F.D.I.C. v. Peabody, N.E., Inc.

• Decision Date: 20 August 1996
• Docket Number: No. 15366,15366
• Citation: 239 Conn. 93,680 A.2d 1321
• Court: Connecticut Supreme Court
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION v. PEABODY, N.E., INC., et al.

Page 1321

680 A.2d 1321

239 Conn. 93

FEDERAL DEPOSIT INSURANCE CORPORATION v. PEABODY, N.E., INC., et al.

No. 15366.

Supreme Court of Connecticut.

Argued May 28, 1996.

Decided Aug. 20, 1996.

Gregory T. D'Auria, Assistant Attorney General, with whom were Lawrence Russ, Assistant Attorney General, and, on the brief, Richard Blumenthal, Attorney General, for appellant (third party defendant department of transportation).

James J. Myers, pro hac vice, with whom was Lawrence H. Dickson, New Britain, for appellees (defendants-third party plaintiffs).

Donald E. Frechette, Hartford, for appellee (plaintiff).

Before PETERS, C.J., and CALLAHAN, BORDEN, BERDON, NORCOTT, KATZ and PALMER, JJ.

CALLAHAN, Associate Justice.

The state department of transportation (state) appeals from the trial court's denial of its motion to dismiss the complaint of the third party plaintiffs, Peabody, N.E., Inc., Peabody International Corporation and the Federal Insurance Company ¹ (collectively, Peabody), for lack of subject matter jurisdiction.

The state claims that the trial court improperly concluded that Peabody, a general contractor that had contracted with the state to reconstruct Route 8 and the Commodore Hull Bridge between the towns of Shelton and Derby, could maintain this third party action against the state, based on a subcontractor's claim for damages, even though Peabody has not conceded liability to the subcontractor in the third party complaint. The trial court concluded that the waiver of the state's sovereign immunity contained in General Statutes § 4-61(a) ² for parties contracting directly with the state was intended also to waive the state's sovereign immunity to allow third party actions by a general contractor, premised upon the conditional liability of the general contractor to a subcontractor. We disagree and reverse the judgment of the trial court. ³

The relevant facts are undisputed. On November 30, 1983, Peabody entered into a contract with the state for the reconstruction of Route 8 and the Commodore Hull Bridge between Shelton and Derby. Peabody thereafter entered into a subcontract with Standard Structural Steel, Inc. (Standard), for the supply and erection of structural steel on the project. During the course of the project, Standard allegedly incurred extra costs for labor, equipment and materials, as well as increased overhead and other assorted costs resulting from delays, work stoppages, and errors and revisions in the plans and specifications for the project. Peabody asserts that the state, not Peabody, was responsible for the delays and errors that caused Standard's unanticipated expenses.

In May, 1993, the plaintiff, the Federal Deposit Insurance Corporation, as the receiver of the New Connecticut Bank and Trust Company and the successor in interest to Standard, brought the underlying action against Peabody, seeking approximately $14.8 million in damages allegedly suffered by Standard. Thereafter, Peabody answered the plaintiff's complaint and moved to implead the state. The trial court, L. Sullivan, J., granted Peabody's impleader motion, and Peabody served its third party complaint upon the state. The state moved to dismiss the third party complaint and Peabody moved to amend that complaint. The trial court, Corradino, J., granted the motion to amend and denied the motion to dismiss. The state appealed from the judgment of the trial court to this court upon the granting of certification by the Chief Justice pursuant to General Statutes § 52-265a. ⁴

I

The resolution of this appeal turns upon the sufficiency of Peabody's pleadings to survive a motion to dismiss for lack of subject matter jurisdiction. In denying the state's motion to dismiss, the trial court took cognizance of both Peabody's initial third party complaint and its amended third party complaint. As a preliminary matter, we must first decide which of Peabody's two third party complaints should be considered in deciding the issue presented.

In Peabody's answer to the plaintiff's complaint and in its initial third party complaint, Peabody denied its liability to Standard for Standard's damages. ⁵ Peabody alleged, however, that if it were liable to Standard, it should be indemnified by the state. In its amended third party complaint, Peabody admitted its liability to Standard to the extent that Peabody recovered damages from the state based upon Standard's claims. ⁶ This "admission" is, of course, actually not an admission at all, but only a statement of the obvious. Furthermore, it is merely a restatement of Peabody's allegations in its original third party complaint to the effect that Peabody would be liable to Standard in the event that Peabody was successful in its third party action against the state based upon damages incurred by Standard.

