Old Colony Constr., LLC v. Town of Southington
| Decision Date | 21 April 2015 |
| Docket Number | No. 19346.,19346. |
| Citation | 113 A.3d 406,316 Conn. 202 |
| Court | Connecticut Supreme Court |
| Parties | OLD COLONY CONSTRUCTION, LLC v. TOWN OF SOUTHINGTON. |
316 Conn. 202
113 A.3d 406
OLD COLONY CONSTRUCTION, LLC
v.
TOWN OF SOUTHINGTON.
No. 19346.
Supreme Court of Connecticut.
Argued Dec. 10, 2014.
Decided April 21, 2015.
Jared Cohane, with whom were Peter J. Martin and Luke R. Conrad, and, on the brief, Timothy T. Corey, Hartford, for the appellant (plaintiff).
Linda L. Morkan, with whom were Dennis C. Cavanaugh, and, on the brief, Ryan M. Burns, Hartford, for the appellee (defendant).
Wendy Kennedy Venoit and Peter J. Zarella, Hartford, filed a brief for the Connecticut Associated Builders and Contractors, Inc., as amicus curiae.
PALMER, EVELEIGH, McDONALD, ROBINSON and PRESCOTT, Js.
Opinion
McDONALD, J.
This appeal principally concerns a municipality's ability to recover liquidated damages for a contractor's failure to timely complete a public works contract if the municipality has elected to terminate the contract for convenience1 or has contributed to
some portion of the delay. The plaintiff, Old Colony Construction, LLC (Old Colony), appeals from the judgment of the trial court awarding the defendant, the town of Southington (town), liquidated damages on its counterclaim and permitting the set off of those damages against the damages awarded to Old Colony for the town's failure to pay sums due under the contract's termination for convenience provision. Old Colony contends that the town is barred from collecting liquidated damages because: (1) termination for convenience precludes any default based remedies available for termination for cause, including liquidated damages; and (2) the town's contribution to the delay rendered the liquidated damages provision unenforceable under Hartford Electric Applicators of Thermalux, Inc. v. Alden, 169 Conn. 177, 184, 363 A.2d 135 (1975). Old Colony further contends that, in light of change orders approved by the town acknowledging Old Colony's entitlement to additional time for certain delays, it is entitled to an equitable adjustment in the contract. The trial court rejected these claims in light of a reservation of the town's rights and remedies in the termination for convenience provision and contractual mechanisms for obtaining extensions of time for delays beyond Old Colony's control, with which Old Colony had failed to strictly comply. We affirm the trial court's judgment.
The record reveals the following summary of the underlying facts, as found by the trial court or as reflected in the express terms of the parties' contract. In early 2004, the town sought bids on a construction project known as the Pond View Drive Pump Station Replacement. The project required the demolition of an existing sewer pump station and the construction of a wet well, a pumping station, and an above grade garage. The town received eleven bids on the project, ranging from $912,500 to $1,665,000. By letter dated February 24, 2004, the town awarded the contract to
Old Colony for $912,500. Included in the contract documents was a document entitled “Standard General Conditions of the Construction Contract” (general conditions), which included, inter alia, provisions concerning the contractor's responsibilities, execution of change orders, and suspension of work and termination. In executing the contract, Old Colony attested that it had examined
the work site to ascertain any conditions that could affect performance and had undertaken any supplemental examination or testing necessary to meet the contract's terms and conditions.
Under the express terms of the contract, time was of the essence. The effective date of the contract was April 22, 2004. Substantial completion of the contract was due by January 17, 2005. The contract authorized liquidated damages in the amount of $400 for each day that substantial completion exceeded that date. The contract also provided mechanisms for Old Colony to seek extensions of time and increases in the contract price for delays beyond its control. Such extensions of time could be made only by way of change orders or amendments to the contract, but, unless the parties had agreed to the adjustment, Old Colony was required to file written notice of a claim to the project engineer—the town engineering department—within a specific period and with supporting documentation to obtain the adjustment.
From the outset, the project was plagued with delays. Part of the delay stemmed from Old Colony's misunderstanding as to when the contract time commenced. Old Colony's first written submittals were more than three months late. Over the course of the project, the project engineer repeatedly brought to Old Colony's attention the provisions pertaining to contract times, liquidated damages, and the extension of the construction period under specific conditions. In a letter dated November 16, 2004, in response to Old Colony's complaint that
the town had delayed responding to certain submittals and providing certain materials, the town agreed as a compromise to extend the substantial completion date to June 14, 2005. The letter advised: “[A]ny delay beyond June 14, 2005 will be assessed liquidated damages at $400 per day.” Following a May 16, 2005 meeting, the project engineer reiterated this position, advising by letter that “[o]nly the [t]own [c]ouncil can waive or reduce liquidated damages and only at [the] completion of the project.”
After the substantial completion date was extended to June 14, 2005, several other problems arose that impacted the schedule. For example, Old Colony discovered that contract construction documents did not correctly reflect the location of underground electrical lines and the elevation of the force main for the sewer lines. Old Colony also discovered a caisson for the old pump station in the excavation site that had to be removed, which the town agreed was an unforeseen condition. In each of these instances, the project engineer signed off on change orders drafted by Old Colony to address certain costs arising from these circumstances, which, in describing the change, noted that the impact to the schedule had not been determined and that additional time would be incorporated into the schedule. When the town, however, rejected as unnecessary Old Colony's new proposal for a temporary bypass system in lieu of a previously accepted proposal, it advised Old Colony by letter that it was not agreeing to any substantial change in the original contract as to time or costs. The letter also reiterated the applicability of the liquidated damages clause and the town's reservation of right to assess such damages.
On more than one occasion during this process, the town initiated steps to terminate the contract for cause, but on each occasion agreed to continue the project after meeting with Old Colony. Ultimately, however,
after disagreements and further delays relating to the dewatering process, the town notified Old Colony by way of a letter dated August 14, 2007, of
the town's election to terminate the contract on the basis of convenience under paragraph 15.03 of the general conditions of the contract. Shortly thereafter, Old Colony submitted payment application 15 in the amount of $86,765.64. Old Colony previously had been paid a total of $650,220.74 pursuant to payment applications 1 through 14. In further communications in September and October, 2007, the town acknowledged receipt of payment application 15 and its obligation to pay Old Colony for expenses, claims, and completed work on the project but requested a complete accounting of costs to settle payment.
On January 16, 2009, Old Colony submitted payment application 15R seeking $1,352,405.89 in unpaid costs, or, in the alternative, a request for an equitable adjustment in the contract price in the amount of $951,245.43, based primarily on delay related costs. After the town rejected the payment requests, Old Colony submitted a claim to the project engineer, as required under the contract. That claim effectively was denied after the project engineer failed to issue a written decision on the merits within thirty days after the claim submission.
In July, 2009, Old Colony commenced the present breach of contract action.2 The town asserted a special defense claiming that Old Colony had not satisfied the conditions precedent to recovery, including proper, timely notice of its claims. The town also requested a setoff for a counterclaim seeking liquidated damages
for breach of contract.3 In response, Old Colony filed a motion for summary judgment, contending that the counterclaim was barred as a matter of law by virtue of the town's election to terminate the contract for convenience, not for cause.
The trial court, ...
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