John T. Brady and Co. v. City of Stamford

• Decision Date: 19 November 1991
• Docket Number: No. 14284,14284
• Court: Connecticut Supreme Court
• Parties: JOHN T. BRADY AND COMPANY et al. v. CITY OF STAMFORD et al. URBAN REDEVELOPMENT COMMISSION OF the CITY OF STAMFORD et al. v. FEDERAL INSURANCE COMPANY et al.

Page 370

599 A.2d 370

220 Conn. 432

JOHN T. BRADY AND COMPANY et al. v. CITY OF STAMFORD et al.

URBAN REDEVELOPMENT COMMISSION OF the CITY OF STAMFORD et al. v. FEDERAL INSURANCE COMPANY et al.

No. 14284.

Supreme Court of Connecticut.

Argued Sept. 26, 1991.

Decided Nov. 19, 1991.

William J. Egan, with whom, on the brief, was Thomas R. Legenhausen, Hartford, for appellants-appellees (Urban Redevelopment Com'n of the city of Stamford et al.).

Scott D. St. Marie, New York City, pro hac vice, with whom was William J. Pastore, Stamford, for appellees-appellants (Federal Ins. Co. et al.).

Richard L. Albrecht, with whom, on the brief, was Gabriel Miller, Bridgeport, for appellee-appellant (John T. Brady and Co.).

Before PETERS, C.J., and CALLAHAN, COVELLO, BORDEN and BERDON, JJ.

PETERS, Chief Justice.

In this action for breach of a commercial construction contract, the principal issue is whether the trial court, in its evidentiary rulings and its instructions to the jury, assigned proper weight to the terms of three contracts consecutively negotiated by the parties. The appeal arises out of two lawsuits that were consolidated for trial. The first was an action brought by the plaintiffs, John T. Brady and Company (contractor), and its surety and assignee Federal Insurance Company (surety), to recover the unpaid portion of the contract price and the price of certain alleged contract extras from the defendant, the Connecticut Urban Redevelopment Commission of the city of Stamford (owner). ¹ The second was an action brought by the owner and Rich-Taubman Associates (redeveloper) to recover damages from the contractor and the surety because of the contractor's alleged failure to comply with contract specifications in timely fashion. The jury found in favor of the contractor and the surety in both actions, awarding them jointly $2,612,098.84 plus interest in the amount of $1,456,520.49. Following the trial court's denial of motions by the owner and the redeveloper to set aside the verdict and for judgment notwithstanding the verdict, the owner and the redeveloper appealed to the Appellate Court and the surety and the contractor cross appealed. We transferred the appeals to this court in accordance with Practice Book § 4023 and now reverse.

The litigation arises out of a contract between the owner and the contractor, John T. Brady and Company, for the construction of a regional shopping center and garage known as the Stamford Town Center (the project). The contractor undertook to build a nine story parking garage and the shell of an adjacent enclosed shopping mall that the redeveloper was to complete and operate. The named surety and four reinsurance companies issued a performance bond underwriting the performance of the contract. The owner and the contractor agreed on a contract price, as amended, of $36,014,993, of which the contractor has been paid $33,028,201.

Three interrelated contracts memorialized the agreement between the owner and the contractor. These contracts consisted of: the underlying construction contract, executed on December 19, 1978, prior to the commencement of construction; the settlement agreement, executed on September 28, 1981, when the project was 94 percent complete; and the completion agreement, executed on June 1, 1982, when the project was 99 percent complete.

The construction contract incorporated relevant drawings and specifications for the project, for which the owner agreed to pay the designated contract price. The contract stipulated that time was of the essence, set January 20, 1981, as the date for completion of the project, and contained a clause liquidating damages in the amount of $3000 each day for any delay after the completion date. ² The contract defined substantial completion of the project as including the issuance of a final certificate of occupancy. ³ Further, the contract indicated that the contractor would not be entitled to final payment until all of its work had been accepted by the owner. ⁴

In order to resolve substantial disagreements about delay in the performance of the contract and responsibility for extra work, the parties negotiated a settlement agreement on September 28, 1981, eight months after the completion date contained in the construction contract. The settlement agreement provided, inter alia, that: (1) the owner would pay the contractor $2,250,000; (2) the contractor immediately released the owner from all claims arising prior to that time; (3) the owner immediately waived any claim for liquidated damages until after January 20, 1982; (4) the owner agreed to waive its claim for actual damages due to delay, stipulated by the parties to amount to $800,000, if the contractor substantially completed the project by January 20, 1982; and (5) the parties agreed that the completion date could be extended under specified circumstances.

