Grenier v. Compratt Const. Co.

• Decision Date: 01 February 1983
• Citation: 454 A.2d 1289,189 Conn. 144
• Court: Connecticut Supreme Court
• Parties: Frank GRENIER et al. v. COMPRATT CONSTRUCTION COMPANY.

Page 1289

454 A.2d 1289

189 Conn. 144

Frank GRENIER et al. v. COMPRATT CONSTRUCTION COMPANY.

Supreme Court of Connecticut.

Argued Dec. 9, 1982.

Decided Feb. 1, 1983.

Alfred J. Jennings, Jr., Bridgeport, with whom, on the brief, was Robert A. Harris, Milford, for appellant (defendant).

Jackie Chan, Danbury, for appellees (plaintiffs).

Before SPEZIALE, C.J., and PETERS, PARSKEY, SHEA and GRILLO, JJ.

PETERS, Associate Justice.

This case concerns the effect of a provision in a construction contract that conditions payment upon a municipal official's certificate of performance. The plaintiffs, Frank Grenier, John Grenier and Eugene Grenier, brought an action against the defendant, Compratt Construction Company, to recover $25,500 which the defendant had agreed to pay for blasting work performed in the construction of certain roads. The defendants responded with an answer and a counterclaim seeking to enforce a liquidated damages clause in the contract. After a trial to the court, judgment was rendered for the plaintiffs in the amount of $23,000 together with interest and costs. The defendant has appealed.

The trial court's memorandum of decision establishes the following facts, which are not contested on this appeal. After disputes had arisen concerning performance under a subdivision contract negotiated on May 26, 1977, the parties entered into a settlement agreement on May 23, 1978. That settlement agreement, which is the subject matter of this lawsuit, entitled the plaintiffs to $25,500 upon the completion of certain subdivision roads by June 30, 1978. The agreement defined "completion" of the roads as "any ... work necessary, so far as the subdivision roads are concerned, so that a certificate of occupancy can be obtained on any lot in the subdivision as of 5:00 p.m. on June 30, 1978, and the providing to Compratt of a letter signed by the City Engineer of the City of Danbury, certifying that a certificate of occupancy can be obtained on any lot owned by Compratt Construction Company in the subdivision." Although the roads were in fact satisfactorily completed, the plaintiffs were unable to provide the stipulated letter from the city engineer because the city engineer did not ordinarily write such letters. Instead, the assistant city attorney, by letter of July 10, 1978, authorized the building inspector to issue certificates of occupancy for the roads in question. Appropriate certificates of occupancy were thereafter issuable and issued.

The contract of May 23, 1978, contained a liquidated damages clause. That clause provided for cumulative weekly penalties to be paid by the plaintiffs to the defendant for failure to complete the roads by 5:00 p.m. on June 30, 1978. The designated amounts were: $1500 at the end of the first week (July 7); an additional $2000 at the end of the second week (July 14); an additional $2500 at the end of the third week (July 21); and an additional $3000 (or daily per diem portion) for each additional week or part thereof. The defendant conceded that accrual of these damages would terminate upon the sworn testimony of the city engineer on September 7, 1978 that the roads in question were approved for the issuance of certificates of occupancy. The amount so cumulated is, according to the defendant's calculations, $26,571.42.

The trial court concluded, on these facts, that the plaintiffs had failed to complete the roads in question on June 30, 1978, but found that the city attorney's letter of July 10, 1978, constituted compliance with the contract as of that date. Although the court recognized that the parties had seriously bargained for a letter from the city engineer, the court held that the parties' major concern was not the letter itself but what it represented, to wit, whether the roads were acceptable so that certificates of occupancy could be issued. On this basis, the city attorney's letter constituted adequate compliance with the terms of the contract. Because of the delay between the contract's date of performance, June 30, and the city attorney's letter, July 10, the court found that the defendant had been damaged to some extent, and that such damages were difficult to ascertain. Although the court found the contract's liquidated damages clause as a whole to be invalid as a penalty clause violative of public policy, the court nonetheless awarded the defendant liquidated damages for a delay of one and one-half weeks in accordance with the contractual liquidated damages clause. Accordingly, the court rendered judgment for the plaintiffs in the amount of $25,500 minus $2500, or $23,000 with interest from July 10, 1978. Only the defendant has appealed.

The defendant has essentially pursued three claims of error. It argues that the trial court erred: (1) in applying a substantial performance test to the settlement agreement; (2) in concluding that the settlement agreement had been substantially performed; (3) in failing to enforce fully the settlement agreement's provision for liquidated damages. Since the first two claims both arise out of the contractual provision requiring a letter from the city engineer, we will consider these claims jointly before we turn to the legality of the liquidated damages clause. With respect to all of the defendant's claims, we find no error.

The defendant's principal claim of error is that the trial court failed to give full effect to the provision in the settlement agreement that made the defendant's obligation to pay conditional upon a letter from the city engineer certifying that the defendant could obtain needed certificates of occupancy for its property. Drawing upon cases involving architects' or engineers' certificates, the defendant argues that the city engineer's failure to give a written certification precludes recovery by the plaintiffs. The defendant claims that the court erroneously applied a substantial performance test to the defendant's conditional contract obligation. We disagree with the defendant's analysis of the relevant cases and of the trial court's memorandum of decision.

It is of course well established that contracting parties are free to impose conditions upon contractual liability. Brauer v. Freccia, 159 Conn. 289, 293-94, 268 A.2d 645 (1970); Strimiska v. Yates, 158 Conn. 179, 185, 257 A.2d 814 (1969). Frequently, building contracts provide that a third party, an architect or an engineer, acting in good faith and in the exercise of his best judgment, shall decide when one of the contracting parties has fulfilled the requirements of the contract. In such circumstances, if the architect or engineer withholds certification, and his decision is not arbitrary or made in bad faith, a court is not authorized to substitute its judgment for that of the designated expert. Maskel Construction Co. v. Glastonbury, 158 Conn. 592, 597, 264 A.2d 557 (1969); Friend v. Green, 146 Conn. 360, 364-65, 151 A.2d 343 (1959); Dahl v. Edwin Moss & Son, Inc., 136 Conn. 147, 153-54, 69 A.2d 562 (1949); Clover Mfg. Co. v. Austin Co., 101 Conn. 208, 213, 125 A. 646 (1924); Chatfield Co. v. O'Neill, 89 Conn. 172, 174, 93 A. 133 (1915).

The regular enforcement of conditions is, however, subject to the competing but equally well established principle that the occurrence of a condition may be excused in the event of impracticability "if the occurrence of the condition is not a material part of the agreed exchange and forfeiture would otherwise result." 2 Restatement (Second), Contracts § 271; 6 Corbin, Contracts § 1362 (1962); 5 Williston, Contracts (3d Ed.1961) § 793. Excuse of the condition, in such circumstances, is based upon the presumption that insistence on an impracticable condition was not in the contemplation of the parties when they entered into their contract. 6 Corbin, supra, 499; 5 Williston,...