Elec. Contractors, Inc. v. Ins. Co. of Pa.

• Decision Date: 03 December 2012
• Docket Number: CIVIL ACTION NO. 3:11cv1432(VLB)
• Court: U.S. District Court — District of Connecticut
• Parties: ELECTRICAL CONTRACTORS, INC. PLAINTIFF, v. INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA DEFENDANT.

ELECTRICAL CONTRACTORS, INC. PLAINTIFF,

v.INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA DEFENDANT.

CIVIL ACTION NO. 3:11cv1432(VLB)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

DECEMBER 3, 2012

ORDER CERTIFYING QUESTIONS TO THE CONNECTICUT SUPREME COURT

This Court has the discretion to certify a question of law to the Connecticut Supreme Court "if the answer may be determinative of an issue in pending litigation in the certifying court and if there is no controlling appellate decision, constitutional provision or statute of this state" pursuant to Conn. Gen. Stat. §51-199b. Although courts "may ordinarily interpret ambiguous state statutes using the normal rules of statutory interpretation, even in the absence of controlling state authority," certification may be appropriate if other "factors strongly suggest that we defer to the Connecticut Supreme Court." Sealed v. Sealed, 332 F.3d 51, 59 (2d Cir. 2003).

The Second Circuit has indicated that the following factors provide helpful guidance in assessing whether to certify a question to the Connecticut Supreme Court: "(1) whether 'Connecticut has a compelling interest' in the issue presented by the case; (2) whether the statutory provision at issue 'forms only one part of a detailed administrative scheme' in an area of law 'in which the federal courts have little familiarity or expertise'; and (3) whether the 'question of statutoryinterpretation implicates the weighing of policy concerns,' especially if such policy concerns are expressed in the statutory scheme." Davis v. Mara, 587 F.Supp.2d 422, 427 (D. Conn. 2008) (quoting Sealed, 332 F.3d at 59). These factors are not "exhaustive of considerations a court may use" but instead provide helpful guidance. Id.

The Second Circuit has emphasized that "[w]here a question of statutory interpretation implicates the weighing of policy concerns, principles of comity and federalism strongly support certification." Sealed, 332 F.3d at 59. The Second Circuit explained that "[n]otably, the Connecticut Supreme Court has recently indicated that it adopts a broad approach to statutory interpretation that looks beyond the statutory text 'to the legislative history and circumstances surrounding [the statute's] enactment, to the legislative policy [the statute] was designed to implement, and to [the statute's] relationship to existing legislation and common law principles governing the same general subject matter.'" Id. (quoting State v. Courchesne, 262 Conn. 537, 577, 816 A.2d 562 (2003)). Therefore, "the Connecticut Supreme Court may well exercise more flexibility and broader interpretive power than the federal courts in analyzing the meaning" of a particular statute. Id. (internal quotation marks and citations omitted). This Court is persuaded that all three criteria have been met in the instant case warranting certification to the Connecticut Supreme Court.

The dispute at issue arises over the interpretation of Conn. Gen. Stat. §49-42(a). "Under Connecticut law, a municipality contracting for work in excess of $100,000 is required to obtain a labor and material bond. The statutoryframework adopted by Connecticut models the federal Miller Act and is often referred to as the 'Little Miller Act.'" Emerson-Swan, Inc. v. Harrington Engineering, Inc., No.DBDCV106004228S, 2011 WL 2417381, at *5 (Conn. Super. Ct. May 13, 2011). "[Connecticut] General Statutes §§ 49-41 through 49-43, which provide for the furnishing of bonds guaranteeing payment (payment bonds) on public works construction projects, were enacted to protect workers and materials suppliers on public works projects who cannot avail themselves of otherwise available remedies such as mechanic's liens ... Section 49-41 requires that the general contractor provide a payment bond with surety to the state or governmental subdivision, which bond shall guarantee payment to those who supply labor and materials on a public works project ... Section 49-42 provides that any person who has performed work or supplied materials on a public works project, but who has not received full payment for such materials or work, may enforce his right to payment under the payment bond." Id.

