construction law attorney Archives - Page 3 of 4 - Attorney Scott S. Orenstein

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,

If Your Mechanic’s Lien is Discharged, You’ve Lost the Battle But Not the War

After a mechanic’s lien is filed, an owner has two options. The owner can wait because, if the lien is not foreclosed within a year, it evaporates by operation of law; or, the owner can file an application with the court seeking an order discharging the lien. If the owner files an application for discharge, the court will hold a hearing during which the contractor “shall first be required to establish that there is probable cause to sustain the validity of his lien,” and, if that occurs, the owner must “prove by clear and convincing evidence that the validity of the lien should not be sustained or the amount of the lien claimed is excessive and should be reduced.” Conn. Gen. Stat. §49-35b. Thus, if a lien is discharged, either there was not “probable cause” to sustain the lien or the owner was able to present “clear and convincing evidence” that the lien should be discharged. In either case, it is evidence that the contractor’s claim for the underlying debt was weak.

The question then is whether a contractor may commence its own action against the owner to the collects the amounts that had been secured by a mechanic’s lien that had been discharged after a hearing.

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,

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.

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,

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.

Arbitrability: Who Decides Who Gets To Decide?

Arbitration has become a popular alternative to traditional courtroom litigation for construction contract disputes; however, arbitration is a creature of contract. No one can be forced to arbitrate an issue that they have not agreed to arbitrate. The problem is that the parties sometimes disagree over what issues they have agreed to arbitrate. In those instances, the issue is whether the court or the arbitrator(s) get to decide whether any specific dispute is subject to the contract’s arbitration clause. The Superior Court addressed this issue most recently in Montowese Industrial Park, LLC v. The Thomas W. Golden Realty Company.

In Montowese, the Court started with the general rule, which states that it is for the Court to decide whether a specific dispute is arbitrable based upon the Court’s authority to interpret contracts. The Court then went on to state that the parties had the authority to transfer that authority to the arbitrator(s) if they chose to do so. In other words, the parties could, by contract, allow the arbitrator(s) to decide whether a particular dispute was within the subject agreement’s arbitration clause.

The Court then went on to state that the Court could imply that the parties had intended to leave the issue of arbitrability up to the arbitrator(s).

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;

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