White Oak Corp. v. Department of Transp.

• Decision Date: 29 January 1991
• Docket Number: No. 13932,13932
• Citation: 585 A.2d 1199,217 Conn. 281
• Court: Connecticut Supreme Court
• Parties: WHITE OAK CORPORATION v. DEPARTMENT OF TRANSPORTATION.

Page 1199

585 A.2d 1199

217 Conn. 281

WHITE OAK CORPORATION v. DEPARTMENT OF TRANSPORTATION.

No. 13932.

Supreme Court of Connecticut.

Argued Nov. 7, 1990.

Decided Jan. 29, 1991.

Edwin A. Lassman, Hartford, for appellant-appellee (plaintiff).

Lawrence Russ, Asst. Atty. Gen., with whom, was William J. White, former Asst. Atty. Gen., for appellee-appellant (defendant).

Before PETERS, C.J., and SHEA, CALLAHAN, GLASS and COVELLO, JJ.

SHEA, Associate Justice.

This action was brought by a highway construction contractor after it had completed a major highway construction project for the state of Connecticut in 1979. The principal issues before us are (1) whether a "no damages for delay" clause in the contract limits the plaintiff's recovery of damages, (2) whether the amount awarded to the plaintiff for idle equipment should be adjusted to reflect lack of wear and tear, and (3) whether the state is liable for prejudgment interest on the amounts due the plaintiff.

On April 17, 1974, the plaintiff, White Oak Corporation (White Oak), a construction company, executed a written contract with the defendant, the state of Connecticut, acting through the department of transportation (DOT), primarily for the construction of Route 72 in New Britain and Berlin. The project was completed in November, 1979. On October 18, 1983, ¹ White Oak brought suit under General Statutes § 4-61, ² claiming, inter alia, payments allegedly due on the contract with DOT and damages incurred by the plaintiff when DOT allegedly delayed the project's completion. On White Oak's motion made pursuant to General Statutes § 13b-57a ³ the trial court referred the case to a panel of three arbitrators for a finding of subordinate facts.

The parties stipulated that the arbitration panel would also make findings of fact as to the damages, if any. Accordingly, the arbitrators calculated damages on each count of the complaint. They did not, however, determine whether the plaintiff was entitled to interest on these damages, nor did they calculate the amount of interest to be awarded or the date from which the interest would run. Nevertheless, they did set forth the amounts of interest claimed and the rates at which they had been calculated.

The arbitration panel reported its findings of fact to the trial court after modifying them in response to the parties' motions to correct. Granting only one of the DOT's numerous exceptions, the trial court then corrected the panel's report by incorporating the contract and its accompanying plans into the report as exhibits. As corrected, the report contained the following relevant facts.

The contract required that White Oak complete the project within 1650 days from the starting date and entitled it to receive the sum of $48,644,853.17 for its work. If White Oak failed to complete the work within 1650 days, the contract allowed DOT to deduct from the amount due $1000 per day for each day White Oak was late. DOT ordered White Oak to begin work on or about April 22, 1974, thereby setting a completion date of October 27, 1978. White Oak did not complete the work until November 23, 1979, 392 days late.

In March, 1980, after the project was completed, White Oak asked DOT, pursuant to a provision in the contract, for a retroactive extension of the completion date because the project had been delayed for causes claimed to have been beyond its control. ⁴ DOT extended the date, but only by 305 days (184 days of excusable delay plus 121 days of "winter shutdown"), to August 28, 1979, leaving a contract overrun of 87 days, which resulted in a payment deduction by DOT of $87,000.

The arbitrators found that all 392 days of delay were caused by factors outside White Oak's control. First, White Oak was prevented from doing excavation work from November 1, 1975, until May 5, 1976, when the gas company, Connecticut Natural Gas, finally removed its gas line from Elm Street in New Britain, ⁵ even though "the plaintiff had reasons to expect that the gas main on Elm Street ... would be removed upon the installation of the regulator and piping at the intersection of Peck and Short Streets," and even though White Oak made repeated inquiries and requests concerning the removal of the gas line commencing in September, 1974, as soon as that installation was completed. The delay in removal of the gas line prevented White Oak from working on the construction of a bridge, because the contract specifically prohibited it from disturbing the bridge site until the gas line was removed. DOT's delay in furnishing controls for the construction of temporary railroad lines, also required under the contract, caused White Oak additional delay.

