Habetz v. Condon

• Decision Date: 22 December 1992
• Docket Number: No. 14461,14461
• Citation: 618 A.2d 501,224 Conn. 231
• Court: Connecticut Supreme Court
• Parties: Peter HABETZ, Jr., et al. v. Ken CONDON.

Page 501

618 A.2d 501

224 Conn. 231

Peter HABETZ, Jr., et al. v. Ken CONDON.

No. 14461.

Supreme Court of Connecticut.

Argued Oct. 28, 1992.

Decided Dec. 22, 1992.

George F. Martelon, Jr., with whom, on the brief, was Thomas B. Lynch, Milford, for appellants (plaintiffs).

Louis M. Pacelli, with whom was John T. Grillo, New Haven, for appellee (defendant).

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

KATZ, Associate Justice.

The dispositive issue in this appeal is whether a home improvement contractor can recover damages from a homeowner who acted in bad faith for work performed under a contract that did not comply with General Statutes § 20-429(a), ¹ which is part of chapter 400, General Statutes §§ 20-418 through 20-432, known as the Home Improvement Act (act). The plaintiff Peter Habetz, Jr., ² filed a multicount complaint against the defendant, Ken Condon, doing business as Condon Contracting, alleging breach of contract, certain statutory violations and negligence. The defendant counterclaimed to recover for the nonpayment of moneys allegedly due and owing, to which the plaintiff asserted special statutory defenses arising out of the defendant's noncompliance with the writing requirements of the act; General Statutes §§ 20-427 and 20-429; and the notice provisions of the Home Solicitation Sales Act. General Statutes § 42-135a. After a trial to the court, judgment was rendered for the plaintiff on the breach of contract count of his complaint and for the defendant on his counterclaim, the court having found that the plaintiff had asserted his statutory defenses in bad faith. ³ The plaintiff appealed to the Appellate Court and we transferred his appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c). We affirm the judgment of the trial court.

The trial court found the following facts. In March, 1989, the plaintiff and the defendant entered into a five page written contract whereby the defendant would construct a two-story addition to the plaintiff's home in Orange, for an agreed upon price of $103,000. The contract outlined the work to be performed and set forth a time schedule for payments based on designated stages of construction. The plaintiff operated a business that installed hot tubs and swimming pools in private homes. He owned his own company, had been engaged in this type of business for over twenty-four years and was licensed by the state of Connecticut.

In July, 1989, additional work and modifications (extras), as set forth in a two page written proposal, were agreed upon by the defendant and the plaintiff. The plaintiff, who requested that these extras be performed, never signed the proposal despite repeated requests by the defendant. The cost of that work, as itemized and set forth in the document, was $6244. The plaintiff paid $93,000 on the original contract and nothing toward the extras.

The plaintiff brought this action against the defendant in four counts: (1) breach of contract due to defective, improper and negligent work; (2) breach of the statutory requirements of the act; General Statutes § 20-429(a); (3) violation of General Statutes §§ 42-110b and 42-110g regarding unfair trade practices; and (4) negligence resulting in the plaintiff sustaining emotional distress and financial loss.

In addition to his answer denying the plaintiff's allegations in counts one through four, the defendant filed a counterclaim in two counts, alleging: (1) the plaintiff's failure to pay $10,000 owed under the written, signed contract; and (2) the plaintiff's failure to pay $6244 for the extras that the defendant had performed at the plaintiff's request. The plaintiff asserted, inter alia, the special defenses that the writing requirements of the act; General Statutes § 20-429; and the notice provisions of the Home Solicitation Sales Act; General Statutes § 42-135(a); had not been satisfied. ⁴ In his answer, the defendant denied the statutory violations. ⁵

The trial court rendered judgment for the plaintiff on the first count of the complaint in the amount of $16,542.50, ⁶ and for the defendant on both counts of the counterclaim, awarding him $10,000 on the first count and $6244 on the second. Although the court concluded that the contract did not comply with § 20-429(a)(6), ⁷ the court's finding of bad faith on the part of the plaintiff caused it to conclude further that "the minor noncompliance by the defendant with § 20-429(a) [did] not bar a recovery under the first and second counts of the counterclaim." ⁸ This appeal followed.

