Kowalsky Brothers, Inc. v. Town of New Canaan (2011)

MEMORANDUM OF DECISION

This case comes to this court as a court trial.   The plaintiff's operative complaint consisted of five counts.   The first count was for breach of contract.   In the plaintiff's memorandum of law the plaintiff withdrew with prejudice count one sounding in breach of contract on the basis of third-party beneficiary.   Count two was for a breach of an executed oral contract.   Count three was for a breach of implied contract.   Count four was for unjust enrichment.   Count five was for quantum meruit.

The Town answered the complaint by substantially denying the allegations of the complaint.   In addition, the Town asserted five special defenses.   The first and second special defenses deal with the statutory provisions of Gen.Stat. §§ 49–41 and 49–42.   The third special defense addresses there being no contractual relationship.   The fourth special defense provides that the work was not authorized.   The Town has abandoned this fourth special defense in its post-trial papers.   The fifth special defense claims the changes were not properly authorized.

I. The contract between Sprinturf and the Town determined the scope of the work.

Kowalsky Bros. undertook the work at Dunning Field under Alternate No. 2. Kowalsky's Subcontract Agreement with Sprinturf [to which the Town was not a party] which only related to that Alternate and made no provision for the base bid configuration that was set forth in Sprinturf's bid proposal and the architect's drawings and specifications.   Ex. A. When Alternate No. 2 failed, Kowalsky Bros. claimed many things that followed were extra work.   Sprinturf adopted that position, despite the terms of its bid and contract with the Town. Under Sprinturf's base bid configuration, removal of the E–Layer and installation of 2 inches of gravel was included at a total cost of $8,550 less than Alternate 2. The base bid configuration was supposed to be done for less money, not more.

The Town and its architect view the original bid and contract with Sprinturf as requiring the base bid configuration and that Alternate No. 2 was merely that, an alternate.   Once it failed, even though it was adopted by the Town at Sprinturf's request, the original base bid configuration was restored.   In fact, Jay Kowalsky testified that it was the “fix.”   There was no new contract between the Town and Sprinturf.   The original one continued and everything that Sprinturf did was consistent with the continuation of the contract, including its Change Orders which reflected the original contract price.

The evidence shows that Jay Egan and Richard Webb rightfully asserted that everything that occurred after the failure of Alternate No. 2 was included in the original contract.   Contrary to Kowalsky's claim, the work that it did removing the carpet and E–Layer and installing of stone were all part of Sprinturf's original bid and the plans and specifications.   Exhibits NN and OO. This work was the bargained-for consideration by the Town with Sprinturf.   The base bid configuration and specifications called for removal of the turf and E-layer, disposal by the contractor, and installation of two qualities of gravel before installation of the new turf.   Exhibit NN and OO. This was to be done for $8,550 less than Alternate 2, since Alternate 2 would have been more labor intense.

The Town had a contract only with Sprinturf.   The Town has paid Sprinturf what is owed under their contract.   The Town has paid Sprinturf 80% of the contract price.   The payment due upon final sign-off has not been paid because the punch list was not completed.   The Town paid architectural and other expenses.   The Town has not received the field without substantial outlay on its part.   It bargained for a completed field and that is what it is entitled to under its contract with Sprinturf.   Any issues relating to the Marketing Brand Awareness discount are between the Town and Sprinturf.

II. There was no implied or oral contract between Kowalsky Bros. and the Town.

It is also obvious from the evidence that Kowalsky Bros.' real claim lies against Sprinturf.   Sprinturf sent them a Subcontract Agreement for $150,000.00 that governs their relationship.   Kowalsky Bros. received $71,136.90 from Sprinturf.   The Subcontract Agreement itself allows for a lawsuit against Sprinturf.   Moreover, under Connecticut's six-year statute of limitation for written contracts, Kowalsky Bros. still has a viable claim against Sprinturf.   If Kowalsky Bros. did more work than what it expected to do under its Subcontract Agreement with Sprinturf, then Kowalsky Bros. should be looking to Sprinturf.

Although not having any written agreement with the Town, Kowalsky Bros. has sued it claiming $233,224.59 for alleged changes in the scope of work and balances due.   Kowalsky Bros. seeks to do this by claiming that it had an implied or oral agreement directly with the Town by virtue of communications with Egan and the receipt of the joint check.

There is nothing extraordinary about the fact that an owner's representative would request quotes from a subcontractor who is on the site on a daily basis.   What is more noteworthy is that neither Egan or the Town were ever billed for any of the work that was quoted.   No demand, prior to this suit, was ever made upon Egan or the Town for said work.   In fact, all of said work was billed by Kowalsky Bros. directly to Sprinturf, even making allowances for “retainage.”   Accordingly, the evidence does not support an implied or oral agreement directly between Kowalsky Bros. and the Town, but instead Kowalsky Bros.' conduct clearly supports its claim against Sprinturf and its status as a subcontractor on the job.   The creation of the joint check payable both to Sprinturf and Kowalsky Bros. simply is not evidence of a direct relationship between Kowalsky Bros. and the Town. In the cover letter of December 20, 2005, enclosing the check for $71,136.90 to Kowalsky Bros., Sprinturf's attorney said that Sprinturf intended to honor its “contractual obligations” with Kowalsky and that it had requested the Town to issue joint checks to them.   There is no evidence of a contractual relationship between the Town and Kowalsky Bros. but evidence of a contractual relationship between it and Sprinturf.

