Hees v. Burke Construction Inc.
Hees v. Burke Construction Inc.
Opinion of the Court
Opinion
The principal issue in this appeal is whether a violation of the Home Improvement Act (act), General Statutes § 20-418 et seq., and specifically, Gen
The record reveals the following relevant facts and procedural history. The parties entered into a written home improvement contract on June 1, 2002, the terms of which provided that the defendant would provide various home improvement services and materials for $349,500. The original terms of the contract were changed periodically through the execution of thirty different change orders, which increased the price for the project by $42,354, to a total of $391,854. The terms of the contract required the plaintiffs to make monthly requisition payments for work already completed, the first nine of which the plaintiffs made in a timely fashion. The plaintiffs failed, however, to make the tenth requisition payment within thirty days, as required by the contract. By letter dated May 19,2003, the defendant advised the plaintiffs that it intended to terminate the contract, in accordance with its terms, if payment was not received within one week. Thereafter, the plaintiffs did not pay the defendant, which then terminated the contract on May 29, 2003. At the time of termination, the defendant had completed and billed the plaintiffs for $346,378 worth of work,
The plaintiffs thereafter brought this action, alleging that the defendant had breached the contract by failing
The court referred the case to the referee, who, after conducting a hearing, filed a report finding in favor of the plaintiffs with regard to both the breach of contract claim
On appeal, the defendant contends that the plaintiffs’ damages award should have been reduced by an amount equal to the unpaid balance remaining on the contract, because, under traditional contract damages law, the appropriate measure of damages in a construction contract case is the plaintiffs’ reasonable cost to complete or repair the work, less the unpaid balance on the contract. The defendant further contends that the trial court improperly accepted the referee’s conclusion that a violation of § 20-429 (a) serves to alter this well established principle of contract damages law. We agree with the defendant in both respects, and conclude, therefore, that the referee improperly failed to reduce the plaintiffs’ damages by the unpaid balance remaining on the contract.
We begin by determining the appropriate standard of review. “While the reports of [attorney trial referees] . . . are essentially of an advisory nature, it has not been the practice to disturb their findings when they are properly based upon evidence, in the absence of errors of law, and the parties have no right to demand that the court shall redetermine the fact[s] thus found. ...
“A reviewing authority may not substitute its findings for those of the trier of the facts. This principle applies no matter whether the reviewing authority is the Supreme Court . . . the Appellate Court ... or the
“Although it is true that when the trial court reviews the attorney trial referee’s report the trial court may not retry the case and pass on the credibility of the witnesses, the trial court must review the referee’s entire report to determine whether the recommendations contained in it are supported by findings of fact in the report. . . .
“Finally, we note that, because the attorney trial referee does not have the powers of a court and is simply a fact finder, [a]ny legal conclusions reached by an attorney trial referee have no conclusive effect. . . . The reviewing court is the effective arbiter of the law and the legal opinions of [an attorney trial referee], like those of the parties, though they may be helpful, carry no weight not justified by their soundness as viewed by the court that renders judgment. . . . Where legal conclusions are challenged, we must determine whether they are legally and logically correct and whether they find support in the facts found by the . . . referee.” (Citations omitted; internal quotation marks omitted.) Alliance Partners, Inc. v. Oxford Health Plans, Inc., 263 Conn. 191, 201-202, 819 A.2d 227 (2003).
