Sebco, Inc. v. ICA (2012)

MEMORANDUM OF DECISION

The plaintiff Sebco, Inc. (“Sebco”) is a construction management/general contractor who provides construction management services in the Danbury, Connecticut area.   Sebco was put in touch with the defendant ICA Sports and Building Systems, Inc. (“ICA”), an architect.   The defendant Lex Kessler is an individual who serves as president of ICA. ICA is in the business of building sports facilities and recreational properties in the area.   ICA had acquired a sports and wellness club located on Starr Road in Danbury, Connecticut.   For various reasons, the development of that property had fallen behind schedule and ICA was in the need of construction management and help in completing the buildout of this fitness facility.

Sometime in the summer of 2008, Sebco and ICA entered into a one-page agreement bearing a printed date of July 25, 2008.   This agreement, which is printed on Sebco stationery and was introduced as plaintiff's Exhibit 1A, states that it is regarding the sports and wellness club but is otherwise stark in its brevity.   The terms of the contract are as follows:

CONTRACT

We will perform work for the above referenced project at the following rates:

Project Manager—$75/hr.

Project Executive—$95/hr.

Carpenter—$65/hr.

Laborer—$40/hr.

Any subcontractor ICA Sports & Building Systems causes to be hired (sic) we will add a fee of 7.5%

Signed:  Steven G. Hicks

President, Sebco

Accepted:  L. Kessler

ICA Sports & Building Systems

The contract also contained written language which the court finds was placed on the Contract by ICA:  “Sebco shall provide adequate manpower and supervision to open Club in September.   Ted Mitchell to be on site as necessary to complete.”   The court finds that such language was added by ICA Sports, but never accepted by Sebco and accordingly, did not become part of the contract.   Said language was effective, however, to reinforce Sebco's notice of the limited time frame ICA had to complete the building of the facility and the importance and urgency of this project to ICA.

Soon after Sebco begin providing services under the agreement, problems arose.   It appears the lines of communication between Sebco and its onsite manger, Ted Mitchell, were not the best and there was confusion as to how certain suppliers and workers were to be paid.   The first Sebco invoice in the amount of $6,121.50 was paid.   Other invoices received during the month of September 2008 were partially paid but not completely.   One steel supplier was paid directly by ICA, rather than through a Sebco invoice.   Also, certain tax amounts which Sebco added to invoices were not paid.   Invoices sent during October and thereafter were not paid.

During October, Sebco and ICA began addressing a series of problems concerning payments.   ICA began expressing concerns that certain subcontractors on the project had not been paid in instances where ICA contended Sebco had been paid including the amounts due those subcontractors.   Sebco, in response, contended that delays with payments to subcontractors were due to the delay of ICA in paying the invoices which Sebco had already sent.   Both of the parties demanded that the other perform its obligations first as each side contended the other was responsible for the problems which were arising.   In October of 2008, ICA directly entered into a contractual agreement with SP Construction, one of the principal subcontractors through Sebco on the project.   In November, ICA began making arrangements to pay other persons directly, particularly the project manager supplied by Sebco.   Meanwhile, each of the parties was threatening to terminate their agreement in the event the other side did not cure the deficiency perceived by the other.   By the end of November, Sebco suspended all services being rendered in association with the agreement but continued to bill and demand payment from ICA for some period of time.

Sebco, of course, complains of nonpayment of its invoices though it readily admits that many of these charges contained therein are incorrect.   Sebco agrees that many of the subcontractors, whose charges are shown therein, were paid directly by ICA or were otherwise not correct.   Of the $176,044 balance claimed by Sebco at the end of 2008, Sebco admits credits exist for approximately $101,775.00 due for direct payments to SP Construction by ICA. Sebco claims a balance of $74,269.05, together with interest at the rate of 1.5 percent per month, costs of collection, “foreclosure cost” and other items of expense which when added to the balance, bring the total amount claimed over $100,000.¹

ICA for its part contends that many of the charges submitted on the invoices from Sebco were improper and not covered by their agreement.   For example, ICA contends it was frequently charged for the services of Sebco's principal, Steve Hicks, as a “project executive,” at an hourly rate of $95 though he was rarely, if ever, seen at the project site.   Additionally, multiple carpenters were being billed by ICA on the invoices at the rate of $65 an hour.   Such carpenters were not employees of Sebco but rather subcontractors who should have been charged solely on a “cost plus 7.5%” basis under the terms of the agreement.

As the party asserting a claim for damage, the burden of proof falls on Sebco to prove such damages with reasonable certainty.  Argentinis v. Fortuna, 134 Conn.App. 538, 549 (2012).  “Exact pecuniary computation” is not required “as long as the evidence afford[s] a basis for a reasonable estimate.”  Wyatt Energy v. Motiva Enterprises, 128 Conn.App. 666, 687, 19 A.3d 181 (2011).

