O and G Industries v. All Phase Enterprises

• Decision Date: 10 February 2009
• Docket Number: No. 28982.,28982.
• Citation: 112 Conn.App. 511,963 A.2d 676
• Court: Connecticut Court of Appeals
• Parties: O AND G INDUSTRIES, INC. v. ALL PHASE ENTERPRISES, INC.

963 A.2d 676

112 Conn.App. 511

O AND G INDUSTRIES, INC. v. ALL PHASE ENTERPRISES, INC.

No. 28982.

Appellate Court of Connecticut.

Argued October 16, 2008.

Decided February 10, 2009.

Regen O'Malley, with whom was Paul D. Meade, Hartford, for the appellant-appellee (defendant-third party plaintiff).

William J. Tracy, Jr., Bristol, for the appellee-appellant (third party defendant).

Michael J. Donnelly filed a brief for the appellee (plaintiff).

FLYNN, C.J., and BISHOP and HARPER, Js.

FLYNN, C.J.

The defendant-third party plaintiff, All Phase Enterprises, Inc. (All Phase), appeals from the judgment of the trial court, claiming that the court improperly failed to award full indemnity against the third party defendant, Connecticut Metal Siding, LLC (Metal Siding), for the attorney's fees that All Phase incurred in defense of the first party action filed against it and for the attorney's fees that it was ordered to reimburse to the plaintiff, O & G Industries, Inc., (O &amp G).¹ All Phase also claims that the court improperly deducted from its indemnification award against Metal Siding an amount that O & G had been retaining on work performed by All Phase. We agree with both claims, and, accordingly, we reverse in part the judgment of the trial court.

Metal Siding filed a cross appeal from the judgment of the trial court rendered in favor of All Phase on the third party complaint for indemnification. On cross appeal, Metal Siding claims that the court improperly awarded (1) indemnification despite a judicial admission by All Phase that the problems with the roof were not the result of faulty installation work by Metal Siding and (2) damages for a rubber membrane roof system that was not part of the contract and represented a substantial improvement in quality and performance over the steel roof system that was required in the contract. We disagree, and, accordingly, we affirm the judgment of the trial court with regard to Metal Siding's cross appeal.

The following facts and procedural history are relevant to our resolution of these appeals. In 2000, the Hotchkiss School (Hotchkiss), a college preparatory school located on the south shore of Lake Wonoscopomic, entered into a construction management agreement with O & G for the construction of an athletic and fitness center at Hotchkiss. O & G then entered into a construction management trade contract (trade contract) with All Phase for a portion of that project. In that trade contract, All Phase agreed to furnish all labor, material and equipment necessary to complete all work included in bid package 1.01, which was for a pre-engineered building. The total amount of the trade contract between All Phase and O & G was $1,048,700. A component part of the trade contract required All Phase to furnish and install a steel roof and insulation panels over the ice arena of the new athletic complex in accordance with the plans and specifications set forth in the trade contract. All Phase, in turn, entered into a subcontract agreement with Metal Siding, in which Metal Siding agreed to perform the actual assembly and erection of the pre-engineered building and the steel roofing for an amount not to exceed $233,700.² After Metal Siding, as subcontractor for All Phase, substantially had completed the steel roof, O & G notified All Phase that the roof was leaking. Attempts were made to repair the steel roof, but, by February, 2003, the leaks were so severe that the ice arena could not be used, and hockey season had to be cancelled.

O & G notified All Phase by letter of the seriousness of the problem.

On July 17, 2003, O & G filed a two count complaint in the Superior Court against All Phase, alleging breach of contract. In August, 2003, All Phase still had not made any progress on fixing the steel roof, and O & G contacted Eastern Roofing Corporation to install a rubber membrane roof over the steel roof at a cost of $152,771.50 so that the ice arena would be usable for the next hockey season. That rubber membrane roof was installed in October, 2003. All Phase filed an answer and a counterclaim against O & G, and it successfully cited in Metal Siding as a third party defendant, seeking indemnification, pursuant to its subcontract agreement, for any damages for which it was found liable to O & G on the trade contract. Metal Siding filed a two count counterclaim against All Phase, and All Phase filed an answer with special defenses.

After a trial to the court, the court found in favor of O & G on its complaint, and it ordered All Phase to pay the sum of $80,530.73, after certain deductions, as well as O & G's attorney's fees. On the third party complaint brought by All Phase against Metal Siding, the court found in favor of All Phase, and it ordered Metal Siding to pay to All Phase the sum of $66,089.18. These appeals followed.