The plaintiff contends that because the contract failed to include the mandatory notice of cancellation provision, the contract was unenforceable and thus the trial court should not have rendered judgment for the defendant on his counterclaim despite the trial court's finding regarding the plaintiff's bad faith. This contention raises the issue of the validity of this court's dictum in Barrett Builders v. Miller, 215 Conn. 316, 328, 576 A.2d 455 (1990), and the related cases decided the same day: that a home improvement contractor, in suing for breach of a contract that violates § 20-429, can avoid the normal bar to his pursuit of such a cause of action by proving that the homeowner invoked, in bad faith, the contractor's statutory violation as a basis for his own repudiation of the contract. A. Secondino & Son, Inc. v. LoRicco, 215 Conn. 336, 576 A.2d 464 (1990); Liljedahl Bros., Inc. v. Grigsby, 215 Conn. 345, 576 A.2d 149 (1990); Sidney v. DeVries, 215 Conn. 350, 575 A.2d 228 (1990).

The plaintiff urges us to enlarge upon the line of cases that have interpreted the act to preclude a suit by a contractor based on the contract or on the three common law principles of restitution in the absence of strict compliance with the provisions of the act. ⁹ He asks that this court go further and abandon the one exception reserved in dictum in the Barrett Builders line of cases. ¹⁰ The plaintiff maintains that a contractor cannot, in his own action to collect payment at the contract rate for contract work, excuse his noncompliance with the contractual stipulations required by the statute by proving that the homeowner has raised the contractor's statutory violation in bad faith.

In mounting his attack on the applicability of a defense of bad faith, the plaintiff accepts the standard definition of bad faith as the absence of good faith. Buckman v. People Express, Inc., 205 Conn. 166, 171, 530 A.2d 596 (1987). Bad faith in general implies both "actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive." Black's Law Dictionary (5th Ed.1979). Bad faith means more than mere negligence; it involves a dishonest purpose. Funding Consultants, Inc. v. Aetna Casualty & Surety Co., 187 Conn. 637, 644, 447 A.2d 1163 (1982); Hartford National Bank & Trust Co. v. Credenza, 119 Conn. 368, 371, 177 A. 132 (1935).

In Barrett Builders v. Miller, supra, 215 Conn. at 328, 576 A.2d 455, A. Secondino & Son, Inc. v. LoRicco, supra, 215 Conn. at 340, 576 A.2d 464, Liljedahl Bros., Inc. v. Grigsby, supra, 215 Conn. at 350, 576 A.2d 149, and Sidney v. DeVries, supra, 215 Conn. at 354, 575 A.2d 228, we recognized that proof of bad faith on the part of the homeowner is an exception to what might otherwise be a harsh lesson to the home improvement contractor unable to recover due to a violation of the act. The central element giving rise to this exception is the recognition that to allow the homeowner who acted in bad faith to repudiate the contract and hide behind the act would be to allow him to benefit from his own wrong, and indeed encourage him to act thusly. Proof of bad faith therefore serves to preclude the homeowner from hiding behind the protection of the act. ¹¹ To support the position this court took in the Barrett Builders line of cases, we need look no further than the maxim that no person may take advantage of his own wrong. Glus v. Brooklyn Eastern District Terminal, 359 U.S. 231, 232, 79 S.Ct. 760, 761-62, 3 L.Ed.2d 770 (1959); Novella v. Hartford Accident & Indemnity Co., 163 Conn. 552, 565, 316 A.2d 394 (1972). This deeply rooted principle has been applied in many diverse classes of cases by both law and equity courts and has frequently been employed to bar what would otherwise be inequitable reliance on statutes. See, e.g., Selzer v. Baker, 295 N.Y. 145, 65 N.E.2d 752 (1946) (doctrine's application to preclude the finality of tax titles when warranted); 51 Am.Jur.2d, Limitation of Actions § 431 (1970) (doctrine's application to prevent a fraudulent or inequitable resort to the statute of limitations).

A bad faith exception is designed to prevent a party's disavowal of previous conduct if such repudiation would not be responsive to demands of justice and good conscience. The law does not permit the exercise of a right to repudiate a contract when the exercise of such a right in bad faith would work an injustice. Every contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement. See, e.g., Warner v. Konover, 210 Conn. 150, 154-56, 553 A.2d 1138 (1989); 3A A. Corbin, Contracts (1960) § 541, p. 97; 5 S. Williston, Contracts (3d Ed. Jaeger 1961) § 670, p. 159; R. Summers, " 'Good Faith' in General Contract Law and the Sales Provisions of the Uniform Commercial Code," 54 Va.L.Rev. 195, 234 (1968). To demand this implicit component but do nothing about its absence would be at best incongruous, and, more accurately, grossly unfair. Thus, a contractor, otherwise precluded from recovering moneys owed for his work because of a violation of the act, must be permitted to assert that the homeowner's bad faith...