Herbert S. Newman and Partners, P.C. v. CFC Const. Ltd. Partnership

• Citation: 674 A.2d 1313,236 Conn. 750
• Decision Date: 30 April 1996
• Docket Number: No. 15197,15197
• Court: Connecticut Supreme Court
• Parties: HERBERT S. NEWMAN AND PARTNERS, P.C. v. CFC CONSTRUCTION LIMITED PARTNERSHIP et al.

Page 1313

674 A.2d 1313

236 Conn. 750

HERBERT S. NEWMAN AND PARTNERS, P.C. v. CFC CONSTRUCTION LIMITED PARTNERSHIP et al.

No. 15197.

Supreme Court of Connecticut.

Argued Feb. 13, 1996.

Decided April 30, 1996.

Richard C. Robinson, Hartford, with whom, on the brief, was Susan S. Chambers, New Haven, for appellants (defendants).

Thomas J. Shortell, Hartford, with whom, on the brief, was Kerry R. Callahan, for appellee (plaintiff).

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

PETERS, Chief Justice.

The principal issue in this appeal is whether contracting parties who, pursuant to General Statutes § 49-41, ¹ execute a public works construction payment bond may expand the coverage of the bond beyond the coverage required by the statute. The plaintiff, Herbert S. Newman and Partners, P.C., is an architectural firm that rendered services in connection with a public works project. The plaintiff brought an action against the defendants, CFC Construction Limited Partnership (CFC), which was the successor in interest to the general contractor on the public works project and the principal on the payment bond for the project, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union), the surety on the bond. The plaintiff asserted a claim for damages against CFC for breach of contract and sought payment under the bond from both defendants for services it had rendered pursuant to the contract. The defendants denied the plaintiff's claim that it was owed compensation for services rendered. After a hearing, the trial court rendered judgment for the plaintiff. The defendants appealed jointly from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c). We affirm the judgment of the trial court.

The following facts are undisputed. In 1986, Chase Enterprises authorized the plaintiff to begin rendering architectural services for the development of a design concept for a new city hall building in New Haven. On February 11, 1988, Enterprise Construction Company, Inc. (Enterprise), an entity affiliated with Chase Enterprises, entered into an owner-contractor agreement with the city of New Haven for the construction of the new city hall building. The owner-contractor agreement identified the plaintiff as the architect on the project.

CFC, another entity affiliated with Chase Enterprises, subsequently assumed Enterprise's obligations under the owner-contractor agreement. Pursuant to § 49-41, CFC furnished the city with a payment bond in the amount of $11,827,644. Under the terms of the payment bond, CFC, as principal, and National Union, as surety, bound themselves to make payments promptly to all claimants supplying labor, services or materials for the city hall project. The payment bond incorporated by reference the owner-contractor agreement and expressly provided that the bond was furnished pursuant to § 49-41. On July 13, 1989, the city consented to CFC's substitution as general contractor on the city hall project. On July 14, 1989, the city and CFC amended the owner-contractor agreement to reflect the assumption by CFC of Enterprise's obligations under the agreement.

On June 21, 1990, the city sent CFC a notification that it was terminating CFC's status as general contractor on the city hall project, effective seven days after CFC's receipt of the notification. On June 25, 1990, CFC received the city's notice of termination. On July 2, 1990, in accordance with the city's notice of termination, CFC relinquished control of the project to the city. Additional facts will be discussed as they become relevant to the issues before us.

On June 25, 1991, the plaintiff commenced this action against the defendants, seeking payment of its invoices, interest, costs and attorney's fees. The plaintiff's amended complaint alleged that CFC, as principal, and National Union, as surety, were liable to the plaintiff under the terms of the payment bond for services that the plaintiff had rendered pursuant to its contract with CFC. The defendants denied that they owed the plaintiff compensation for those services, raised several special defenses to the plaintiff's claims and filed a counterclaim against the plaintiff for indemnity for any sums awarded against them in pending litigation. ²

Specifically, the defendants claimed that the plaintiff was barred from recovering under its contract with CFC because, inter alia: (1) the plaintiff had failed to obtain a necessary contract modification for payment of the services for which it sought compensation; and (2) CFC's obligations under the contract had been discharged under the doctrine of accord and satisfaction. The defendants also claimed that, even if CFC were liable under its contract with the plaintiff, the plaintiff was not entitled to relief under the payment bond because: (1) the plaintiff had failed to establish that its services fell within the coverage of the bond; and (2) the plaintiff had failed to commence its action on the bond in a timely manner. The defendants further claimed that, even if the plaintiff could recover under the payment bond, the plaintiff was not entitled to recover under the bond for services that it had rendered after the city had terminated the owner-contractor agreement.