I
We begin our analysis by briefly addressing the defendant’s first claim, namely, that the trial court improperly accepted the referee’s report because the referee failed to use an appropriate method to calculate the plaintiffs’ damages. “It is axiomatic that the sum of damages awarded as compensation in a breach of contract action
Thus, we agree with the defendant that the referee used an improper method to calculate the plaintiffs’ damages. The parties do not dispute the fact that, at the time of the breach, there remained an unpaid balance on the contract of $16,472. They also do not dispute the fact that, as a result of the breach, the plaintiffs incurred expenses to complete and repair the work in the amount of $16,085.17. Accordingly, in the absence of some legal justification for not doing so, the referee should have subtracted any unpaid amount remaining on the contract from the extra costs incurred by the plaintiffs, so as to avoid placing the plaintiffs in a better position than they would have been in had the contract been
II
We turn, then, to the principal issue in this appeal, namely, whether the trial court improperly accepted the referee’s legal conclusion that the defendant’s violation of § 20-429 (a) precluded a reduction in the plaintiffs’ damages by an amount equal to the unpaid balance on the contract. The defendant claims that there is nothing in the language of § 20-429 (a), or our cases interpreting it, that mandates an abandonment of the traditional approach to contract damages by allowing a homeowner to recover damages against a contractor when they have not, in fact, suffered any actual loss or injury. To hold otherwise, the defendant contends, would give the plaintiffs a windfall double recovery that the legislature did not intend when it passed the act. In response, the plaintiffs claim that § 20-429 (a) prohibits a contractor who has violated the act from using its own damages under the contract to offset the homeowner’s damages, since the contractor’s damages are,
Whether § 20-429 (a) precludes the defendant from reducing the plaintiffs’ damages in the present case “raises a question of statutory construction, which is a [question] of law, over which we exercise plenary review. . . . The process of statutory interpretation involves the determination of the meaning of the statutory language as applied to the facts of the case, including the question of whether the language does so apply. . . .
“When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature. ... In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply. ... In seeking to determine that meaning, General Statutes § l-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered. . . . The test to determine ambiguity is whether the statute, when read in context, is susceptible to more than one reasonable interpretation.” (Internal quotation marks omitted.) Slate v. Marsh & McLennan Cos., 286 Conn. 454, 464-65, 944 A.2d 315 (2008).
We begin our statutory analysis, then, with the language of § 20-429 (a). Section 20-429 (a) provides in
Accordingly, we now turn to an analysis of the relevant extratextual sources in order to determine the scope of § 20-429 (a). Although the legislative history of § 20-429 (a) is silent on this specific question, the history of the act, more broadly, indicates that § 20-429 (a) was intended to protect homeowners, rather than, to serve as a tool for them to enhance their own interests at the expense of contractors. Representative William P. Candelori, for example, remarked that “ [t]he purpose of the bill is to provide minimal, and I stress minimal, safeguards for the consumer who contracts for home improvement work to be done on or in the home.” 22 H.R. Proc., Pt. 33, 1979 Sess., p. 11,613. Similarly, Senator Audrey P. Beck indicated that the purpose of the bill was not only to “provide some safeguards for consumers who contract for home improvement work,” but also to benefit the majority of home improvement
Moreover, the only cases disclosed by our research in which § 20-429 (a) has been used offensively by a homeowner arise in the context of CUTPA claims, wherein that statute provides the basis for recovery, not § 20-429 (a) itself.
Furthermore, were we to agree with the plaintiffs’ position in this case, we would, in effect, award them an unwarranted windfall that the legislature could not have intended. The plaintiffs essentially claim that, not only does § 20-429 (a) relieve them of their obligation to pay the defendant for work already completed, but it also serves to punish the defendant by obligating it to reimburse the plaintiffs for any costs incurred to complete the contract, regardless of whether such costs are over and above the original contract price. Thus, according to the plaintiffs, if a contractor discovers that the contract violates § 20-429 (a) the day after it is entered into, and then immediately terminates the contract rather than risk doing work on a contract that it
The judgment is reversed and the case is remanded with direction to render judgment in favor of the defendant.
In this opinion ROGERS, C. J., and PALMER and ZARELLA, Js., concurred.
General Statutes § 20-429 (a) provides in relevant part: “No home improvement contract shall be valid or enforceable against an owner unless it: (1) Is in writing, (2) is signed by the owner and the contractor, (3) contains the entire agreement between the owner and the contractor, (4) contains the date of the transaction, (5) contains the name and address of the contractor and the contractor’s registration number, (6) contains a notice of the owner’s cancellation rights in accordance with the provisions of chapter 740, (7) contains a starting date and completion date, and (8) is entered into by a registered salesman or registered contractor. . .
