Segan Construction Corp. v. Nor-West Builders, Inc.

• Decision Date: 09 August 1967
• Docket Number: Civil No. 10898.
• Citation: 274 F. Supp. 691
• Court: U.S. District Court — District of Connecticut
• Parties: SEGAN CONSTRUCTION CORP., Plaintiff, v. NOR-WEST BUILDERS, INC. and Jack Cooper, Defendants.

274 F. Supp. 691

SEGAN CONSTRUCTION CORP., Plaintiff, v. NOR-WEST BUILDERS, INC. and Jack Cooper, Defendants.

Civil No. 10898.

United States District Court D. Connecticut.

August 9, 1967.

COPYRIGHT MATERIAL OMITTED

Sidney Vogel, of Vogel, Sigsway, Seidman & Harris, Norwalk, Conn., for plaintiff.

Lawrence C. Hirsch, of Weinstein & Weinstein, Norwalk, Conn., for defendants.

TIMBERS, Chief Judge.

Plaintiff brought this diversity action to recover amounts allegedly owing and unpaid in connection with carpentry work performed under a construction subcontract.

Following trial on the merits to the Court without a jury, the Court makes the following findings of fact and conclusions of law, pursuant to Rule 52(a), Fed.R.Civ.P.

FINDINGS OF FACT

1. Plaintiff, Segan Construction Corp., being a New York corporation and having its principal place of business in New York, is a New York citizen. Individual defendant Jack Cooper is a citizen of Connecticut; corporate defendant Nor-West Builders, Inc. (hereinafter "Nor-West"), being a Connecticut corporation and having its principal place of business in Connecticut, is also a Connecticut citizen. The amount in controversy exceeds $10,000, exclusive of interest and costs.

2. On some date prior to May 12, 1964, defendant Cooper acquired title to a certain parcel of real estate bordering on County Street, in Norwalk, Connecticut,¹ and continued to hold said property in his own name during the period of time here involved.

3. On January 2, 1964, defendant Nor-West was incorporated under the laws of the State of Connecticut. Defendant Cooper became a director, and also president and treasurer, and was the sole stockholder. Nor-West began business with the sum of $1,000, which sum still constitutes the entire capitalization of the organization, and represents the amount contributed to capital by the sole stockholder Cooper.

4. On May 12, 1964, plaintiff and Nor-West entered into a written contract² for the performance of the carpentry aspect of construction of a garden apartment complex contemplated with respect to Cooper's County Street property in Norwalk. Signing on behalf of Nor-West was its president, Jack Cooper.

5. The contract called for plaintiff to perform all work customary in the carpentry trade, and fixed a total contract price of $86,300.00.³ Monthly progress payments were intended, with payments for work completed by the 20th of a certain month to be rendered in full by the 15th of the following month; no fixed time was set for completion of performance, although the written agreement expressly stated that time was of the essence.⁴

6. It was subsequently agreed to and understood by the contracting parties that billing and payment would be computed on a per building basis, with the total contract price divided by the number of buildings to be constructed, and the number of such resulting units of payment due each month to be determined by the number of buildings in which carpentry work had been completed.

7. Similar agreement was reached in November of 1964 when the billing and payment method was changed over to an individual apartment basis, with the total contract price divided by the number of separate apartments to be constructed, and the number of such resulting units of payments due each month to be determined by the number of individual apartments in which carpentry work had been completed.

8. In both of the above methods employed in calculating amounts due as progress payments, the basic unit of payment was further subdivided, with 60% of its value assigned to rough framing work, 20% to exterior trim work, and 20% to interior trim work.

9. On May 20, 1964, Nor-West entered into a written contract⁵ with Cooper by which it assumed the responsibilities of general contractor for over-all construction to be carried out on Cooper's County Street property, in exchange for a maximum total contract price of $1,542,723.00, representing estimated actual cost of construction. Jack Cooper signed the instrument as the individual property owner, and was also the signatory on behalf of Nor-West.

10. The County Street enterprise constitutes the only construction work in which Nor-West has been engaged during the time of its corporate existence.

11. At some date between mid-June and the latter part of July, 1964, plaintiff commenced work under its carpentry subcontract with Nor-West.

