Edward Smith Company v. Raymond Scott (2011)

MEMORANDUM OF DECISION

The Plaintiff Edward Smith Company, is a partnership, consisting of three brothers, Edward J. Smith, Tony Smith, and Jeffrey Smith.   The partnership is engaged in construction, and land development (TR p. 7).

As part of the division of labor between the partners, Jeffrey and Tony primarily handled the land work, while Edward Smith was charged with office duties and responsibilities.

In December of 2004, the partnership entered into an agreement with the Defendant, Raymond Scott, concerning the construction of a single family residence (Ex. A).  The dwelling was to be constructed at Smith Farms, in the Town of Beacon Falls.

The parcel consists of 1.51 acres, and is shown as Lot # 36 on a subdivision map entitled:  “Subdivision Plan “SMITH FARMS SUBDIVISION, SECT. IV” prepared for E.J. Smith Realty Co. Coach Lane and Bonna Street, Beacon Falls, Connecticut, 9–3–03.”   The subdivision is situated at the intersection of Route 42 and Cook Lane (TR, p. 8).

The contact price agreed upon was $275,000, and the parties contemplated that work would begin on April 30, 2005 (Ex. A, par.9) and would be completed within “six (6) months from the date of commencement.”   The contract did not contain a “time is of the essence” clause.

Work began on the home in June of 2005.   According to Edward J. Smith, a building permit could not be obtained from the Town of Beacon Falls prior to June of 2005.   The reason for the delay in the issuance of the permit was that the subdivision road in front of the property was not paved until June, 2005 (TR, p. 12).

Edward J. Smith also detailed unanticipated problems due to ledge on the site.   It was necessary to engage a blasting contractor, before the foundation of the home could be poured (TR, p. 14–15).

The contract provided for a process which permitted extra work to be requested by the Defendant, and performed by the Plaintiff.   If work was not described in the plans and specifications was desired, the clause concerning “change orders,” paragraph 3 of Exhibit A, reads:

3 EXTRAS—The CONTRACTOR shall perform no extra work, services or changes of any kind other than those set forth in the attached plans and specifications, unless authorized in advance by OWNER, and signed by the CONTRACTOR.   Said authorization shall describe the work or services to be performed and shall state the cost thereof.   Payment for said extra work or services shall be made no later than the completion date and date of final payment.   This clause shall under no circumstances be waived except by an instrument in writing signed by the parties.   No one shall have authority to authorize any extra work, services or charges, except the OWNER.

The Defendant, Raymond Scott, moved into the home in May of 2006, after a certificate of occupancy was issued.

In June of 2006, shortly after the Defendant assumed occupancy, four written change orders were executed (Ex. 1, a through d).

The written change orders are:  (Ex. 1)

Ex. 1a (upgrade accent tiles) $ 1,248.00

Ex. 1b (cabinets, desk, bar, etc.) $14,200.00

Ex. 1c. (garage 10 ft. addition) $11,985.00

Ex. 1d (fireplace and hearth) $ 2,800.00

TOTAL $30,233.00

The Defendant, Raymond Scott, paid for these change orders with a check dated June 19, 2006 (Ex. 2) in the full amount.

The Defendant tendered an initial payment to the Plaintiff of $50,000 on August 9, 2005.   This followed the Defendant's direct payment of a bill for blasting in the amount of $14,360.   This sum was paid to D'Ambruoso Construction Company (Ex. M).

At trial, Edward J. Smith testified to the receipt of monies from the Defendant, in addition to those contained in Exhibit M. The payments were (Ex. 3):

November 10, 2005 $ 75,000.

February 10, 2006 $ 75,000.

May 26, 2006 $ 45,000.

June 16, 2006 $ 30,233.

September 15, 2006 $ 8,000.

TOTAL $233,233.

The Plaintiff also claimed that additional work was performed, in anticipation of the completion of written change orders.   These charges (Ex. 5) were not paid, and no writing signed by the parties was executed.

In December of 2006, the Plaintiff claimed that additional monies were due to the partnership.   Edward J. Smith testified that the outstanding amount was appropriately $18,000, at which time the Defendant offered to pay the sum of $14,000.   A bank Check was obtained in that amount (Ex. M).

Edward J. Smith initially agreed to accept the $14,000, but after talking to his brothers, he declined the offer (TR p. 50–51).   The $14,000 bank draft (Ex. M) was never negotiated.

The plaintiff instituted this action, returnable March 13, 2007, seeking to recover monies claimed to be due under the contract (Ex. A).

In the operative complaint, dated August 12, 2008, four counts are pled:  breach of contract (Count one), unjust enrichment (Count two), breach of the covenant of good faith and fair dealing (Count three) and implied contract (Count four).

The Defendant, Raymond Scott, filed a two-count Counterclaim.   He seeks damages for improper workmanship, and breach of contract.

Following the close of evidence, the parties acknowledged that a written contract existed between them, (Ex. A) and that the writing constituted the understanding of the parties (TR p. 189–90).

