The Fcm Group Inc. v. Miller

• Citation: 300 Conn. 774,17 A.3d 40
• Decision Date: 10 May 2011
• Docket Number: No. 18074.,18074.
• Court: Supreme Court of Connecticut
• Parties: The FCM GROUP, INC.v.Jeffrey T. MILLER et al.

300 Conn. 774

17 A.3d 40

The FCM GROUP, INC.

v.Jeffrey T. MILLER et al.

No. 18074.

Supreme Court of Connecticut.

Argued Sept. 23, 2010.Decided May 10, 2011.

Richard C. Robinson, with whom were Megan Youngling Carannante, Hartford and, on the brief, Christine Collyer, for the appellants-cross appellees (defendants).Neal L. Moskow, with whom were Deborah M. Garskof and Anthony J. Labella, Fairfield, for the appellees-cross appellants (plaintiff and third party defendant Frank C. Mercede III).PALMER, McLACHLAN, EVELEIGH, LAVINE and BEACH, Js.PALMER, J.

In this breach of contract and lien foreclosure action arising out of a dispute concerning the construction of a single-family home in the town of Greenwich, the named defendant, Jeffrey T. Miller, who owns the home, and the defendant Cheryl Miller, his wife,¹ appeal, and the plaintiff, The FCM Group, Inc., the builder of the home, and the third party defendant, Frank C. Mercede III,² cross appeal ³ from the judgment of the trial court. The trial court, Hon. William B. Lewis, judge trial referee, rendered partial judgment awarding the plaintiff $266,846 in damages, including $3660.67 in lost profit, and awarding the defendants $5000 in damages under General Statutes § 49–8(c).⁴ Thereafter, the trial court, Karazin, J., awarded the plaintiff $64,405.17 in attorney's fees under General Statutes § 52–249(a) ⁵ and rendered judgment of strict foreclosure. On appeal, the defendants challenge all aspects of the trial court's judgment in favor of the plaintiff except that portion of the judgment awarding the plaintiff lost profit in the amount of $3660.67. Specifically, the defendants claim that the trial court improperly accepted the recommendations of the attorney trial referee that (1) Cheryl Miller was liable for breach of contract even though she was not a party to the contract, (2) the plaintiff was entitled to delay damages under the terms of the parties' contract, and (3) the plaintiff was entitled to foreclose on a mechanic's lien ⁶ in the amount of $30,761.98. The defendants further claim that the trial court improperly (1) awarded the plaintiff the remaining balance due under the parties' contract, (2) awarded the plaintiff attorney's fees under § 52–249(a), and (3) failed to award them attorney's fees under § 49–8(c) in connection with their successful challenge to a second mechanic's lien in the amount $343,351.47. The plaintiff claims in its cross appeal that the trial court improperly accepted the attorney trial referee's determination that the $343,351.47 mechanic's lien was invalid and, therefore, improperly awarded the defendants $5000 in damages under § 49–8(c). We agree with the defendants' claims and reject the plaintiff's claims.⁷

Accordingly, we reverse in part the judgment of the trial court.

The following facts and procedural history are relevant to our disposition of the defendants' appeal and the plaintiff and Mercede's cross appeal. On June 11, 1998, the plaintiff and Jeffrey Miller entered into a contract for the construction of a 5000 square foot, single-family home on property located at 134 Butternut Hollow Road in Greenwich. Jeffrey Miller was married to Cheryl Miller at the time, but Jeffrey Miller held title to the property in his name alone, and he and the plaintiff were the sole signatories to the construction contract. In addition, by its express terms, the contract binds only the “[o]wner” of the property, who is identified in the contract as Jeffrey Miller.

The plaintiff is a general contractor and builder of residential and commercial properties. Its founder and president, Mercede, an experienced contractor, runs the company's daily operations. Prior to entering into the contract, Mercede and Jeffrey Miller were social acquaintances and previously had worked together on another project. Pursuant to the terms of the contract, Jeffrey Miller agreed to pay the plaintiff $648,394 for the construction of his home, but reserved the right, under article 12 of the contract, to perform a portion of the construction work himself and to hire his own subcontractors to do that work. In a rider attached to the contract, several items, including the garage, the kitchen cabinets and most of the wall coverings and flooring, were expressly excluded from the scope of the work covered by the contract so that Jeffrey Miller could hire his own vendors to install those items. The same rider also provided a “Schedule of Alternates,” which permitted the “[o]wner” to “add back in” several of the items that had been excluded from the contract, with a corresponding price for each item.⁸ Under article 13 of the contract, the “[o]wner,” without invalidating the contract, could order “changes in the [w]ork” consisting of “additions, deletions or modifications, [with] the [c]ontract [s]um and [c]ontract [t]ime being adjusted accordingly.” Such changes had to be authorized by a written change order form signed by the owner, the contractor and the architect.