12. As plaintiff's work progressed, monthly bills were submitted to Nor-West. Analysis of the value of plaintiff's work to date of submission of a particular bill would be conducted on the construction site by Sidney Abrams, employed by Nor-West in the capacity of project manager and owner's representative; Abrams would then recommend approval of a certain amount for payment, at times following discussions with Leon Segal, plaintiff's president, and Cooper would sign payment checks in accordance with the recommendation from Abrams.

13. Although such general contractor approval procedure was in itself contemplated by the terms of plaintiff's contract with Nor-West,⁶ differences of opinion between the parties arose and continued with respect to the appropriate value to be assigned to plaintiff's mounting level of overall performance, with plaintiff of the opinion that it was accomplishing more than it was being given credit for.

14. In the course of plaintiff's performance, further differences arose over particular items of work, which plaintiff considered to be "extras" requiring compensation over and above the original contract price. No written authorization for such extras was executed,⁷ and plaintiff did not include such items in its regular monthly billing. Plaintiff did install as an extra, under oral order from Jack Cooper, 32 metal sleeves for air-conditioning units.

15. In November or December of 1964, Abrams noted certain omissions in plaintiff's work, and accepted the diminished value of performance occasioned thereby on the understanding that the contract price would be correspondingly lowered; this adjustment was also made without written authorization. These omissions involved use of fewer studs in apartment partitions, failure to install steel in certain buildings, changes in the structure of apartment balconies, and delegation of certain bathroom construction responsibilities to another contractor; the diminution in the value of plaintiff's contemplated performance amounted to $2,050.00. Certain other omissions were not accepted, and both plaintiff and Nor-West engaged in relatively minor corrective work.⁸ The corrective work done by Nor-West employees was performed at a cost of $571.00 to Nor-West.

16. In spite of the above disagreements, both plaintiff and Nor-West continued in good faith their attempts to carry out their respective obligations under the contract.

17. On January 25, 1965, plaintiff submitted its customary bill for work done as of the 20th of that month. As of January 20, 1965, the total value of plaintiff's performance under the contract was $47,752.00, of which $38,903.89 had already been paid. Deducting the 10% retainage,⁹ the sum then presently due, payable on February 15, 1965, was $4,072.91.

18. By this time, however, plaintiff had decided to bring the differences over valuation and extras to a head. After continuing work, mostly of a corrective nature,¹⁰ for a couple of weeks, plaintiff halted performance on February 9, 1965.

19. No discussion of the contract disagreement was attempted by Nor-West, and the amount owing to plaintiff as of January 20 was not paid by the 15th of February. On February 15, 1965, plaintiff submitted a bill¹¹ which fully embodied its view of the value of its work to date, including extras, demanding over $19,000.

20. Nor-West refused to consider negotiations concerning payment; plaintiff did not resume performance; and Nor-West engaged carpenters, including some of plaintiff's workmen, to complete the work. The substituted performance was completed on October 14, 1965.

21. The total value of plaintiff's performance as of February 9, 1965, was $45,791.00.¹² With the total sum of $38,903.89 previously having been received as payment, the remaining value of work done for which no payment had been rendered was in the amount of $6,887.11.

22. Plaintiff commenced the instant action on March 30, 1965, seeking recovery against both Nor-West and Jack Cooper, individually, for the unpaid value of work done on the County Street construction project.

CONCLUSIONS OF LAW

1. The Court has jurisdiction over the parties to, and the subject matter of, this action.¹³

2. The contractual relationship upon which the action is founded is governed by the law of the State of Connecticut.

3. On May 12, 1964, plaintiff entered into a written contract with Nor-West, undertaking performance of certain carpentry work in connection with a contemplated garden apartment complex, in exchange for a total contract price of $86,300.00.

4. The carpentry contract called for installment payments payable on the 15th of each month in an amount representing the monthly increment of value of plaintiff's performance as of the 20th of the preceding month.

5. The contracting parties subsequently agreed to certain alterations in plaintiff's duties under the contract, diminishing the value of plaintiff's performance by the sum of $2,050.00.

6. Certain corrective work on plaintiff's behalf, of the value of $571.00, was carried out by Nor-West.

7. By further oral agreement, plaintiff undertook installation of air-conditioning sleeves as an extra, and did install 32 sleeves; the value of such performance was $160.00. The contractual requirement of a written order was waived by Nor-West.

8. As of January 20, 1965, plaintiff was entitled to receive payment of the sum of $6,387.11, less retainage.

9. Plaintiff's subsequent work stoppage on February 9, 1965, over the payment dispute, did not constitute breach of the contract by absolute and...