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OLD COLONY CONSTRUCTION, LLC v. TOWN

OF SOUTHINGTON

(SC 19346)

Palmer, Eveleigh, McDonald, Robinson and Prescott, Js.

Argued December 10, 2014—officially released April 21, 2015

Jared Cohane, with whom were Peter J. Martin and

Luke R. Conrad, and, on the brief, Timothy T. Corey,

for the appellant (plaintiff).

Linda L. Morkan, with whom were Dennis C. Cavanaugh, and, on the brief, Ryan M. Burns, for the appellee (defendant).

Wendy Kennedy Venoit and Peter J. Zarella filed

a brief for the Connecticut Associated Builders and

Contractors, Inc., as amicus curiae.
Opinion

McDONALD, J. This appeal principally concerns a

municipality’s ability to recover liquidated damages for

a contractor’s failure to timely complete a public works

contract if the municipality has elected to terminate

the contract for convenience1 or has contributed to

some portion of the delay. The plaintiff, Old Colony

Construction, LLC (Old Colony), appeals from the judgment of the trial court awarding the defendant, the

town of Southington (town), liquidated damages on its

counterclaim and permitting the set off of those damages against the damages awarded to Old Colony for

the town’s failure to pay sums due under the contract’s

termination for convenience provision. Old Colony contends that the town is barred from collecting liquidated

damages because: (1) termination for convenience precludes any default based remedies available fortermination for cause, including liquidated damages; and (2)the

town’s contribution to the delay rendered the liquidated

damages provision unenforceable under Hartford Electric Applicators of Thermalux, Inc. v. Alden, 169 Conn.

177, 184, 363 A.2d 135 (1975). Old Colony further contends that, in light of change orders approved by the

town acknowledging Old Colony’s entitlement to additional time for certain delays, it is entitled to an equitable adjustment in the contract. The trial court rejected

these claims in light of a reservation of the town’s rights

and remedies in the termination for convenience provision and contractual mechanisms for obtaining extensions of time for delays beyond Old Colony’s control,

with which Old Colony had failed to strictly comply.

We affirm the trial court’s judgment.

The record reveals the following summary of the

underlying facts, as found by the trial court or as

reflected in the express terms of the parties’ contract.

In early 2004, the town sought bids on a construction

project known as the Pond View Drive Pump Station

Replacement. The project required the demolition of

an existing sewer pump station and the construction

of a wet well, a pumping station, and an above grade

garage. The town received eleven bids on the project,

ranging from $912,500 to $1,665,000. By letter dated

February 24, 2004, the town awarded the contract to

Old Colony for $912,500. Included in the contract documents was a document entitled ‘‘Standard General Conditions of the Construction Contract’’ (general

conditions), which included, inter alia, provisions concerning the contractor’s responsibilities, execution of

change orders, and suspension of work and termination.

In executing the contract, Old Colony attested that it

had examined the work site to ascertain any conditions

that could affect performance and had undertaken any

supplemental examination or testing necessary to meet

the contract’s terms and conditions.

Under the express terms of the contract, time was
of the essence. The effective date of the contract was

April 22, 2004. Substantial completion of the contract

was due by January 17, 2005. The contract authorized

liquidated damages in the amount of $400 for each day

that substantial completion exceeded that date. The

contract also provided mechanisms for Old Colony to

seek extensions of time and increases in the contract

price for delays beyond its control. Such extensions of

time could be made only by way of change orders or

amendments to the contract, but, unless the parties had

agreed to the adjustment, Old Colony was required to

file written notice of a claim to the project engineer—

the town engineering department—within a specific

period and with supporting documentation to obtain

the adjustment.

From the outset, the project was plagued with delays.

Part of the delay stemmed from Old Colony’s misunderstanding as to when the contract time commenced. Old

Colony’s first written submittals were more than three

months late. Over the course of the project, the project

engineer repeatedly brought to Old Colony’s attention

the provisions pertaining to contract times, liquidated

damages, and the extension of the construction period

under specific conditions. In a letter dated November

16, 2004, in response to Old Colony’s complaint that

the town had delayed responding to certain submittals

and providing certain materials, the town agreed as a

compromise to extend the substantial completion date

to June 14, 2005. The letter advised: ‘‘[A]ny delay beyond

June 14, 2005 will be assessed liquidated damages at

$400 per day.’’ Following a May 16, 2005 meeting, the

project engineer reiterated this position, advising by

letter that ‘‘[o]nly the [t]own [c]ouncil can waive or

reduce liquidated damages and only at [the] completion

of the project.’’

After the substantial completion date was extended

to June 14, 2005, several other problems arose that

impacted the schedule. For example, Old Colony discovered that contract construction documents did not

correctly reflect the location of underground electrical

lines and the elevation of the force main for the sewer

lines. Old Colony also discovered a caisson for the old

pump station in the excavation site that had to be

removed, which the town agreed was an unforeseen

condition. In each of these instances, the project engineer signed off on change orders drafted by Old Colony

to address certain costs arising from these circumstances, which, in describing the change, noted that the

impact to the schedule had not been determined and

that additional time would be incorporated into the

schedule. When the town, however, rejected as unnecessary Old Colony’s new proposal for a temporary

bypass system in lieu of a previously accepted proposal,

it advised Old Colony by letter that it was not agreeing

to any substantial change in the original contract as to

time or costs. The letter also reiterated the applicability
of the liquidated damages clause and the town’s reservation of right to assess such damages.