I ALL PHASE'S APPEAL

We first consider All Phase's appeal from the judgment rendered in its favor against Metal Siding. All Phase claims that the court improperly failed to award it full indemnity against Metal Siding despite concluding that All Phase was entitled to indemnification. Specifically, it argues that the court should have ordered Metal Siding to indemnify All Phase for the attorney's fees that All Phase incurred defending the first party action brought by O & G and that it also should have ordered Metal Siding to indemnify All Phase for the attorney's fees that All Phase was ordered to pay to O & G on O & G's successful complaint. All Phase further claims that the court improperly deducted from its indemnification award against Metal Siding an amount that O & G had been retaining on work performed by All Phase, which money rightfully was due to All Phase. After setting forth additional facts and the relevant law, we will address each of these claims in turn.

After concluding that "All Phase breached the contract by failing to install the roof in a workmanlike manner" and that it failed to repair the roof successfully, the court awarded damages to O & G for the cost of the new rubber roof membrane in the amount of $152,771.50 less a retainage that O & G owed to All Phase in the amount of $72,240.77, for a total of $80,530.73.³ The court also ordered that All Phase was obligated to pay O & G's attorney's fees but reserved judgment as to the exact amount pursuant to a stipulation of the parties. The court then found, pursuant to § 5.1 of Metal Siding's subcontract agreement with All Phase, that Metal Siding was responsible to indemnify All Phase "for any claims arising out of [Metal Siding's] installation of the roof" because "the evidence show[ed] that the defects were the result of the poor installation of the roof." The court ordered that Metal Siding "must indemnify All Phase for the damages." The court then ordered Metal Siding to pay to All Phase $80,530.73, the out-of-pocket amount that All Phase was ordered to pay to O & G, minus $14,441.55 that All Phase was holding in retainage on its subcontract agreement with Metal Siding, for a total of $66,089.18.⁴

We note the standard of review. "If contract language is definitive of the parties' intent, then the interpretation of the language becomes a question of law for the court . . . Additionally, a presumption that the language is definitive arises when . . . the contract is between sophisticated parties and commercial in nature. . . . Our review, in such a case, is plenary." (Citations omitted.) Best Friends Pet Care, Inc. v. Design Learned, Inc., 77 Conn.App. 167, 176, 823 A.2d 329 (2003). Additionally, we note that in determining damages, "[t]he trial court has broad discretion . . . and we will not overturn its decision unless it is clearly erroneous. . . . [W]here the legal conclusions of the court are challenged, we must determine whether they are legally and logically correct and whether they find support in the facts set out in the memorandum of decision; where the factual basis of the court's decision is challenged we must determine whether the facts set out in the memorandum of decision are supported by the evidence or whether, in light of the evidence and the pleadings in the whole record, those facts are clearly erroneous." (Internal quotation marks omitted.) Valentin v. Community Remodeling Co., 90 Conn.App. 255, 260, 876 A.2d 1252 (2005).

A Attorney's Fees

All Phase claims that the court improperly failed to require Metal Siding to indemnify it fully, arguing that, pursuant to the subcontract agreement, Metal Siding was responsible for the attorney's fees that All Phase incurred defending the action brought by O & G as well as the attorney's fees that All Phase was ordered to pay as damages to O & G. We agree.

In its third party complaint, All Phase alleged in relevant part: "By the terms of the . . . subcontract agreement [Metal Siding] is obligated to indemnify [All Phase] from and against the claims [that] have been asserted against [it] in this lawsuit, which claims arise from the conduct, management and performance of the work contracted for and undertaken by [Metal Siding]. . . . All Phase has incurred and will continue to incur attorney's fees and other expenses in responding to and defending against the claims asserted by [O & G] and also faces the possible award of damages against it in favor of [O & G] as a result of the allegedly defective furnishing, erection, installation and construction of the subject building by [Metal Siding]."

All Phase sought as damages: "Indemnification as to any claims for which it may be held liable . . . [a]ttorney's fees and costs . . . [and][s]uch other relief as the court deems proper."

In rendering its decision, the court made no mention of All Phase's claim in its third party complaint that it was entitled to attorney's fees, both as indemnification for O & G's attorney's fees and for the attorney's fees for which it was responsible in defending the action brought by O & G. In part because the court failed to mention...