Department of Transp. v. White Oak Corp.

• Decision Date: 20 May 2008
• Docket Number: No. 17828.,17828.
• Citation: 946 A.2d 1219,287 Conn. 1
• Parties: DEPARTMENT OF TRANSPORTATION v. WHITE OAK CORPORATION et al.
• Court: Connecticut Supreme Court

946 A.2d 1219

287 Conn. 1

DEPARTMENT OF TRANSPORTATION v. WHITE OAK CORPORATION et al.

No. 17828.

Supreme Court of Connecticut.

Argued October 24, 2007.

Decided May 20, 2008.

Lawrence Russ, assistant attorney general, with whom was Howard K. Levine, New Haven, for the appellant (plaintiff).

Raymond A. Garcia, with whom were Jane I. Milas, Nicole Liguori Micklich, New Haven, and, on the brief, James E. Regan, for the appellee (named defendant).

ROGERS, C.J., and NORCOTT, KATZ, ZARELLA and SCHALLER, Js.

ROGERS, C.J.

The principal issue in this appeal is whether General Statutes § 4-61,¹ which waives the state's sovereign immunity with respect to certain claims arising under public works contracts, permits a general contractor to commence a second arbitration against the state to pursue claims that previously had been, or could have been, arbitrated between the parties in a prior action. The plaintiff, the state department of transportation (department), appeals from the judgment of the trial court denying its claim seeking a permanent injunction barring the named defendant, White Oak Corporation (White Oak),² from arbitrating a claim for delay damages arising under a public works contract. The department claims that the trial court improperly refused to issue an injunction because the second arbitration is barred by the doctrine of sovereign immunity, the doctrine of res judicata and the statute of limitations in § 4-61(b).³ We agree with the department's first claim, and, accordingly, reverse the judgment of the trial court.

The record reveals the following facts and procedural history. On June 6, 1994, White Oak and the department executed a public works contract for the construction of the Tomlinson bridge in New Haven. Construction was scheduled to commence on September 4, 1994, and to be completed by January 5, 1998. After experiencing numerous delays in construction, however, White Oak, the department and White Oak's surety agreed "that a new contractor [should] be employed to perform the remainder of the [c]ontract" and, accordingly, on April 28, 2000, they executed an assignment agreement whereby Cianbro Corporation (Cianbro) became the successor contractor. Construction of the Tomlinson bridge subsequently was completed on December 31, 2001.

Thereafter, White Oak filed a notice of claim against the department and a demand for arbitration with the American Arbitration Association pursuant to § 4-61(b) (first arbitration). In its notice of demand, White Oak sought $93,793,891.11 in damages for the department's alleged wrongful termination of the contract. In response, the state filed an answer, special defenses and various counterclaims seeking, in relevant part, damages for increased costs caused by the delays in construction. The arbitration panel found in favor of the department with respect to White Oak's wrongful termination claim, concluding that "no termination of White Oak actually [had] occurred." The arbitration panel also found in favor of the department with respect to its counterclaims seeking damages for certain increased costs, and awarded the department $1,169,648.33 in damages. The trial court, Berger, J., subsequently confirmed the arbitration award.

Thereafter, White Oak filed a second notice of claim against the department, followed by a second demand for arbitration, seeking $110,314,807 in damages, plus interest, for delays associated with the construction of the Tomlinson bridge (second arbitration). In response, the department filed the present action in the trial court seeking, inter alia, a permanent injunction barring the second arbitration. The department claimed that the second arbitration was barred by: (1) the doctrine of sovereign immunity because § 4-61 waives the state's sovereign immunity only with respect to a single action or arbitration wherein all disputed claims arising under a public works contract must be resolved; (2) the doctrine of res judicata because White Oak's claims previously had been arbitrated, or could have been arbitrated, in the first arbitration; and (3) the statute of limitations, which began to run on the date on which the contract had been terminated by virtue of the assignment to Cianbro.⁴

