Strazza Bldg. & Constr., Inc. v. Harris

• Court: Connecticut Supreme Court
• Writing for the Court: D'AURIA, J.
• Citation: Strazza Bldg. & Constr., Inc. v. Harris, 346 Conn. 205, 288 A.3d 1017 (Conn. 2023)
• Decision Date: 21 February 2023
• Docket Number: SC 20660
• Parties: STRAZZA BUILDING & CONSTRUCTION, INC. v. Jennifer G. HARRIS, Trustee, et al.

346 Conn. 205

288 A.3d 1017

STRAZZA BUILDING & CONSTRUCTION, INC.

v.Jennifer G. HARRIS, Trustee, et al.

SC 20660

Supreme Court of Connecticut.

Argued November 15, 2022

Officially released February 21, 2023

Bruce L. Elstein, Bridgeport, for the appellants (named defendant et al.).

Anthony J. LaBella, Fairfield, with whom, on the brief, was Deborah M. Garskof, for the appellee (plaintiff).

Robinson, C. J., and McDonald, D'Auria, Mullins and Ecker, Js.

D'AURIA, J.

In Girolametti v. Michael Horton Associates, Inc ., 332 Conn. 67, 87, 208 A.3d 1223 (2019), this court held that, when a property owner and a general contractor have resolved disputes arising from a construction project by way of binding arbitration, there arises a rebuttable presumption that the general contractor and its subcontractors are in privity for purposes of res judicata in any subsequent litigation. In this certified appeal, we must determine whether the Appellate Court correctly applied Girolametti to the facts of the present case, in which a general contractor had sued the property owner to foreclose two mechanic's liens it served on the owner, claiming unpaid balances for labor and materials stemming from renovations it began on the owner's home. In particular, we consider whether the Appellate Court properly upheld the trial court's denial of the property owner's motion for summary judgment, declining to give preclusive effect to the findings of the trial court in a prior action between the owner and one of the general contractor's subcontractors. We agree with the Appellate Court that the presumption of privity that we held to apply in Girolametti does not apply in the present case, in which a property owner seeks to bind a general contractor to a prior judgment against a subcontractor. We also agree that the trial court correctly denied the defendants’ motion for summary judgment because there remains an issue of material fact as to whether the doctrine of res judicata applies to the facts of this case.

We assume familiarity with the Appellate Court's opinion, which contains a full recitation of the factual and procedural history in this case. See Strazza Building & Construction, Inc . v. Harris , 207 Conn. App. 649, 652–57, 262 A.3d 996 (2021). We briefly summarize that history as follows.

The defendant Jennifer G. Harris (Harris) serves as trustee of the Jennifer G. Harris Revocable Trust (trust), which owns real property located in Greenwich. The defendants¹ hired the plaintiff, Strazza Building & Construction, Inc. (Strazza), to serve as a general contractor for substantial renovations to a home located on the property. After a dispute arose over the cost and quality of the work that had been completed and the estimated time remaining to complete the project, the defendants terminated their contractual relationship with Strazza. Strazza and two subcontractors, Robert Rozmus Plumbing & Heating, Inc. (Rozmus), and Interstate & Lakeland Lumber Corporation, then filed and served mechanic's liens on the defendants, claiming unpaid balances. Strazza then brought this action to foreclose its liens, totaling $561,155.88, alleging claims for breach of contract and unjust enrichment. Id., at 652, 262 A.3d 996.

The preclusion issue presently before us arises because Harris, as trustee for the trust, previously initiated a separate proceeding against Rozmus (Rozmus action), pursuant to General Statutes § 49-35a, seeking to reduce or discharge the mechanic's lien filed by Rozmus. See Harris v. Rozmus Plumbing & Heating, Inc ., Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-17-6033512-S. A trial was held in the Rozmus action to resolve the validity of the mechanic's lien. "Rozmus’ mechanic's lien claimed $97,469.86 as the amount due to Rozmus for plumbing services and materials," which the court reduced to $62,040.36. Strazza Building & Construction, Inc . v. Harris , supra, 207 Conn. App. at 653, 262 A.3d 996. "The court [then] determined whether Strazza was appropriately owed funds, because Rozmus could recover the sum it claimed to be owed only to the extent that Strazza, as the general contractor, was still owed money. ... The court in the Rozmus action, therefore, reviewed the charges that were included in the liens held by Strazza and Rozmus and found that Harris was entitled to credits against the liens for many of the charges. ... [T]he court ultimately concluded that the total adjusted lienable fund was negative $109,605.29. Thus, because the lienable fund for Strazza's contract was entirely exhausted, the lien held by Rozmus was invalid and ordered discharged." (Citations omitted.) Id., at 653–54, 262 A.3d 996.

