Wadia Enterprises, Inc. v. Hirschfeld, No. 14540

• Court: Supreme Court of Connecticut
• Writing for the Court: Before PETERS; KATZ
• Citation: 618 A.2d 506,224 Conn. 240
• Parties: WADIA ENTERPRISES, INC. v. Carolyne HIRSCHFELD et al.
• Decision Date: 22 December 1992
• Docket Number: No. 14540

Page 506

618 A.2d 506 224 Conn. 240 WADIA ENTERPRISES, INC.
v.
Carolyne HIRSCHFELD et al. No. 14540. Supreme Court of Connecticut. Argued Oct. 28, 1992.
Decided Dec. 22, 1992.

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[224 Conn. 241] Robert A. Slavitt, with whom was Michael J. Lawrence, Norwalk, for appellant (plaintiff).

Michael D. Bromley, with whom, on the brief, was Burt M. Hoffman, Stamford, for appellees (defendants).

Before [224 Conn. 240] PETERS, C.J., and BORDEN, BERDON, KATZ and FRANCIS X. HENNESSY, JJ.

[224 Conn. 242] KATZ, Associate Justice.

The principal issue in this case is whether the plaintiff contractor produced sufficient evidence of the defendant homeowners' alleged bad faith so as to survive their motion for summary judgment under the Home Improvement Act (act), General Statutes § 20-418 et seq. The plaintiff appeals from the judgment of the Appellate Court affirming the decision of the trial court granting the defendants' motion for summary judgment. We affirm.

The plaintiff, Wadia Enterprises, Inc., brought an action to recover damages against the defendants, Carolyne Hirschfeld, also known as Caroline Hirschfeld,

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and Robert B. Machinist, under theories of breach of contract, quasi contract and foreclosure of a mechanic's lien. The defendants filed an answer and special defenses asserting, inter alia, that the contract violated General Statutes § 20-429(a)(6) of the act and was therefore unenforceable. ¹ The plaintiff subsequently amended its complaint to allege that the defendants had acted in bad faith by asserting the protection of the act after attempting to enforce their rights under the contract. The defendants filed a motion for summary judgment, alleging that, by failing to contain the required notice of the right of cancellation, the contract violated the act and was therefore unenforceable as a matter of law. In opposing the motion, the [224 Conn. 243] plaintiff claimed that the defendants had acted in bad faith and thus could not seek the protection of the act. The trial court granted the defendants' motion for summary judgment and the Appellate Court affirmed; Wadia Enterprises, Inc. v. Hirschfeld, 27 Conn.App. 162, 604 A.2d 1339 (1992); concluding that the plaintiff had failed to present a sufficient factual basis to raise a genuine issue of bad faith on the part of the defendants. We affirm the judgment of the Appellate Court.

The opinion of the Appellate Court discloses the following facts. On August 21, 1989, the parties entered into a detailed, written contract for the renovation of and addition to the defendants' house in Greenwich. The defendants' architect and New York attorneys prepared the contract before presenting it to the plaintiff for execution. The contract provided that a total contract price of $599,314.80 would be payable in ten installments and that the defendants could retain five percent of each installment payment until the architect's certification of the completion of the job. The contract further provided for substantial completion of the project 170 week days after the building permit was obtained, a liquidated damages clause of $500 per day for failure to complete the project within the time provided in the contract, supervision of the project by the defendants' architect, and for additional work to be performed at the request of the defendants by means of "change orders." The contract was a home improvement contract within the meaning of the act. The contract did not, however, provide the notice of the right of cancellation required by § 20-429(a)(6) of the act. Id., at 164, 604 A.2d 1339. ²

The plaintiff subsequently worked on the defendants' house pursuant to the contract and to additional change [224 Conn. 244] orders for an added expense of approximately $150,000 to $200,000. Between September 14, 1989, and September 5, 1990, the defendants' architect approved and the defendants paid the first nine requisitions for payment, minus the five percent retainage pursuant to the contract. On August 30, 1990, the architect approved and certified for payment the tenth and final requisition in the amount of $64,000. Of this amount, $35,676 was attributable to amounts that the defendants had retained pursuant to the five percent retainage clause. The defendants refused to pay the final installment. Instead, the defendants asserted that sums due under the contract's $500 per day liquidated damages clause should be set off against the plaintiff's final requisition for payment. Id.