The defendant appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-1.
In addition to accepting the referee’s finding in favor of the plaintiffs on their breach of contract claim, the trial court also accepted the referee’s recommendation against awarding the defendant any recovery on its three counterclaims. The defendant does not appeal from this portion of the trial court’s judgment, but, rather, focuses its appeal exclusively on the referee’s calculation of the plaintiffs’ damages.
In calculating the total of $346,378 for work completed and billed, the referee included costs contained in the eleventh requisition payment, which the defendant had submitted to the plaintiffs by letter dated May 15, 2003, as well as $4650 for work completed after the submission of the eleventh requisition payment up to the date of termination.
Subsequent to its termination of the contract, the defendant filed a mechanic’s lien against the plaintiffs’ property to secure the unpaid balance.
Finding in favor of the plaintiffs on their breach of contract claim, the referee concluded that the “[p]laintiffs were ready, willing and able to pay requisition [ten] to [the] defendant conditioned, only on the completion of the customary type of discussions,” and that “[t]he failure to complete the discussion in reference to requisition [ten] was caused by the failure or refusal of the defendant and not by the adions of the plaintiffs.”
The referee did not elaborate on his conclusion that § 20-429 (a) precluded the defendant from reducing the plaintiffs’ damages, simply stating that “[b]ecause of [the] defendant’s CUTPA violations [the] defendant is not entitled to any of its claim for damages nor is it entitled to offset any of its damage claims against [the] plaintiffs’ damages.” We note that the referee’s reference to CUTPA is somewhat confusing. In his report, for example, the referee correctly recognized that a violation of the act is a per se violation of CUTPA. The referee then went on, however, to note that the plaintiffs did not assert any claim under CUTPA, and had properly based their defense of the defendant’s counterclaims on the defendant’s violation of the act,
Indeed, it appears that the plaintiffs have, as a result of the defendant’s breach and the inability of the defendant to prevail on its counterclaims; see part II of this opinion; incurred a savings of far more than $386.83. The unpaid balance remaining on the contract pertains only to the amount unpaid for work already performed. Had there been no breach at all, therefore, the plaintiffs likely would have been liable for both the $16,472 owed to the defendant for work already performed, as well as the amount that the defendant would have billed them for the uncompleted work, which was subsequently completed by another contractor.
It appeal's that the plaintiffs and the referee both miss this important distinction in the purpose for which the defendant attempts to use the contract. The referee, for example, found that “[b]ecause of [the] defendant’s CUTPA violations [the] defendant is not entitled to any of its claim for damages nor is it entitled to offset any of its damage claims against [the]
Indeed, § 20-429 (a) cases arise almost exclusively within one of just two different contexts: (1) those in which the homeowner asserts an affirmative CUTPA claim against the contractor; see, e.g., MJM Landscaping, Inc. v. Lorant, 268 Conn. 429, 434-35, 845 A.2d 382 (2004); Meadows v. Higgins, 249 Conn. 155, 159, 733 A.2d 172 (1999); Wright Bros. Builders, Inc. v. Dowling, supra, 247 Conn. 224 n.5; Habetz v. Condon, 224 Conn. 231, 234, 618 A.2d 501 (1992); A. Secondino & Son, Inc. v. LoRicco, 215 Conn. 336, 339, 576 A.2d 464 (1990); or (2) those in which the homeowner uses it as a shield to prevent the contractor from affirmatively asserting its own claims. See, e.g., D’Angelo Development & Construction Co. v. Cordovano, 278 Conn. 237, 240-41, 897 A.2d 81 (2006); MJM Landscaping, Inc. v. Lorant, supra, 434-35; Meadows v. Higgins, supra, 159; Wright Bros. Builders, Inc. v. Dowling, supra, 220; Rizzo Pool Co. v. Del Grosso, 232 Conn. 666, 671, 657 A.2d 1087 (1995); Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 244, 618 A.2d 506 (1992); Habetz v. Condon, supra, 234; Sidney v. DeVries, 215 Conn. 350, 352-53, 575 A.2d 228 (1990); Liljedahl Bros., Inc. v. Grigsby, 215 Conn. 345, 346, 576 A.2d 149 (1990); A. Secondino & Son, Inc. v. LoRicco, supra, 339; Barrett Builders v. Miller, 215 Conn. 316, 319, 576 A.2d 455 (1990); Caulkins v. Petrillo, supra, 200 Conn. 715. The use of § 20-429 (a) claimed by the plaintiffs in the present case does not fall into either category, since the plaintiffs have not asserted a CUTPA claim, and the plaintiffs, rather than the defendant, are the party suing.