The central finding of the Rozmus action was that no lienable fund existed. The defendants in the present case therefore moved for summary judgment, arguing that this court's decision in Girolametti v. Michael Horton Associates, Inc ., supra, 332 Conn. 67, 208 A.3d 1223, required the trial court to give res judicata effect to the trial court's decision in the Rozmus action that no lienable fund existed. Strazza opposed the motion, arguing that the doctrine of res judicata did not apply because it was not a party to the Rozmus action and that there was insufficient privity between it and Rozmus to preclude it from suing to enforce its liens in the present action. Strazza Building & Construction, Inc . v. Harris , supra, 207 Conn. App. at 655, 262 A.3d 996.

The trial court denied the defendants’ summary judgment motion, determining that, although three of the four required elements of res judicata were met, a genuine issue of material fact existed regarding whether there was sufficient privity between Strazza and Rozmus to preclude Strazza from pursuing its claims against the defendants. Id., at 655–56, 262 A.3d 996. In addressing the privity issue, the trial court considered, among other things, that Strazza's mechanic's liens were for a substantially greater sum than Rozmus’ lien, that Strazza was not a party to the prior proceeding, and that Rozmus, as a subcontractor, may not have been in a position to defend the defendants’ allegations against Strazza, the general contractor. Id., at 656–57, 262 A.3d 996. After considering the functional relationship between the parties, the trial court ultimately concluded that a genuine issue of material fact existed as to whether Strazza's interests were "sufficiently represented in the Rozmus action." Id., at 663, 262 A.3d 996.

The defendants appealed² to the Appellate Court, which affirmed the trial court's decision. The Appellate Court first held that the presumption of privity that we held to apply in Girolametti did not apply in the case at hand because the facts "are clearly distinguishable ...." Id., at 660, 262 A.3d 996. Second, the Appellate Court concluded that the trial court "correctly determined that [without the presumption of privity] there was a genuine issue of fact as to whether [Strazza] was in privity with Rozmus for the purpose of res judicata." Id., at 664, 262 A.3d 996.

We agree fully with the Appellate Court's holding in this case and have nothing further to add to its cogent rationale and conclusion on the second issue. The remainder of this opinion addresses the first issue and provides us with the opportunity to clarify our holding in Girolametti and to expand on the Appellate Court's application of that case to the present case.

This court held in Girolametti that, "when a property owner and a general contractor enter into a binding, unrestricted arbitration to resolve disputes arising from a construction project, subcontractors are presumptively in privity with the general contractor with respect to the preclusive effects of the arbitration on subsequent litigation arising from the project." (Emphasis added.) Girolametti v. Michael Horton Associates, Inc ., supra, 332 Conn. at 87, 208 A.3d 1223. Although the dispute between Rozmus and Harris was litigated in court, rather than through arbitration, if res judicata were to apply in the present case, the preclusive effect would of course be the same. See, e.g., DKN Holdings, LLC v. Faerber , 61 Cal. 4th 813, 828, 352 P.3d 378, 189 Cal. Rptr. 3d 809 (2015) ; CDJ Builders Corp . v. Hudson Group Construction Corp ., 67 App. Div. 3d 720, 722, 889 N.Y.S.2d 64 (2009). The Appellate Court properly declined to apply the presumption of privity in the present case. It reasoned that Girolametti concluded that "the presumption of privity arises from the ‘flow down’ obligation that a general contractor owes to a subcontractor." Strazza Building & Construction, Inc . v. Harris , supra, 207 Conn. App. at 662, 262 A.3d 996. The Appellate Court determined that there was no basis for concluding that the presumption of privity also arises in the opposite situation, that is, when the prior adjudication is between the owner and the subcontractor, because there is no corresponding obligation owed by the subcontractor to the contractor. Id. ("there is no corresponding ‘flow up’ obligation that extends from a subcontractor to a general contractor"). We agree.

In Girolametti , we cited decisions from several jurisdictions that had similarly adopted a rebuttable presumption that subcontractors are in privity with general contractors for purposes of res judicata. See Girolametti v. Michael Horton Associates, Inc ., supra, 332 Conn. at 79, 208 A.3d 1223. We reasoned further that, without this presumption, "a property owner who fails to prevail in arbitration against a general contractor often will be able to relitigate its claims by simply recharacterizing what are essentially contract claims as violations of a subcontractor's allegedly independent, noncontractual duties." Id., at 81, 208 A.3d 1223.

Our analysis in Girolametti focused on the fairness of applying the doctrine of res judicata to bind subcontractors to "postconstruction arbitration in which the subcontractors did not participate." Id., at 82, 208 A.3d 1223. W...