On September 9, 1990, the plaintiff filed a mechanic's lien on the Greenwich land records, and subsequently commenced this action to foreclose that lien, and to recover

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damages for breach of contract and quasi contract. In their answer and special defenses, the defendants denied the existence of an outstanding balance in favor of the plaintiff, and alleged, inter alia, that the contract failed to contain the notice of the right of cancellation as required by § 20-429(a)(6), and therefore was invalid and unenforceable against the defendants. ³ The plaintiff subsequently amended its complaint, alleging that the defendants' refusal to make final payment constituted a bad faith use of the act. The defendants filed an answer and special defenses to the amended complaint, substantially reiterating their prior answer [224 Conn. 245] and special defenses. ⁴ The plaintiff filed a reply denying all of the defendants' special defenses and asserting that the defendants, by enforcing the terms of the contract and making payments pursuant to the terms of the contract, were precluded from asserting the invalidity of the contract and, by those same actions, had waived their right to assert the invalidity of the contract. Id., at 164-65, 604 A.2d 1339.

The defendants moved for summary judgment with supporting affidavits and a memorandum of law, claiming that the underlying contract was unenforceable pursuant to § 20-429(a)(6). The plaintiff filed affidavits and a memorandum of law in opposition to the defendants' motion, contending that there was a genuine issue of material fact as to the defendants' bad faith. In granting the defendants' motion for summary judgment, the trial court stated that although bad faith on the part of the homeowner would appear to preclude the homeowner from asserting the protection of the act under Barrett Builders v. Miller, 215 Conn. 316, 328, 576 A.2d 455 (1990), the plaintiff had not provided any evidence that would raise a genuine issue relating to the bad faith of the defendants. The trial court further ruled that waiver was not applicable to this action because Barrett Builders made it clear that a homeowner does not waive the protection of the act simply by making payments and invoking certain provisions of the contract.

The Appellate Court affirmed the judgment of the trial court. Recognizing that Barrett Builders "suggested that bad faith on the part of a homeowner might preclude use of the [a]ct as a defense"; Wadia Enterprises, Inc. v. Hirschfeld, supra, 27 Conn.App. at 168, 604 A.2d 1339; the Appellate [224 Conn. 246] Court defined the concept of bad faith as involving some element of "design or motive of interest or ill will." Id., at 169, 604 A.2d 1339. After examination of the pleadings, the Appellate Court determined that the plaintiff had not provided any evidence that the defendants "knew of the defect in the contract and affirmatively concealed or induced the plaintiff into signing the contract so as to be in a position thereafter to utilize the [a]ct's protection." Id., at 170, 604 A.2d 1339. The Appellate Court concluded, therefore, that the plaintiff had failed to present a genuine issue of bad faith on the part of the defendants. The Appellate Court also concluded that "[i]n light of the clear expression of public policy establishing that the [a]ct precludes a contractor's recovery under an unenforceable home improvement contract, the plaintiff's claims that the defendants are not to be afforded the [a]ct's protection because of waiver, estoppel and consent must fail." Id., at 170-71, 604 A.2d 1339.

We granted certification limited to the following issue: "Was the Appellate Court correct in upholding the Superior Court's finding that no genuine issue of material fact was raised by the plaintiff relating to bad faith, waiver, estoppel and/or consent on the part of the defendants?" Wadia

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Enterprises, Inc. v. Hirschfeld, 222 Conn. 904, 606 A.2d 1330 (1992). We conclude that the Appellate Court's decision was correct. I

The plaintiff first contends that the trial court improperly concluded that no genuine issue of...