General Statutes § 20-427 (c) provides in relevant part: “A violation of any of the provisions of this chapter shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b.”
General Statutes § 42-110b (a) provides: “No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”
Although it is not controlling, Argentinis v. Gould, supra, 219 Conn. 151, relied on by the defendant, is also instructive. In Argentinis, the plaintiff homeowner brought an action against the defendant contractor for breach of contract, on the ground that the defendant had not substantially performed the contract. Id., 154. The defendant thereafter filed a separate action to foreclose its mortgage on the plaintiffs property. Id. The attorney trial referee found in favor of the plaintiff in both actions, determining that the defendant was legally precluded from recovering in its foreclosure action because of its failure substantially to perform the contract, and that the plaintiffs own damages should not be reduced by the amount of the outstanding mortgage. Id., 154-55. On appeal, we concluded that the defendant’s legal inability affirmatively to recover on its own claim did not, without more, alter the basic principle that a plaintiff in a breach of contract case may not recover damages in excess of the sum necessary to compensate him for his actual loss. Id., 157-59. Because the plaintiff in Argentinis would have had 1o bear the cost of the mortgage had there been no breach, we concluded that the referee improperly failed to reduce the damages award accordingly. Id., 158-59. Thus, although the legal basis for not reducing the damages award in Argentinis was the defendant’s lack of substantial performance, and not § 20-429 (a), our holding in Argentinis supports our conclusion that the plaintiffs in the present case must do more than simply demonstrate the defendant’s legal inability to enforce the contract. Rather, they must show that § 20-429 (a) was intended to alter traditional principles of contract damages, by allowing the plaintiffs to recover an amount in excess of their actual loss.
The plaintiffs claim that the defendant’s reading of § 20-429 (a) will eliminate any incentive on the part of contractors ever to continue doing work on a contract once it is discovered that the contract violates § 20-429 (a), because a contractor will not risk doing more work on a contract that it cannot enforce. According to the plaintiffs, this will result in added costs and delays to homeowners that were unintended by the act. The plaintiffs’ argument is without merit, however, because the contractor remains liable for any damages that may result from the breach under traditional principles of contract damages.
