LLC v. Prayer Tabernacle Church of Love, Inc. (2010)

MEMORANDUM OF DECISION

The issue to be determined is whether parol evidence is admissible to establish the base contract price relating to a construction agreement between the parties.   For the reasons hereinafter discussed, the court concludes that parol evidence is not admissible.

The defendant filed an application to discharge or modify a mechanic's lien recorded by the plaintiff against the defendant's real property in Bridgeport, Connecticut.   The court held hearings on the application on April 25, June 3 and July 21, 2010.   On the last hearing date, the court ruled from the bench that the plaintiff's lien was reduced from the amount of $329,693.67 to the amount of $259,693.67.   In reaching that conclusion, the court found the base contract price to be the amount of $938,412.   The court credited the testimony of the plaintiff's witness, Larry Stewart, that the actual base contract price was $938,412 despite that the signed contract between the parties stated a base contract price in the amount of $791,980.¹  The defendant disputed the court's finding on the amount of the base contract price claiming that it was based on improperly admitted parol evidence.   As a result, and subsequent to the July 21st hearing, the court ordered that the parties brief the parol evidence issue and left the hearing open on the issue of the amount of the base contract.   A hearing concerning the parol evidence issue was held on November 22, 2010.

“[T]he parol evidence rule is not a rule of evidence, but a rule of substantive contract law.”  HLO Land Ownership A. LTD. v. Hartford, 248 Conn. 350, 357, 727 A.2d 1260 (1999).  “The rule is premised upon the idea that when the parties have deliberately put their engagements into writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement, it is conclusively presumed, that the whole engagement of the parties, and the extent and manner of their understanding, was reduced to writing.   After this, to permit oral testimony, or contemporaneous conversations, circumstances, or usages [etc.], in order to learn what was intended, or to contradict what is written, would be dangerous and unjust in the extreme.”  (Internal quotation marks omitted.)  Heyman Associates No. 1 v. Insurance Co. of Penn., 231 Conn. 756, 780, 653 A.2d 122 (1995), citing Glendale Woolen Co. v. The Protection Ins. Co., 21 Conn. 19, 37 (1851).

“Under the parol evidence rule ․ if a written contract is found to be the final repository of agreements made between the parties, evidence of a prior unwritten agreement would not be allowed to have any effect on the agreement as integrated in the writing ․ Whether the written contract was actually the final repository of the oral agreements and dealings between the parties depends on their intention, evidence as to which is sought in the conduct and language of the parties and the surrounding circumstances.   If the evidence leads to the conclusion that the parties intended the written contracts to contain the whole agreement, evidence of oral agreements is excluded ․” Damora v. Christ-Janer, 184 Conn. 109, 113-14, 441 A.2d 61 (1981).

“The parol evidence rule does not of itself, therefore, forbid the presentation of parol evidence, that is, evidence outside the four corners of the contract concerning matters governed by an integrated contract, but forbids only the use of such evidence to vary or contradict the terms of such a contract.   Parol evidence offered solely to vary or contradict the written terms of an integrated contract is, therefore, legally irrelevant.   When offered for that purpose, it is inadmissible not because it is parol evidence, but because it is irrelevant.   By implication, such evidence may still be admissible if relevant (1) to explain an ambiguity appearing in the instrument;  (2) to prove a collateral oral agreement which does not vary the terms of the writing;  (3) to add a missing term in a writing which indicates on its face that it does not set forth the complete agreement;  or (4) to show mistake or fraud ․ These recognized exceptions are, of course, only examples of situations where the evidence (1) does not vary or contradict the contract's terms, or (2) may be considered because the contract has been shown not to be integrated;  or (3) tends to show that the contract should be defeated or altered on the equitable ground that relief can be had against any deed or contract in writing founded in mistake or fraud.”  (Citations omitted;  internal quotation marks omitted.)  Heyman Associates No. 1 v. Ins. Co. of Pennsylvania, supra, 231 Conn. 780-81.

After consideration of the evidence, memoranda of law and arguments of counsel, the court finds that the standard form contract is an integrated agreement;  that is, the agreement embodies the entire agreement of the parties, including the base contract price.   Further, the court finds that the agreement is clear and unambiguous concerning the base contract price set forth in § 13.2 in the amount of $791,980.   Therefore, parol evidence offered to vary or contradict the terms of the base contract price in the written agreement is irrelevant and inadmissible.  HLO Land Ownership A. LTD. v. Hartford, supra, 248 Conn., 358.

Larry Stewart testified that the base contract price was not the amount of $791,980 stated in the standard form agreement, but the amount of $938,412, and that the difference was due to the lender purportedly agreeing to fund the only lower figure.   The plaintiff offered Stewart's testimony to directly vary or contradict the base contract price contained in the written agreement.   The court concludes that the parol evidence offered by Steward concerning the base contract amount is irrelevant, and that the base contract price is the amount set forth in the contract.   Additionally, the court finds that, in accordance with Stewart's testimony on the June 3rd hearing date and Plaintiff's Exhibit 14,² the amount of extra work for which the plaintiff is to be paid is in the amount of $93,364.67.

In view of the foregoing, the court corrects its prior ruling.   The court finds the base contract price to be $791,980 as stated in the written standard form agreement.³  The court finds that the amount due for extra work in addition to the base contract price is $93,364.67.   The base contract price plus the additional work is $885,344.67.   Subtracting from that amount the $702,000 that the plaintiff has been indisputably paid, the balance due is $183,344.67.   If you reduce that amount further by the $70,000 amount that the court has previously disallowed the plaintiff to claim, then there is an $113,344.67 balance due to the plaintiff on the agreement.   Therefore, the defendant's Motion for Discharge or Reduction of Mechanic's Lien (102.00) is granted to the extent that the plaintiff's mechanic's lien is reduced to the amount of $113,344.67.

TYMA, J.

FOOTNOTES

FN1. The contract signed by the parties was a “Standard Form of Agreement between Owner and Construction Manager,” which is designated as AIA Document B801 CMa-1992.   The base contract price is set forth in § 13.2 of the agreement..  FN1. The contract signed by the parties was a “Standard Form of Agreement between Owner and Construction Manager,” which is designated as AIA Document B801 CMa-1992.   The base contract price is set forth in § 13.2 of the agreement.

FN2. The exhibit, which was prepared by the plaintiff at the request of the plaintiff's counsel, contained a summary of additional work performed by the plaintiff and for which the plaintiff was to be paid above the base contract amount..  FN2. The exhibit, which was prepared by the plaintiff at the request of the plaintiff's counsel, contained a summary of additional work performed by the plaintiff and for which the plaintiff was to be paid above the base contract amount.

FN3. The court previously found, based on parol evidence, that the base contract price was in the amount of $938,000.   For the reasons discussed, that finding was improper..  FN3. The court previously found, based on parol evidence, that the base contract price was in the amount of $938,000.   For the reasons discussed, that finding was improper.

Tyma, Theodore R., J.