In addition to damages for breach of contract, both parties claim to be entitled to an award of attorneys fees, pursuant to paragraph 11 of Exhibit A. The paragraph reads:

11.  SETTLEMENT OF DISPUTES—In the event of any dispute arising hereunder as to the work compiles with the plans or specifications or whether payment is properly due and the same is not settled within ten (10) days, and it becomes necessary for either party to seek judicial enforcement of the terms of the agreement, then in that event the prevailing party shall be entitled to the costs of said legal action, including reasonable attorneys fees.

THE PLAINTIFF WAS NOT FULLY PAID PURSUANT TO THE TERMS OF THE CONTRACT

The Plaintiff maintains that it performed its contract with The Defendant, Exhibit A, and is entitled to monies due.   The Defendant, on the other hand, claims that the contract was breached, and that he is entitled to damages for the Plaintiff's failure to perform its obligations, or failure to perform them in a workmanlike manner.

In an action for breach of contract, the party claiming the breach must show the formation of an agreement, performance by one party, and breach of the agreement by the other party, resulting in damages.  Sullivan v. Thorndike, 104 Conn. 297, 303 (2007);  Rosato v. Mascardo, 82 Conn.App. 396, 411 (2004).   The award of damages for breach of contract should place the injured party in the same position he would have been, had the contract been performed.  O'Hara v. State, 218 Conn. 628, 642 (1991);  Keefe v. Norwalk Cove Marina, Inc., 57 Conn.App. 601, 610 (2000).

The Defendant, Raymond Scott, moved into the new home in May of 2006, after a certificate of occupancy was issued.   Because the construction was financed via a construction mortgage, the Plaintiff had periodically signed mechanic's lien waivers, so that the financing could be obtained.

Exclusive of change orders, a total of $245,000 had been paid by the Defendant to the Plaintiff, through June of 2006.  (Ex. 3;  Ex. M.) In addition, $14,360 was paid by the Defendant directly to a blasting contractor, to deal with an unexpected ledge situation.   Therefore, a total of $259,360 had been paid, in addition to the $30,233 in change orders.

A final check in the amount of $8,000, was tendered in September of 2006, bringing the total paid to $267,360.

It is clear from the testimony that the plaintiff continued to work at the property, following the date on which the Defendant took occupancy in May of 2006.   However, the evidence did not reveal that any “punch list” or other document was ever signed by the parties, acknowledging that additional work needed to be done, and setting forth the estimated cost of the work.   Nor was any escrow account ever established, where monies were released only upon the occurrence of a particular contingency, or monies were held until certain work was performed.

In December of 2006, the Defendant offered to resolve all outstanding issues, and pay the sum of $14,000 to the Plaintiff, Edward Smith Company.

Items to which the Plaintiff pointed at trial, in an attempt to show failure of performance or unworkmanlike construction, were not significant, and are not found to constitute a breach of the agreement by the Plaintiff.   There is no indication that these items were the subject of negotiation, or a “punch list,” at any time prior to the institution of this action.

One who substantially performs a building contract, may recover on the contract, and will not be denied recovery, for minor variations, to which he failed to strictly adhere.  Edens v. Kole Construction Co., 188 Conn. 489, 494 (1982).   Whether substantial performance has occurred, is a question of fact.  Randolph Construction Co. v. Kings East Corporation, 165 Conn. 269, 274 (1973);  Argentinis v. Gould, 23 Conn.App. 9, 14 (1990).

It is found, that the Plaintiff, Edward Smith Company, substantially performed its contract (Ex. A) with the Defendant Raymond Scott.

It is therefore found that it is entitled to recover of the Defendant, the contract price of $275,000, plus any change orders agreed to pursuant to the contract

It is found that “change orders” as shown in Exhibit 1, a through d, were agreed to pursuant to the agreement, and that the Plaintiff has been fully paid for those change orders having received from Raymond Scott a check in the amount of $30,233.

The Plaintiff further claims that it is entitled to recover for work itemized on Exhibit 5. While admitting that no signed change order for the work and services exists, the Plaintiff claims that the defendant waived his right to insist upon a written change order.

This claim is not well taken.

Waiver is defined as the intentional relinquishment of a known right.   A Sangivanna & Sons v. F.M. Floryan & Co., 158 Conn. 467, 475 (1969).   Waiver may be express, or it may be implied from the circumstances.  Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., 234 Conn. 1, 5 (1995).   Whether conduct constitutes a waiver, is a question of fact.  Franz v. Romaine, 93 Conn.App. 396–97 (2006).

Here, the operative clause requires a written waiver before work is performed or paid for.   While a waiver is found as to work performed prior to the execution of the written change orders in Exhibit 1, the court is unable to find a waiver, concerning the claims made in Exhibit 5.

The tender of the $14,000 check was not a waiver of the change order clause by Raymond Scott.   More likely, it was an attempt to offer a sum certain, for any claims which might have arisen under the contract, Exhibit A.

It is found that the Defendant did not waive the provisions of paragraph 3 of Exhibit A concerning claims made in Exhibit 5, and that the Plaintiff, Edward Smith Company, cannot recover for those items.

THE DEFENDANT CANNOT PREVAIL ON HIS COUNTERCLAIM

The Defendant, Raymond Scott, raises multiple claims against the Plaintiff Edward Smith Company, by way of counterclaim.