Indeed, the legislature’s enactment of § 20-429 (f), which provides that “[n]othing in this section shall preclude a contractor who has complied with subdivisions (1), (2), (6), (7) and (8) of subsection (a) of this section from the recovery of payment for work performed based on the reasonable value of services which were requested by the owner, provided the court determines that it would be inequitable to deny such recovery,” indicates that, although it was intended to protect homeowners, § 20-429 (a) was not even intended to result in inequitable windfalls in all cases brought by the contractor, let alone those cases brought by the homeowner. See Economos v. Liljedahl Bros., Inc., 279 Conn. 300, 310-11, 901 A.2d 1198 (2006); New England Custom Concrete, LLC v. Carbone, 102 Conn. App. 652, 659, 927 A.2d 323 (2007); see also 36 S. Proc., Pt. 10, 1993 Sess., p. 3451, remarks of Senator Thomas F. Upson (“As you know, there was a Supreme Court decision [Barrett Builders v. Millei-, 215 Conn. 316, 576 A.2d 455 (1990)]
Concurring Opinion
concurring. I agree that the plaintiff homeowners, Gerald Hees and Beatrice Hees, are not entitled to recover damages for their costs to complete and repair the work performed by the defendant, Burke Construction, Inc. I disagree, however, with the decision to reverse the judgment on the basis of an interpretation of the Home Improvement Act (act), General Statutes § 20-418 et seq. I would reach the same result by a more direct route that does not involve any statutory interpretation of General Statutes § 20-429 (a), which provides in relevant part that “[n]o home improvement
Central to my approach is a precise recognition of the parties’ claims and the application of § 20-429 (a) by the attorney trial referee, David Albert (referee). As the majority opinion indicates, the plaintiffs brought a breach of contract action, thereby treating the contract as valid and enforceable against the defendant. In recommending judgment for the plaintiffs on their breach of contract claim, the referee, whose report was accepted by the trial court, recognized the viability of the contract for this purpose, and repeatedly cited the contract in his various findings. In short, the contract was valid and enforceable with respect to the plaintiffs’ breach of contract claim.
The defendant, in addition to contesting the plaintiffs’ breach of contract claim, also filed various counterclaims. In response, the plaintiffs filed a motion for summary judgment, claiming that § 20-429 (a) barred the defendant’s counterclaims. The referee agreed that § 20-429 (a) barred the counterclaims and recommended summary judgment in favor of the plaintiffs.
The plaintiffs, in other words, simultaneously claimed that the contract was enforceable to support their breach of contract claim but unenforceable, pursuant to § 20-429 (a), with respect to the contractor’s counterclaims. This is a valid dual argument. See New England
The problem in this case arose when, in calculating the plaintiffs’ damages, the referee conflated the application of § 20-429 (a) to the defendant’s counterclaims with the application of § 20-429 (a) to the plaintiffs’ burden of proof as to damages on the breach of contract claim. In short, the referee took the concept that the contractor could not prevail on his counterclaims and applied it to the calculation of the plaintiffs’ damages. The referee stated: “Because of [the] defendant’s . . . [statutory] violations
I agree with the majority that “§ 20-429 (a) does not preclude the damages award from being reduced by an amount equal to the unpaid balance remaining on the contract.” I reach that conclusion, however, on the ground that § 20-429 is inapplicable to the present case, rather than by relying on an analysis of the statute’s legislative history.
Simply put, the road to calculating the plaintiffs’ damages never detours with a stop at § 20-429 (a). In the present case, calculating the plaintiffs’ damages necessarily requires reference to the applicable contract. With respect to proving damages, our case law requires reference to the contract on which the breach is based. “For a breach of a construction contract involving
Under the facts of the present case, the appropriate calculation of compensatory damages, with reference to the contract, would be as follows: The contract price of $349,500, after various change orders, totaled $391,854. The defendant charged the plaintiffs $347,003
In short, this case presents nothing more than an ordinary breach of contract claim that requires the
The majority opinion, at the outset, seems to agree with the proposition that § 20-429 (a) does not apply in calculating the plaintiffs’ damages. In analyzing various cases that were based on violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., the majority concludes that “if § 20-429 (a) does not affect the damages calculation in actions brought under CUTPA, we do not see why it should alter such a calculation in an action for breach of contract.”
Significantly, in order to reach the conclusion that § 20-429 (a) does not affect the damages calculation in an action brought under CUTPA, the majority does not rely on any statutory interpretation. Under CUTPA, a plaintiff must first “establish that the conduct at issue constitutes an unfair or deceptive trade practice. Second, [a plaintiff] must present evidence providing a basis for a court to make a reasonable estimate of the damages that they have suffered. . . . There is no automatic entitlement to damages.” (Citation omitted; emphasis added.) New England Custom Concrete, LLC v. Carbone, supra, 102 Conn. App. 666. By analogy, the evidence in the present case, if raised under CUTPA, would be the contract price and related payments, paid
Moreover, § 20-429 (a) would be relevant to calculating damages only if our case law took account of a defendant’s legal entitlement to collect an unpaid balance. As the majority observes, however, a court, in calculating a plaintiff’s damages, need not consider whether a defendant legally would be entitled to recover an unpaid balance in a cause of action brought by the defendant.