There was never a meeting of the minds between the Town and Kowalsky Bros. to enter into a contract separate and apart from the Town's contract with Sprinturf.  “If the minds of the parties have not truly met, no enforceable contract exists ․ [A]n agreement must be definite and certain as to its terms and requirements ․ So long as any essential matters are left open for further consideration, the contract is not complete.”  (Internal quotation marks omitted.)  L & R Realty v. Connecticut National Bank, 53 Conn.App. 524, 535, 732 A.2d 181, cert. denied, 250 Conn. 901, 734 A.2d 984 (1999).

III. Kowalsky's equitable claims against the Town are without merit.

Unjust enrichment is inapplicable where a contract is present.   In this case, the Town had an ongoing contract with Sprinturf, which was directly referred to in Section 1 of the Subcontract Agreement signed by Jay Kowalsky.   Accordingly, Kowalsky Bros., when it undertook its agreement with Sprinturf, was aware that there was a contract between Sprinturf and the Town dated July 28, 2005 and that the Subcontract Agreement referred to the drawings and specifications pertaining to that contract.

A plaintiff seeking recovery for unjust enrichment must prove not only that the defendant was benefited, but that the retention of that benefit would be unjust.  Polverari v. Peatt, 29 Conn.App. 191, 200–01 (1992).   Kowalsky Bros. claims that the Town's retention of the completed field is unjust.   However, the Town has already paid Sprinturf 80% of the net contract price with Sprinturf, and that the balance is not owed because the punch list was never completed.   The delivery of the completed field was what the Town bargained for.   They substantially paid for it.   Accordingly, the Town's retention of the work and materials involved with the field is not “unjust.”   It is obvious from the exchange of emails between the Town and Sprinturf that there was a dispute about what Sprinturf was due under the contract.   But since the numerous items on the punch list were never completed or corrected, Sprinturf is not entitled to the final payment under the contract.   The final 20% payment is not due until after the punch list is completed and the final sign-off occurs.

IV. The defendant has not proven its statutory defenses.

The defendant Town claims Gen.Stat. § 49–41 et seq. is a statutory bar to plaintiff's right to recover.   It is not.   The statutory requirements of Gen.Stat. § 49–41 et seq. governing contracts with municipalities in excess of $100,000, requires the posting of a bond.   It is undisputed that no bond was ever posted in this case (consistent with the testimony of Mr. Jay Egan).   Where the required bond is not furnished, the contractor may recover in equity.  Royal School Lab, Inc. v. Town of Watertown, 358 F.2d 813, 815 (2d Cir.1966).

When there is the posting of a bond, Gen.Stat. § 49–41 it is the exclusive remedy and, importantly, the statutory right to pursue the bond is to the exclusion of any common-law right of action.  Paradigm Contract Management Co. v. St. Paul Fire and Marine Ins. Co., 293 Conn. 569, 581–82 (2009) (“We conclude, therefore, that the plaintiff was not entitled to bring a common-law action on the bond”).   Conversely, where there is no posting of a bond, Connecticut law allows a subcontractor to proceed directly against the municipality with a common-law action in equity under the doctrine of unjust enrichment.   Plaintiff timely commenced this civil action in 2008.

V. The claimed change orders were not proper under the contract and did not receive the required approvals.

The A1A Document A205, which forms part of the original contract between Sprinturf and the Town, governs changes in the scope of the work.   Section 5.1 provides that after the execution of the contract, changes in the work may be accomplished by a Change Order.   Section 5.2 provides:  “A Change Order shall be a written order to the contractor signed by the Owner and Architect to change the Work, Contract Sum or Contract Time.” Sections 4.1–4.9 provide that the architect shall administer the contract and interpret it.

The four Change Orders were prepared by Sprinturf on their form and sent by it to Jay Egan. Exhibit P15. Change Order No. 1 was signed by Andrew Roland of Sprinturf and Jay Egan. However, Change Orders 2, 3 and 4 were only signed by Andrew Roland.   They were not signed or approved by Egan or anyone else representing the Town or by the architect.   Accordingly, the requirements of the contract regarding Change Orders were clearly not met.

But beyond failing to comply with the contract formalities, the Change Orders were not change orders.   In his letter to Al Woodall, Richard Webb rejected Change Orders 2 and 3 because the work described was already called for in the scope of the work.   Mr. Webb had also examined the backup for Change Order No. 4 and found that that was also within the scope of the work except that he recommended that the owner consider a Change Order totaling $7,015.00 for additional site work.   Accordingly, Change Orders which form the greatest part of the plaintiff's claim were interpreted by the architect to be within the contract scope of the work and not changes to the scope of work.   Section 11 of Kowalsky's Subcontract Agreement specifically provided that:

“Subcontractor shall be bound by the decisions of the architect/engineer with respect to the meaning of the contract documents.”

Unlike many cases that this court has tried over the years this is a lawsuit between good people.   The court has seen over the years many situations where both of the parties are not good people.   In this case both parties are good people.   Kowalsky was hired to do a job did it competently, efficiently and completed it on time.   The Town expected no less.   It is clear to this court that there were many discussions between the parties concerning this construction.   The court in evaluating the evidence is unable to find that the plaintiff has proven by a preponderance of the evidence that the underlying contracts were amended orally or that the plaintiff is otherwise entitled to additional money from the Town of New Canaan.

Based on the most credible evidence the court finds the plaintiff has failed to prove any separate oral or implied contracts were entered into between Kowalsky and the Town.

Accordingly, the court finds the plaintiff has failed to prove the allegations of the Complaint.   The court finds the defendant has failed to prove the first and second special defense.   The court finds the defendant has proven the third and fifth special defenses.   The fourth special defense was abandoned.   Accordingly, the court enters judgment against the plaintiff and in favor of the defendant.

SO ORDERED.

BY THE COURT

EDWARD R. KARAZIN, JR.

JUDGE TRIAL REFEREE

Karazin, Edward R., J.T.R.