He claims that he should recover the cost of renting a house for six months, because of the Plaintiff's delay in completing the home.   He seeks $8,100 in damages, based upon the delay.  (Ex. J.)

This claim is not well taken.

The contract (Ex. A) provided that work on the home would begin “no later than April 30, 2005,” and that the home would be completed “within six (6) months from the date of commencement.”  (Ex. A, Par. 9.) The contract does not contain a time is of the essence clause.

The mere fact that a contract sets a date for a closing, does not mean that time is of the essence.  Fullerton v. McGowan, 6 Conn.App. 624, 629 (1986).   When time is not of the essence in a contract, the time for performance is a reasonable time following the date for performance contained in the agreement.  Epstein v. Carrier, 12 Conn.App. 691, 700 (1987).   When a time for performance is set in a contract, but time is not of the essence, either party has the power to make that date or some subsequent date essential by giving notice to that effect, provided that the notice leaves a reasonable time for rendering performance.  Miller v. Bourgoin, 28 Conn.App. 491, 499 (1992).

Here, the Defendant made no written demand upon the Plaintiff for completion of the improvement, and did not demand that the home be completed by a date certain.   Prior to the filing of the counterclaim the Defendant did not claim that any delays in completion had resulted in a breach of contract.

It is found that any delays in the completion of the dwelling resulted from circumstances such as the delay in completing the subdivision road prior to June of 2005, encountering ledge on the property and other contingencies, such as changing the garage to include another bay.

At no time did the Defendant claim that he was entitled to a setoff for rent paid, when payments were tendered in 2006.

It is therefore found that the Defendant, Raymond Scott, has failed to demonstrate that he should recover the cost of rental payments, prior to his assuming occupancy of the property in May of 2006.

The defendant also makes various claims for damages for allegedly shoddy workmanship, or the failure of the plaintiff to complete certain tasks.   No claim is made for a breach of the statutory warranties, express or implied, contained in Chapter 827 of the General Statutes (See § 47–117(d)(2) and § 47–118(e)(2) of the General Statutes.).

At trial, the Defendant claimed to have paid cash for certain work which was performed, and estimated the cost of certain work which had not been performed—Furthermore, he seeks recovery for the hours he claims to have expended in improving his property, at a rate of $52 per hour (TR, p. 130).   These claims have not been proven.

Nor can the Defendant, who testified that he has obtained a license as a home improvement contractor, recover any portion of the $14,000 cost for a tractor, which he claims to have used when working on the property.   This claim is not a proper element of damage.

It is found that the Defendant's claims raised by way of counterclaim are not credible, and he cannot recover for those claims.

THE PLAINTIFF CANNOT RECOVER ATTORNEYS FEES

Both parties claimed that they were entitled to recover attorneys fees, based upon paragraph 11 of Exhibit A.

Attorneys fees are not awarded to a successful party, unless there is a contractual term, or a statutory exception to the general rule requiring each party to pay his own attorneys fees.  Chrysler Corp. v. Maiocco, 209 Conn. 579, 590 (1989).  Maris v. McGrath, 58 Conn.App. 183, 185 (2000).

Here, both parties rely upon the clause in the agreement.   That reliance, based upon the fact presented, is misplaced.

Evidence revealed that the Defendant, Raymond Scott, offered to pay to the Plaintiff $14,000 in full satisfaction of all claims.   The Plaintiff rejected that offer, and chose to institute suit.

Paragraph 11 permits a successful party to seek attorneys fees if it “becomes necessary to seek judicial enforcement of the terms of the agreement ․”

Because it is found, based upon the evidence presented, that $7,640 of the contract price remains unpaid, and the Plaintiff has been fully paid for all written change orders, resort to judicial process was not “necessary,” in light of the Defendant's offer of $14,000 (Ex. M) communicated in December of 2006.

It is therefore found that the plaintiff, as the prevailing party, should not recover attorneys fees.

CONCLUSION

It is found that the following monies have been paid by the Defendant, to the Plaintiff, exlusive of change orders, for the construction of the new home on Lot # 36 (Ex. 3 & M):

August 8, 2005 $ 50,000 (Ex. M)

July 8, 2005 $ 14,360 (Ex. M)

November 10, 2005 $ 75,000 (Ex. 3)

February 10, 2006 $ 75,000 (Ex. 3)

May 26, 2006 $ 45,000 (Ex. 3)

September 15, 2006 $ 8,000 (Ex. 3)

TOTAL $267,360

It is found, that a total of $7,640 is due to the Plaintiff, based upon the contract price of $275,000.

Judgment may enter in favor of the Plaintiff, Edward Smith Company, as against the Defendant Raymond Scott, on the breach of contract count, in the amount of $7,640.

Judgment may enter in favor of the plaintiff Edward Smith Company, in its capacity as Defendant on the Counterclaim filed by Raymond Scott.

No award of attorneys fees is made.

Costs are awarded to the Plaintiff, Edward Smith Company.

RADCLIFFE, J.

Radcliffe, Dale W., J.