Pursuant to article 2, the contract was to commence “[u]pon issuance of a [b]uilding [p]ermit,” and the plaintiff was to achieve “[s]ubstantial [c]ompletion of the entire [w]ork not later than ... 240 [c]alendar [d]ays from the commencement of work,” subject to any time adjustments as provided under the contract. Although it was the responsibility of the plaintiff to secure all building permits, Jeffrey Miller was required to furnish all other “approvals,” including wetlands approval. On June 18, 1998, the plaintiff applied to the town of Greenwich (town) for a building permit, but the application was denied due to certain unresolved wetlands issues. The town, however, eventually issued the wetlands approval on September 2, 1998, and the town also issued the foundation permit on October 6, 1998.

The defendants had agreed that Cheryl Miller could communicate directly with Mercede about any changes to the design of the house, or any problems with the project. From June, 1998, through December, 1999, she visited the property two to three times a week and requested numerous changes. As a general matter, Cheryl Miller would request a change on behalf of Jeffrey Miller, and the plaintiff would quote a price for the change. The defendants then would decide whether to proceed with the change depending on the price. As of November 10, 1999, the parties had agreed to four written change orders, which included a total of 113 changes to the contract.⁹ These changes had increased the contract price to $803,090.98, and had added a total of eighty-six business days to the schedule. Several of the changes constituted credits to Jeffrey Miller for items that the parties had agreed to subtract from the contract.

Article 4 of the contract provided for “progress payments” to be made by the “[o]wner” on the basis of the applications for payment submitted by the “[c]ontractor” and approved by the architect. Article 5 provided that “[f]inal payment” was due when all of the work had been completed, the contract had been “fully performed,” and a final certificate for payment had been issued by the architect. As of December 8, 1999, Jeffrey Miller had made nine progress payments to the plaintiff for a total of $778,638, which constituted approximately 97 percent of the total revised contract price of $803,090.98. By the end of January, 2000, the project was approximately 95 percent complete, and the only payment remaining was the final payment of $24,452.98, which was due upon completion of all work.

By that time, however, the parties' relationship had become strained. Although dissatisfaction had been building steadily for some time on both sides, the relationship broke down irretrievably when, on or about February 2, 2000, Mercede and Cheryl Miller got into a dispute over when and how the contractor's “final punch list,” that is, the list of items that the contractor was required to complete or repair before final payment was due, should be handled. Mercede informed Cheryl Miller that it was customary to compile a master punch list during a final walk through of the premises with the architect and owner, rather than to submit partial punch lists in piecemeal fashion. Specifically, Mercede told her that his “intention was to get everything on one list, complete my work and get my final payments.” Cheryl Miller responded that Mercede would “never see [his] final payment.” Following his encounter with Cheryl Miller, on February 7, 2000, Mercede wrote a letter to Jeffrey Miller in which he demanded payment of $30,761.98 on or before February 16, 2000. Although the balance remaining on the signed contract was $24,452.98, he attached to the letter a “final change order for the project,” which increased the contract price by $6309, for a total contract price of $809,399.98. The letter also noted the addition of sixty-seven business days to the construction schedule,¹⁰ for a total of 153 business days by which the original schedule had been extended as a result of all of the change orders. Jeffrey Miller was instructed to execute the new change order and to return it to the plaintiff, together with the final payment, in return for the plaintiff's agreement not to file a mechanic's lien or to bring an action for delays in the project. Jeffrey Miller never signed this final change order.¹¹

On February 10, 2000, Jeffrey Miller responded to Mercede's letter by informing Mercede that, consistent with the terms of their agreement, he expected the plaintiff to complete all work before he would remit final payment. With respect to Mercede's demand that Jeffrey Miller execute the final change order form and return it to Mercede by February 16, 2000, Jeffrey Miller stated: “As always you will receive [an] executed change order in a timely manner, however, I have just received [this] change order and need time to review [the] final accounting and credits due [to the] owner.” As the attorney trial referee found, “a...