Regardless, however, of the substantive similarity between Peabody's two third party complaints, it was nonetheless inappropriate for the trial court to consider Peabody's amended third party complaint, rather than its initial complaint, when acting on the state's motion to dismiss for lack of subject matter jurisdiction. "As we have stated many times before, the doctrine of sovereign immunity implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss." Amore v. Frankel, 228 Conn. 358, 364, 636 A.2d 786 (1994); Lussier v. Dept. of Transportation, 228 Conn. 343, 349-50, 636 A.2d 808 (1994); White v. Burns, 213 Conn. 307, 312, 567 A.2d 1195 (1990). "It is axiomatic that once the issue of subject matter jurisdiction is raised, it must be immediately acted upon by the court." Gurliacci v. Mayer, 218 Conn. 531, 545, 590 A.2d 914 (1991); Statewide Grievance Committee v. Rozbicki, 211 Conn. 232, 245, 558 A.2d 986 (1989); Cahill v. Board of Education, 198 Conn. 229, 238, 502 A.2d 410 (1985). "Whenever the absence of jurisdiction is brought to the notice of the court or tribunal, cognizance of it must be taken and the matter passed upon before it can move one further step in the cause; as any movement is necessarily the exercise of jurisdiction.... The point has been frequently made." (Citations omitted; internal quotation marks omitted.) Baldwin Piano & Organ Co. v. Blake, 186 Conn. 295, 297-98, 441 A.2d 183 (1982); see also Kohn Display & Woodworking Co. v. Paragon Paint & Varnish Corp., 166 Conn. 446, 448, 352 A.2d 301 (1974); Woodmont Assn. v. Milford, 85 Conn. 517, 524, 84 A. 307 (1912).

Consequently, when the state moved to dismiss Peabody's initial third party complaint because of a lack of subject matter jurisdiction, the trial court was obligated to construe that complaint in the manner most favorable to Peabody and to rule upon the state's motion before considering Peabody's motion to amend. Gurliacci v. Mayer, supra, 218 Conn. at 545, 590 A.2d 914 ("the trial court should not have allowed the amendment [to the complaint] before ruling on the motion to dismiss [for lack of subject matter jurisdiction]"); see Antinerella v. Rioux, 229 Conn. 479, 489, 642 A.2d 699 (1994); Reynolds v. Soffer, 183 Conn. 67, 68, 438 A.2d 1163 (1981). If the state's motion had been granted, as we are persuaded it should have been, the trial court would have been without jurisdiction to allow Peabody to amend its pleadings. Gurliacci v. Mayer, supra, at 545, 590 A.2d 914; Woodmont Assn. v. Milford, supra, 85 Conn. at 524, 84 A. 307. We must, therefore, focus on Peabody's initial third party complaint to determine whether that complaint fits within the parameters of the limited waiver of the state's sovereign immunity contained in § 4-61(a).

II

The state claims that the allegations of Peabody's third party complaint are, on their face, insufficient to allege a waiver of the state's sovereign immunity because they fail to allege that Peabody itself has a disputed claim under its contract with the state as required by § 4-61(a). The state argues that Peabody was required to admit liability to Standard before proceeding with an action against the state. The state claims that in the absence of such an admission, Peabody would not have a "disputed [claim] under [its] contract" with the state within the meaning of § 4-61(a) because it would have no obligation to pay Standard. The state contends that because Peabody did not admit liability to Standard, Peabody's third party complaint lacked an essential jurisdictional element, and the trial court was required to dismiss the complaint for lack of subject matter jurisdiction. Peabody contends, to the contrary, that it has adequately pleaded the existence of a disputed claim under its contract with the state so as to bring it within the purview of the statutory waiver of sovereign immunity provided by § 4-61(a). We agree with the state.

Section 4-61(a) waives sovereign immunity for any "person, firm or corporation which has entered into a contract with the state ... for the design, construction, construction management, repair or alteration of any highway, bridge, building or other public works of the state...." Such an entity "may, in the event of any disputed claims under such contract ... bring an action against the state ... for the purpose of having such claims determined." General Statutes § 4-61(a). The issue presented by this appeal is whether a general contractor has a "disputed [claim] under [its] contract" with the state, within the meaning of § 4-61(a), if the general contractor's claim against the state takes the form of a claim for indemnification that is based upon the pending claim of a subcontractor.

Our analysis of this issue is "guided by settled principles of statutory construction that assist us in ascertaining the intent of the legislature.... The legislative intent is to be discerned by reference to the language of the statute, its legislative history and surrounding circumstances, the policy the [statute] was designed to implement, and the statute's relationship to the existing legislation and...