The trial court, Berger, J., denied the department's request for a permanent injunction.⁵ The trial court concluded that the second arbitration was not barred by the doctrine of sovereign immunity because, to the extent that § 4-61 requires a singular demand for arbitration, White Oak had fulfilled this requirement in that its "July 25, 2001 revised amended demand and companion revised amended notice of claim [in the first arbitration had] included a claim for delay damages...." The trial court noted that "[c]ourts and arbitration panels regularly bifurcate matters as needed and as appropriate. To argue that the process of deciding one issue first forecloses further consideration of other issues, if not waived, and if appropriate, has no merit. In this case, it is clear that while the [first arbitration] panel did make certain findings concerning extensions and delays, it considered its only task — for whatever reason, whether notice deficiencies or stipulations — to be the wrongful termination claim...."⁶

On appeal, the department claims that the trial court improperly declined to issue a permanent injunction. We conclude that the waiver of sovereign immunity set forth in § 4-61 requires all existing disputed claims arising under a public works contract to be litigated or arbitrated in a single action. Because White Oak's claim for delay damages existed at the time its notice of claim had been filed in the first arbitration; see footnote 9 of this opinion; and because White Oak failed to pursue its claim in that proceeding, we conclude that it is barred by the doctrine of sovereign immunity. Accordingly, we reverse the judgment of the trial court.⁷

Whether § 4-61 waives the state's sovereign immunity with respect to White Oak's claim for delay damages presents us with an issue of statutory interpretation, over which our review is plenary.⁸ See Dept. of Public Works v. ECAP Construction Co., 250 Conn. 553, 558, 737 A.2d 398 (1999). "General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.... When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter...." (Internal quotation marks omitted.) Southern New England Telephone Co. v. Cashman, 283 Conn. 644, 650-51, 931 A.2d 142 (2007).

"Our analysis is more specifically illuminated by the well settled principle that when the state waives sovereign immunity by statute a party attempting to sue under the legislative exception must come clearly within its provisions, because [s]tatutes in derogation of sovereignty should be strictly construed in favor of the state, so that its sovereignty may be upheld and not narrowed or destroyed.... Where there is any doubt about [the] meaning or intent [of a statute in derogation of sovereign immunity, it is] given the effect which makes the least rather than the most change in sovereign immunity.... The state's sovereign right not to be sued may be waived by the legislature, provided clear intention to that effect is disclosed by the use of express terms or by force of a necessary implication." (Internal quotation marks omitted.) Dept. of Public Works v. ECAP Construction Co., supra, 250 Conn. at 558-59, 737 A.2d 398. Thus, a party who seeks to litigate or arbitrate a disputed claim arising under a public works contract bears the burden of proving that the claim fits precisely within the narrowly drawn reach of § 4-61. DeFonce Construction Corp. v. State, 198 Conn. 185, 188, 501 A.2d 745 (1985).

With these principles in mind, we turn to the language of § 4-61 to determine whether it requires all existing disputed claims arising under a public works contract to be pursued and resolved in a single action or arbitration. Subsection (a) of § 4-61 provides in relevant part that, "[a]ny ... corporation which has entered into a contract with the state, acting through any of its departments ... for the design, construction, construction management, repair or alteration of any ... bridge ... may, in the event of any disputed claims under such contract ... bring an action against the state to the superior court for the judicial district of Hartford for the purpose of having such claims determined ...." Subsection (b) of § 4-61 provides that, "[a]s an alternative to the procedure provided in subsection (a) of this section, any such ... corporation having a claim under said subsection (a) may submit a demand for arbitration of such claim or claims for determination ...."

The department claims that the plain language of § 4-61 requires all disputed claims that have accrued under a public works contract to be asserted against the state in a single action or, alternatively, in a single arbitration. In support of this claim, the department relies on the following statutory language: "in the event of any disputed claims under such contract ... [a party may] bring an action;" (emphasis added) General Statutes § 4-61(a); or, alternatively, "submit a demand for arbitration...." (Emphasis added.) General Statutes § 4-61(b). Essentially, the department claims that the use of the singular in reference to "an action" or "a demand for arbitration," combined with the use of the plural in reference to "disputed claims,"...