The project was not completed by the revised completion date of January 20, 1982. Relying on the extension provision in the settlement agreement, the contractor maintained that this delay resulted from the absence of timely instructions and the issuance of belated change orders. Because the owner disagreed with the validity of these claims, it paid the contractor only $1,375,000 of the additional $2,250,000 promised in the settlement agreement, and refused to waive the $800,000 in actual delay damages stipulated in that agreement. The resultant financial difficulties led the contractor, in March of that year, to assign its contract rights to the surety, which thereupon began funding further work on the project.

On June 1, 1982, the owner, the contractor and the surety entered into the completion agreement. By the terms of that contract: (1) the surety agreed to finance the resumption of work on the project so that it could be completed by July 9, 1982; (2) the owner agreed to waive any claim for delay damages sustained between the new completion date and the prior revised completion date of January 20, 1982; (3) the owner agreed to pay $1,000,000 upon substantial completion of the project by the new completion date; (4) the surety agreed to obtain releases of mechanic's liens; and (5) the owner agreed to make monthly progress payments. Like the settlement agreement, the completion agreement provided that the new completion date could be extended for reasons enumerated in the agreement.

The project was not completed on July 9, 1982. Alleging that certain important work remained undone or unaccepted, and that mechanic's liens had not been released, the owner withheld further payments. On August 19, 1982, the contractor sued to recover the unpaid contract price and an additional amount representing the cost of alleged extra work. The complaint also contained a count for prejudgment interest. This cause of action, with the surety replacing the contractor as the real party in interest, is the first of the lawsuits before us on this appeal.

Despite the lawsuit, work continued on the project, resulting in the issuance of a temporary certificate of occupancy on October 22, 1982. Maintaining that it had completed its work on the project, the contractor left the work site on January 5, 1983. The owner continued to insist that there were uncorrected defects in the contractor's performance. When the surety refused a request for further corrective work, the owner engaged another contractor to complete the project. This aspect of the controversy between the parties was the basis for the second cause of action before us, a suit by the owner and the redeveloper to recover liquidated and actual damages because of the contractor's delay in completing the project, and actual damages because of the contractor's allegedly unsatisfactory performance of the contract, in the total amount of $3,225,907.14 above and beyond the remaining balance on the contract price. Like that of the contractor and the surety in the first case, the complaint of the owner and the redeveloper included a claim for prejudgment interest.

The trial of these consolidated causes of action began with jury selection in April, 1989. The trial itself began on July 5, 1989, and continued until April 24, 1990, when the jury returned its verdict. Because of the volume and complexity of the pleadings, the court and the parties had agreed that the pleadings would not go to the jury. The trial court had rejected requests for interrogatories filed on behalf of the surety, the owner and the redeveloper. The jury returned a single verdict in both cases, finding that the surety was entitled to $2,612,098.84 plus interest in the amount of $1,456,520.49. The parties stipulated that they would accept the mathematical calculation of the interest by the jury. The trial court, having earlier denied the owner's request for a directed verdict, also denied posttrial motions by the owner and the redeveloper for a mistrial, to set aside the verdict, and for judgment notwithstanding the verdict. The present appeal ensued.

I

The appeal by the owner and the redeveloper challenges: (1) the sufficiency of the evidence adduced to support a verdict on the first cause of action, and hence the property of the trial court's denial of the owner's motions for a directed verdict and for judgment notwithstanding the verdict; (2) the trial court's evidentiary rulings and jury charge concerning the effect of the release provisions in the settlement agreement; and (3) five other statements of law contained in the charge to the jury. ⁵ We disagree with the first of these claims, but agree that the trial court made so serious an error in its evidentiary rulings that a new trial is required. We will consider other aspects of the trial court's charge only to the extent that such discussion is necessary to guide the court at a new trial.

A

The owner contends that the surety was not entitled to recover the balance of the contract price because the construction contract conditioned a right to...