The panel found that these delays not only had caused White Oak's failure to meet the contract completion date, but also had resulted in other damages, because the passage of time had increased its labor and general overhead costs. Thus, the panel found that DOT owed White Oak, in addition to the $87,000 it had withheld as liquidated damages, a further amount to compensate White Oak for its losses from these delays.

The arbitration panel found in favor of White Oak on most of its other claims. The panel found that DOT had not been timely in making the periodic payments the contract required when portions of the project were completed or, if not completed, approved by the DOT's engineer. It also found that DOT owed White Oak for additional, unanticipated work that White Oak had performed at DOT's request. Finally, the panel found that DOT had overcharged White Oak for gravel White Oak had removed during the project, and owed White Oak reimbursement of the excessive amount deducted from DOT's payments.

In rendering judgment, the trial court accepted all of the factual findings of the arbitration panel but sustained several objections filed by DOT. The court disallowed the award of damages resulting from the gas company delay, reduced the damages allowed for idle equipment resulting from DOT's other delays, and denied White Oak's claim for prejudgment interest. White Oak on appeal challenges these three rulings. We will consider its challenges in that order.

I

As a threshold matter, we note that the trial court's role in reviewing the corrected arbitrators' report was limited to rendering "such judgment as the law requires upon the facts in the report as it may be corrected." Practice Book § 443; see also Dills v. Enfield, 210 Conn. 705, 713, 557 A.2d 517 (1989) (discussing attorney trial referees). Thus, it was bound by the subordinate facts found by the panel, but was not bound by the arbitrators' legal conclusions, if any. Dills v. Enfield, supra; Seal Audio, Inc. v. Bozak, Inc., 199 Conn. 496, 509-10, 508 A.2d 415 (1986).

The trial court disallowed damages resulting from the gas company delay after DOT objected to the report for its failure to take into account a "no damages for delay" clause in the contract. The clause, contained in special provision 1.05.06 of the contract, stated: "The Contractor shall schedule his operations in such a manner as to minimize interference with the operation of the forces of utility companies or municipalities in effecting the installation of new facilities as shown on the plans or relocation of their existing facilities. The Contractor shall consider in his bid all permanent and temporary utility appurtenances in their present or relocated positions and installation of new facilities as required for the project; and no additional compensation will be made for delays, inconvenience or damage sustained by him due to interference from the above-noted utility appurtenances or the operation of installing or moving them." (Emphasis added.) The arbitrators' report omitted any discussion of this provision, but the contract as a whole was included in the corrected report as an exhibit. The trial court construed the contract to prevent White Oak from claiming damages incurred as a result of the gas company delay, and thus, pursuant to Practice Book § 440, ⁶ sustained DOT's objection to the finding of liability as "not properly reached on the basis of the subordinate facts found."

White Oak does not contest the trial court's conclusion that "no damages for delay" clauses are generally valid and enforceable and are not contrary to public policy. See 5 A. Corbin, Contracts § 1068, note 87; annot., Validity and Construction of "No Damage" Clause With Respect to Delay in Building or Construction Contract, 74 A.L.R.3d 187. Rather, White Oak maintains that the delay in this case falls within the exceptions to the enforceability of such clauses, and urges us to adopt the list of such exceptions recently enunciated by the New York Court of Appeals in Corinno Civetta Construction Corporation v. New York, 67 N.Y.2d 297, 493 N.E.2d 905, 502 N.Y.S.2d 681 (1986). We agree with the trial court that, although Corinno Civetta Construction Corporation's statement of the law should be followed in Connecticut, the delay does not fall within the exceptions enumerated in that case.

In Corinno Civetta Construction Corporation v. New York, supra, the New York Court of Appeals rejected a sewer construction company's claim that it was entitled to damages for delay caused, in part, by the defendant city's moratorium on street openings, notwithstanding the presence of a "no damages for delay" clause contained in its contract. Considering the reach of the "no damages for delay" clause, the court held: "Generally, even with such a clause, damages may be recovered for: (1) delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee's breach of a fundamental obligation of the contract." Id., 309, 493 N.E.2d 905, 502 N.Y.S.2d 681. Applying these exceptions, the New York Court...