The trial court concluded that CFC had failed to perform its contract with the plaintiff. The trial court also concluded that the defendants were liable to the plaintiff on the payment bond for services that the plaintiff had rendered pursuant to its contract with CFC and for which it had not received compensation. The trial court rendered judgment for the plaintiff on both the complaint and on the counterclaim, and awarded the plaintiff $184,793.02, plus costs and interest.

I

The defendants' primary claim is that the work performed by the plaintiff is not covered by the payment bond that CFC furnished for the city hall project. The defendants contend that, as a matter of law, the coverage of a payment bond executed pursuant to § 49-41 cannot be broader than the coverage required by the statute, and that the statute expressly protects only "persons supplying labor or materials." The defendants further contend that the plaintiff can recover on the payment bond as a "[person] supplying labor or materials" only for services that it rendered on the project job site and that, because the plaintiff did not distinguish between services it had rendered at the job site and services it had rendered away from the job site, it failed to establish its entitlement to recovery on the bond. We need not determine whether the defendants' interpretation of § 49-41 is correct, however, because we conclude that the coverage of a payment bond executed pursuant to § 49-41 can be broader than the coverage required by the statute and that in this case the bond executed by the defendants expressly covered the services rendered by the plaintiff.

We first address the defendants' claim that a payment bond executed pursuant to § 49-41 cannot establish broader protection than that required by the statute. Our analysis of this issue "is guided by well established principles of statutory construction. Statutory construction is a question of law and therefore our review is plenary.... [O]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature.... In seeking to discern that intent, we look to the words of the statute itself, 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." (Citations omitted; internal quotation marks omitted.) State v. Burns, 236 Conn. 18, 22-23, 670 A.2d 851 (1996); HUD/Barbour-Waverly v. Wilson, 235 Conn. 650, 656, 668 A.2d 1309 (1995).

"As with any issue of statutory interpretation, our initial guide is the language of the statute itself." HUD/Barbour-Waverly v. Wilson, supra, 235 Conn. at 656, 668 A.2d 1309; see Frillici v. Westport, 231 Conn. 418, 430, 650 A.2d 557 (1994). Section 49-41 sets forth the requirements for a public works construction payment bond. We have consistently recognized that the provisions of § 49-41 are to be incorporated into a payment bond that is executed pursuant to the statute. See American Masons' Supply Co. v. F.W. Brown Co., 174 Conn. 219, 225, 384 A.2d 378 (1978); International Harvester Co. v. L.G. DeFelice & Son, Inc., 151 Conn. 325, 333, 197 A.2d 638 (1964); New Britain Lumber Co. v. American Surety Co., 113 Conn. 1, 5, 154 A. 147 (1931). In accordance with the plain and unambiguous language of § 49-41, however, the coverage of a payment bond need not be limited to the coverage required by the statute. With exceptions not at issue in this case, § 49-41(b) provides that "[n]othing in this section or sections 49-41a to 49-43, inclusive, shall be construed to limit the authority of any contracting officer to require a performance bond or other security in addition to the bond herein referred to...." (Emphasis added.) Thus, § 49-41 expressly contemplates that the parties to a payment bond, although they must provide the coverage required by the statute, may incorporate additional provisions that expand the coverage required by the statute. See New Britain Lumber Co. v. American Surety Co., supra, at 6-7, 154 A. 147.

The legislative purpose in enacting § 49-41 supports the conclusion that a payment bond executed pursuant to § 49-41 may provide protection that is broader than that required by the statute. Section 49-41 is a remedial statute enacted to protect workers and materials suppliers on public works projects who cannot avail themselves of otherwise available remedies such as mechanic's liens. See Okee Industries, Inc. v. National Grange Mutual Ins. Co., 225...