At particular issue is the meaning of the following provision of Section 49-42(a):

The notice of claim shall state with substantial accuracy the amount claimed and the name of the party for whom the work was performed or to whom the materials were supplied, and shall provide a detailed description of the bonded project for which the work or materials were provided. If the content of notice prepared in accordance with subsection (b) of section 49-41a complies with the requirements of this section, a copy of such notice, served within one hundred eighty days of the payment date provided for in subsection (a) of section 49-41a upon the surety that issued the bond and upon the contractor named as principal in the bond, shall satisfy the notice requirements of this section. Within ninety days after service of the notice of claim, the surety shall make payment under the bond and satisfy the claim, or any portion of the claim which is not subject to a good faith dispute, and shall serve a notice on the claimant denying liability for anyunpaid portion of the claim. The notices required under this action shall be served by registered or certified mail, postage prepaid in envelopes addressed to any office at which the surety, principal or claimant conducts his business, or in any manner in which civil process may be served. If the surety denies liability on the claim, or any portion thereof, the claimant may bring action upon the payment bond in the Superior Court for such sums and prosecute the action to final execution and judgment.

Conn. Gen. Stat. §49-42(a) (emphasis added). The Plaintiff argues that Section 49-42 is a waiver provision whereby a surety's failure to either pay, assert a good faith dispute to, or deny a subcontractor's claim within 90 days constitutes a waiver of all the surety's defenses, entitling the claimant to a judgment for the full amount of the payment bond claim. Contrastly, the Defendant argues that Section 49-42 does not impose any ineluctable penalty for such a failure, but instead entitles the claimant to file a suit for judicial adjudication of the claim, upon the expiration of the 90 day deadline, to recover payment on the bond, together with costs, interest and reasonable attorney fees.¹

The Plaintiff points to a 2000 Connecticut superior court decision in support of its interpretation. Barreira Landscaping & Masonry v. Frontier Ins. Co.,47 Conn. Supp. 99 (Conn. Super. Ct. 2011). In Barreira, the Superior Court, ruling in a matter of first impression, held that a surety's compliance with the 90 day period under Section 49-42 for providing notice of denial of claim was mandatory and that noncompliance resulted in the "automatic approval of payment to the plaintiff subcontractor." Id. at 110. In reaching this conclusion, the Barreira court analogized to administrative law noting that "the result that has uniformly emanated from our case law when a mandatory statutory time limit has been violated in the context of administrative law, has been to invalidate the action of the particular agency which committed the violation," and therefore "if the action of an administrative agency in denying an application for a specified form of relief is null and void because of failure to comply with a mandatory time limit, the legal effect is that the relief requested is granted." Id. at 111. The Barreira court concluded that "it does not matter whether the surety's denial of the plaintiff's claim was in bad faith or without substantial basis in law or in fact. The surety's failure to act within the prescribed ninety day period was equally illegal and the plaintiff is entitled to the relief sought in its notice of claim." Id.

The Defendant argues that numerous Connecticut superior court decisions have declined to follow Barreira whereas the Plaintiff argues that Connecticut courts have consistently interpreted the ninety-day time limit as mandatory and no court, state or federal, has contradicted or countermanded these decisions. However, none of the caselaw that either Plaintiff or Defendant cites squarely or thoroughly addressed the question at issue besides the Barreira decision. Barreira appears to be the only case on point. Furthermore, no ConnecticutAppellate or Supreme Court decisions have interpreted this particular section of Connecticut's Little Miller Act.

In the instant case, there is no doubt that the answer to the question of law certified will be determinative of an issue in the pending litigation and there is no controlling appellate decision, constitutional provision or statute. Although this Court may interpret an ambiguous state statute, the factors identified by the Second Circuit strongly suggest that deferring to the Connecticut Supreme Court is warranted in the instant case despite Defendant's objections. Defendant argues that certification is not appropriate because the language of Section 49-42 is clear and unambiguous as it fails to provide any penalty or remedy. However, Defendant's argument is unpersuasive as the ambiguity results from this very fact that the statute does not expressly provide a remedy or penalty and therefore this Court could not resolve the dispute solely by reference to the text of the statute. This Court would necessarily have to weigh public policy issues attendant to public infrastructure contracting to determine what remedy results from a surety's failure to meet the 90 day deadline. Because the instant question of statutory interpretation implicates the weighing of policy concerns, "the principles of comity and federalism strongly support certification." Sealed, 332 F.3d at 59.

Connecticut clearly has a compelling interest in the issue presented by this case as Connecticut's Little Miller Act undeniably affects the public's interest in public...