsibility, however, is providing the public owner with proper notice of its claims in accordance with the subject agreement.

One of the reasons public works construction projects are more onerous than their private counterparts is because public owners rarely negotiate contract terms. Contracts that are slanted significantly in the public owner’s favor are the norm. Thus, as the contractor in a recent state Supreme Court decision learned, it is vitally important to read the contract and abide by its terms.

One of the lessons from Old Colony Cosntr., LLC v. Town of Southington, 316 Conn. 202 (Conn. April 21, 2015) is that general assertions of entitlement to damages and/or additional contract time is not sufficient when the contract requires more detail. During the long duration of the project, the contractor in Old Colony repeatedly indicated that each problem that occurred impacted its schedule and costs.

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,

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 &

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