Attorney Scott S. Orenstein
Construction Law & Litigation
QUESTIONS?
203.640.8825
Attorney Scott S. Orenstein
Construction Law & Litigation

UNDERSTANDING HOW THE COURTS WILL INTERPRET YOUR CONTRACT

A well drafted, written contract expresses the intent of the parties in clear language without any ambiguity. For that reason, when a court interprets a written contract, it seeks “to determine the intent of the parties from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction.” MJM Indus. v. Henley Co., 2020 Conn. Super. LEXIS 427, *6. In fact, according to the “parol evidence rule,” if the written contract contains the full expression of the parties’ agreement, a court is generally not allowed to look beyond the language of the written agreement itself. The prior negotiations between the parties will be considered irrelevant. Anything that may have been said verbally or in writing during the parties’ contract negotiations that was not made part of the final written contract is typically not enforceable by either party.

A contract that contains the full agreement of the parties is referred to as a fully integrated agreement. Again, “[i]n order to determine whether a written agreement is integrated, a court must look to the intention of the parties.” Giorgio v. Nukem, Inc., 31 Conn. App.

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Basing a Claim on the Total Cost Approach is Likely Throwing Good Money After Bad

Construction projects never go completely as planned. Construction managers, general contractors, subcontractors and suppliers all realize that changes in the work may be required for any number of reasons. For example, an area of the site may not become available due to the lack of an easement; there may be poor communication and/or coordination between trades; plans and/or specifications may contain certain deficiencies; critical shipments may be delayed; or, as allowed by most construction contracts, the owner simply may make design changes after the commencement of the work. One or more of the foregoing situations arises on almost every project. As a result, it is expected that construction schedules will be periodically updated during a project to address where the actual performance of the work was not completed in accordance with the original schedule.

Schedule revisions are so commonplace that some specifications require construction schedules to be updated on a monthly basis with two or three-week “look aheads” provided in between schedule revisions. The goal is not to complete the work in accordance with some original plan that Nostradamus would not be able to accurately create. The goal is to complete the work by the completion date no matter what problems arise.

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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). 

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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. 

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Public Owners Cannot Arbitrarily Award Contracts

Successfully protesting the award of a public construction contract is a very difficult.  Under the public bidding laws, an unsuccessful bidder cannot obtain a monetary award against a public owner and its only recourse is to seek stop the public owner from awarding the contract to another bidder.  The courts, however, will not stop a public owner from rejecting an apparent low bid and awarding the contract to another bidder unless the public owner engaged in fraud, favoritism or corruption.

For years, the public bidding laws protected the public owner’s ability to make any decision it deemed to be in its best interest provided it acted in good faith.  As indicated in another post, that protection ended when the Connecticut Supreme Court held that it was possible for an unsuccessful bidder to obtain a monetary judgment against a public owner if the claim was based upon a cause of action that did not rely upon the public bidding laws. 

More recently, a Connecticut Superior Court determined that a public owner can be held liable for money damages if it completely circumvents the public bidding laws.  In CTTFB, Inc. v. City of Bridgeport, the court refused to overturn a jury verdict that awarded the plaintiff damages after determining that the City violated the Connecticut Unfair Trade Practices Act. 

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“Pay when Paid” versus “Pay if Paid”

Most subcontracts contain language, which state that the contractor shall pay the subcontractor within so many days after the contractor’s receipt of payment from the owner.  The question then becomes, “what happens if the owner never pays the contractor?”  It is a complicated question that has been the subject of much litigation.  The general rule is that – provided the owner is not withholding payment due to a failure by the subcontractor – the subcontract will be interpreted as requiring payment within a reasonable time. In other words, even if the owner does not pay the contractor for the subcontractor’s work, the contractor will still be expected to pay the subcontractor despite the fact that the subcontract requires the owner to first pay the contractor.

Of course, as with almost every legal issue, there are exceptions to the general rule.  For example, there are “magic words” that will make it more likely that the court will find that the subcontractor has given up its right to payment should the owner not pay the contractor.  Examples of such “magic words” are as follows:

• Contractor’s receipt of payment from owner is a “condition precedent” to the subcontractor’s right to payment;

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The Connecticut Home Improvement Act Has Harsh Penalties With Limited Exceptions

According to the Home Improvement Act (the “Act”), a home improvement contractor has no legal right to payment if his contract is not entered into by a registered salesman or contractor and does not contain:

  • the signatures of both the homeowner and contractor;
  • notice of the homeowner’s cancellation rights; and
  • a start date and a completion date.

Even if the homeowner testifies, under oath, that he requested the work, that the work was performed in a workmanlike manner, and he didn’t pay the amount he had agreed to pay, the contractor will still lose the lawsuit if the contract does not comply with the Act.  Like most laws, however, there are exceptions to this rule.

A contractor may be able to get paid if a court finds that the homeowner was acting in “bad faith.”  The Connecticut Appellate Court recently issued a decision that explains the limits of that exception.

In Lucien v. McCormick Construction, LLC, 122 Conn.App. 295 (Conn.App. 2010), the Connecticut Appellate Court refused to invoke the bad faith exception.  The facts were that the homeowner:

  • was represented by counsel; 
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