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 &

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,

A Contractor May Still Recover Monies Due For Work Performed Pursuant to an Unenforceable Contract

Despite what might appear to be the parties’ intentions, courts sometimes find contracts unenforceable.  Courts may find contracts unenforceable for any number of reasons including, but not limited to, the contract omitting a material term; the contract having vague or indeterminate terms; the contract violating the statute of frauds; the contract lacking consideration; and/or the contract not reflecting the understanding of both parties.  In those situations, a party that provides labor, materials, and/or services may still be entitled to receive payment for its work under the legal theories of unjust enrichment or quantum meruit.

“[U]njust enrichment and quantum meruit are alternative theories of restitution.”  Nation Elec. Contracting, LLC v. St. Dimitrie Romanian Orthodox Church, 144 Conn.App. 808, 814, 74 A.3d 474, 478 (Conn.App., 2013).  “Unjust enrichment applies whenever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract.”  Gagne v. Vaccaro, 255 Conn. 390, 401, 766 A.2d 416, 424 (Conn.,2001).  “Quantum meruit is the remedy available to a party when the trier of fact determines that an implied contract for services existed between the parties, and that,

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.

Construction Claims May Come From A Variety of Sources

Most construction claims arise out of the contractual relationship between the parties.  Some arise out of claims of negligence.  There are other situations where a contractor may be held liable for damages that stem from nothing more than having engaged in certain activities.  Such claims are based upon the idea that “strict liability” applies to “ultra-hazardous activities.”  In both situations, i.e. claims based upon negligence and claims based upon strict liability, the first party performs an act or omission that results in damage to the life or property of the second party.  With a negligence claim, in order to be held liable, the first party must owe the second party a duty that is breached by the first party’s act or omission.  For example, if a contractor is working on scaffolding above a sidewalk, the contractor must use reasonable care to make sure that nothing falls on the people below and, in that situation, the contractor would only be held liable if something fell due to the failure to exercise reasonable care and not solely because something fell.  With a strict liability claim, however, all that is required is for the contractor to be held liable is for the contractor to be engaged in the activity that caused the harm.

After Nine Years, There is Still Ambiguity in The State’s Prequalification Program

On October 1, 2004, acting through its Department of Administrative Services (“DAS”), the State of Connecticut implemented a prequalification program for all contractors bidding on certain public projects.  2003 Ct. ALS 215, 1.  Specifically, “[t]he DAS Contractor Prequalification Program (C.G.S §4a-100) [(the “Program”)] requires all contractors to prequalify before they can bid on a contract or perform work pursuant to a contract for the construction, reconstruction, alteration, remodeling, repair or demolition of any public building or any other public work by the state or a municipality, estimated to cost more than $500,000 and which is funded in whole or in part with state funds, except a public highway or bridge project or any other construction project administered by the Department of Transportation.”  DAS website, http://www.das.state.ct.us/cr1.aspx?page=10.  On October 1, 2007, the Program was expanded to apply to subcontractors whose contract exceeded $500,000.  http://www.das.state.ct.us/fp1.aspx?page=111.  Still, questions remain as to whether an apparent low bid submitted by a DAS prequalified contractor may be rejected by a public owner and/or its construction manager and the information that a bidder may have to submit to be awarded a project can be unduly burdensome and repetitive.

According to DAS,

Recent OCIP Decision Reminds Contractors About the Importance of Contract Language

In recent years, Owner Controlled Insurance Programs (“OCIP”) have become more prevalent in public and private construction projects.  An OCIP “is a class of ‘wrap-up’ insurance that provides coverage for many construction project participants under one program.”  Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 308 Conn. 760, 767 (Conn. 2013).  Such programs typically include commercial general liability insurance and worker’s compensation insurance.  In general, OCIPs reduce a project’s overall cost because the owner does not have to pay the multiple layers of duplicative administration associated with the general contractor and each subcontractor having its own insurance coverage.  The general understanding is that the project owner benefits from the savings but a recent Superior Decision reminds us that contractual duties and obligations are derived from the plain language of the contract and not what may reasonably inferred.

In Elevator Serv. Co. v. Reg’l Scaffolding & Hoisting Co., 2013 Conn. Super. LEXIS 687 (Conn. Super. Ct. Mar. 27, 2013), Elevator Service Co., Inc. (“Elevator Service”) and Regional Saffolding & Hosting, Inc. (“Regional Scaffolding”) entered into an agreement pertaining to a project known as the Royal Bank of Scotland (the “Project”).  The issue before the court was whether Elevator Service had to pass along to Regional Scaffolding a discount that it received through the subject project’s OCIP. 

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,

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.