In this case, Sebco has presented little more than its printed invoices to support its claim for damages.   Some of the problems with these invoices are as follows:  Under the Contract, for Ted Mitchell, the project manager, his time was to be billed at $75 an hour.   Without explanation, his time is frequently billed at “time and a half” or $112.50 per hour.   There was no evidence of any kind offered to establish that Sebco could bill the project manager at this higher rate.   Next, the bulk of the charges for which ICA was invoiced are attributable to the services of carpenters who are billed at the rate of $65 an hour.   However, it does not appear there is any evidence that Sebco in fact provided carpenters as employees of Sebco who would have qualified for that hourly amount.   The carpenters were instead provided through subcontractors, principally SP Construction, and could only have been billed at the hourly rate actually paid by Sebco plus 7.5 percent.   Sebco has never introduced evidence to support any claim for any services on a cost plus percentage basis.   The only evidence as to the true hourly rate for these carpenters is in defendant's exhibit B, the contract between ICA and SP Construction, which shows the carpenters being charged by SP Construction at $50 an hour.   This same agreement, as well as testimony from defendants, demonstrates that from September 3, 2008, the effective date of the agreement, ICA was paying SP Construction directly for the carpenters used on the job.   Accordingly, the court finds Sebco has failed to carry its burden of proof with regard to charges for the carpenter services, beyond the 7.5% markup.

The final category of charges is for Steve Hicks as a project engineer, at the rate of $95 an hour.   While the agreement does provide such services are to be charged, ICA has raised substantial questions as to whether or not such services were in fact provided.   Sebco's testimony in this regard is simply that Mr. Hicks cannot recall how often or the number of hours he would have been present at the job site.

Finally, it is clear that in any event, as of November 30, 2008, no further charges could be assessed by Sebco under the agreement.   By that date, Sebco had ceased all work on the job.

There are two other issues worthy of note:  First, it is clear that during the months of October and November 2008, ICA had grounds which could have been asserted to terminate the contract with Sebco, but ICA did not terminate the agreement.   ICA continued to accept performance of what services were being rendered by Sebco.   For that reason, the court finds ICA remained liable as per the terms of its agreement with Sebco.   Second, ICA at trial attempted to show that during September of 2008, it had overpaid substantial amounts to Sebco.   ICA argued it should be able to reduce any liability it had to Sebco by such amounts.   However, ICA has never brought any action, counterclaim or claim for recoupment or setoff seeking to recover amounts it has overpaid to Sebco.   Accordingly, the court determines that no such claims can be maintained by ICA.

Having reviewed the evidence presented by the parties, the court determines that the amounts due and owing to Sebco from ICA should be calculated as follows.   All hours billed by Ted Mitchell as project manager shall be paid at the rate of $75 per hour, without time and a half.   All time billed by Steve Hicks, project executive, shall be billed at the rate of $95 per hour.   All charges billed for carpenters, shall be billed at the following formula:  The stated number of hours in each invoice times $50 an hour (the rate charged by SP Construction) times 7.5 percent.   Further, the court finds that the invoices through September 15 were paid in full.

Accordingly, the court determines that following totals are due:  On the invoice of October 8, 2008—$1,798.75;  on the invoice of October 16, 2008—$4,849.37;  on the invoice of November 12, 2008, the amount of $14,920;  on the invoice of December 1, 2008—$7,075.   The cumulative total of damages for all claims by the plaintiff herein is as follows:  $28,643.12.

With regard to the claim against the defendant, Lex Kessler, this was unsupported by any evidence that he became a party to any agreement with Sebco or ever received any benefit thereunder.   Thus, judgment is entered in favor of Kessler and against Sebco together with an award of costs in favor of Kessler.

In regard to the claim of Sebco against ICA, judgment is entered in favor of Sebco and against ICA in the amount of $28,643.12.   The court finds that these claims were unliquidated and the court declines to award any prejudgment interest and awards postjudgment interest at the rate of 4 percent per annum.   The court further awards Sebco all costs with regard to the defendant ICA.

William J. Wenzel, Judge

FOOTNOTES

FN1. Sebco has not presented any evidence of an agreement by which interest would be charged on any principal balance due Sebco.   Also, there is no evidence that either party agreed to bear expenses for attorneys fees and there is no evidence as to what would be included within the charge of “foreclosure cost.”   Accordingly, the court determines that neither attorneys fees, nor interest, nor any other items of cost are recoverable as damages in this case..  FN1. Sebco has not presented any evidence of an agreement by which interest would be charged on any principal balance due Sebco.   Also, there is no evidence that either party agreed to bear expenses for attorneys fees and there is no evidence as to what would be included within the charge of “foreclosure cost.”   Accordingly, the court determines that neither attorneys fees, nor interest, nor any other items of cost are recoverable as damages in this case.

Wenzel, William J., J.