The majority’s analysis with respect to the CUTPA cases, and the insignificance of a defendant’s legal authority to collect an unpaid sum, makes the majority’s foray into statutory inteipretation all the more unnecessary. In my view, the majority’s analysis goes astray when it asks whether “the legislature intended § 20-429 (a) to prohibit a contractor from in any way using the contract against the interests of the homeowner, even in the procedural context of an action brought by the homeowner against the contractor.” It is no wonder, given the potential breadth of that query, that the majority concludes that the statute is ambiguous.
The question actually presented by the facts of this case is far narrower. The more appropriate question to be asked is whether § 20-429 (a) abrogates the usual method of calculating damages when a homeowner has brought a successful breach of contract claim. I conclude that it does not. The effect of § 20-429 (a) is
Accordingly, because I conclude that the referee properly considered the contract to be valid for purposes of the plaintiffs’ complaint, I see no obstacle to relying on the contract to assess damages, as the case law requires. Doing so does not run afoul of the act in any respect. This approach would avoid interpreting the act in a way that, to my mind, relies on concepts, such as affirmative uses of the statute as opposed, presumably, to nonaffirmative uses of the statute, that do not appear in the statute and are likely to prove troublesome in the future. It is also unnecessary to
For the foregoing reasons, I respectfully concur in the judgment reached by the majority.
The referee stated “CUTPA violations”; see Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.; but it is clear that the referee was referring to § 20-429 (a) and not to CUTPA violations, because, as the maj ority opinion notes, the plaintiffs did not raise any CUTPA claims. See footnote 7 of the majority opinion.
The referee did not make any findings with respect to the value of the home in its unfinished and finished state. Accordingly, the proper calculation of damages consists of the reasonable cost of completion in accordance with the contract.
The $347,003 owed by the plaintiffs consisted of $346,378 that had been billed by the defendant and $625 that had not been billed.
To illustrate this point, it is clear that if the defendant had never raised any of his counterclaims, and thus had never given the plaintiffs cause to invoke § 20-429 (a), the calculation of damages on the plaintiffs’ breach of contract claim would have proceeded in the same fashion as I have outlined today. That is, if the defendant had been silent during the trial and had left the plaintiffs to their proof, the plaintiffs still would not have been entitled to damages under our case law. In that posture, it could not reasonably be said that the contract was being used “against” the plaintiffs because the plaintiffs would need to rely on the contract to attempt to prove their damages.
The plaintiffs have not cited any authority that suggests that a court should take into account a defendant’s legal ability to collect an unpaid balance when the court calculates a plaintiffs damages.
Again, it is a fine line to walk, but the contract was invalid and unenforceable with respect to the defendant’s counterclaims only; it was valid and enforceable with respect to the plaintiffs’ breach of contract claim. As noted previously in this concurring opinion, this is a permissible dual view of the contract. New England Custom Concrete, LLC v. Carbone, supra, 102 Conn. App. 666.
Although we consider the failure to comply with the act, which includes § 20-429 (a), to be a per se violation of CUTPA; Woronecki v. Trappe, 228 Conn. 674, 579, 637 A.2d 783 (1994); we still require a plaintiff to prove damages. A. Secondino & Son, Inc. v. LoRicco, 215 Conn. 336, 343-44, 576 A.2d 464 (1990). Nothing within those cases suggests that the act should also be considered in calculating a plaintiff s damages.
Reference
- Full Case Name
- Gerald Hees Et Al. v. Burke Construction, Inc.
- Cited By
- 33 cases
- Status
- Published