On more than one occasion during this process, the

town initiated steps to terminate the contract for cause,

but on each occasion agreed to continue the project

after meeting with Old Colony. Ultimately, however,

after disagreements and further delays relating to the

dewatering process, the town notified Old Colony by

way of a letter dated August 14, 2007, of the town’s

election to terminate the contract on the basis of convenience under paragraph 15.03 of the general conditions

of the contract. Shortly thereafter, Old Colony submitted payment application 15 in the amount of $86,765.64.

Old Colony previously had been paid a total of

$650,220.74 pursuant to payment applications 1 through

14. In further communications in September and October, 2007, the town acknowledged receipt of payment

application 15 and its obligation to pay Old Colony for

expenses, claims, and completed work on the project

but requested a complete accounting of costs to settle payment.

On January 16, 2009, Old Colony submitted payment

application 15R seeking $1,352,405.89 in unpaid costs,

or, in the alternative, a request for an equitable adjustment in the contract price in the amount of $951,245.43,

based primarily on delay related costs. After the town

rejected the payment requests, Old Colony submitted

a claim to the project engineer, as required under the

contract. That claim effectively was denied after the

project engineer failed to issue a written decision on

the merits within thirty days after the claim submission.

In July, 2009, Old Colony commenced the present

breach of contract action.2 The town asserted a special

defense claiming that Old Colony had not satisfied the

conditions precedent to recovery, including proper,

timely notice of its claims. The town also requested a

setoff for a counterclaim seeking liquidated damages

for breach of contract.3

In response, Old Colony filed

a motion for summary judgment, contending that the

counterclaim was barred as a matter of law by virtue

of the town’s election to terminate the contract for

convenience, not for cause.

The trial court, Young, J., denied Old Colony’s motion

for summary judgment. The court framed the issue as

‘‘whether the town’s election to terminate the contract

pursuant to [paragraph] 15.03 of the general conditions

of the contract absolved Old Colony of any further

obligation for prior alleged default or liquidated damages, which could have been asserted if the contract

was terminated for cause.’’ In answering that question

in the negative, the court cited language in paragraph

15.03 reserving to the town other rights and remedies.

Following a bench trial, the trial court, Hon. Lois

Tanzer, judge trial referee, rendered judgment in favor
of Old Colony on its breach of contract claim and in

favor of the town on its liquidated damages counterclaim. With respect to Old Colony’s claim, there was

no real dispute as to whether Old Colony had a right

to recover for sums due under the termination for convenience provision, but rather as to the amount due

thereunder. That provision distinguishes between payment for completed work, payment for expenses for

uncompleted work, and payment for expenses sustained in connection with termination. The court concluded that Old Colony was due a total of $164,440.64:

$86,765.64 for completed work set forth in payment

application 15; $45,000 in expenses forincomplete work

related to the dewatering plan; and $32,675 in expenses

directly attributable to termination for materials that

the town had required Old Colony to leave on the site

posttermination.

Having resolved the issue of damages due under the

termination for convenience provision, the court considered Old Colony’s claim for an equitable adjustment

in the contract price due to project delays. The court

agreed with the town that no such adjustment could

be afforded in light of Old Colony’s failure to comply

with the strict contractual notice preconditions for

obtaining adjustments for delays. The court rejected

Old Colony’s position that the notice requirements had

been satisfied by letters accompanying some ofits applications for payment indicating that the requests therein

were not inclusive of all costs or work completed to

date, that the project had been impacted by circumstances beyond Old Colony’s control, and that, as a

result, additional time and efforts would be required to

complete the project. The court also disagreed with Old

Colony’s position that the town’s approval of the change

orders was persuasive evidence that the parties had

agreed to modify the contract to dispense with contractual requirements for changes in time, cost, or notice

of the details of delay claims. The court concluded: ‘‘In

sum, [Old Colony] is not entitled to recover payment for

its claimed delay expenses because [paragraph] 15.03

[Termination for Convenience] of the [c]ontract does

not authorize such payment, because [Old Colony] did

not comply with the notice provisions of the contract

for delay claims and changes in [c]ontract price and

time, and because there is no equitable basis such as bad

faith or contract modification to invoke such a claim.’’

The court next turned to the town’s counterclaim for

liquidated damages and a setoff. The town sought $400

per day for 789 days of delay between June 14, 2005,

the revised substantial completion date, and August 14,

2007, the termination for convenience date. As there

was express contractual language providing for such

damages, the court considered in turn, but ultimately

rejected, each of Old Colony’s special defenses as to

why such relief was legally unavailable. The court first

concluded that the argument that this relief was pre-
cluded by the town’s election to terminate for convenience had been rejected in the prior decision by Judge

Young denying Old Colony’s motion for summary judgment, noting that Old Colony had not provided the court

with any basis to rule contrary to that decision. The

court next rejected Old Colony’s reliance on Hartford

Electric Applicators of Thermalux, Inc. v. Alden, supra,

169 Conn. 184, for the proposition that the liquidated

damages provision had been abrogated because the

town had caused or contributed to some of the delays.

The court reasoned that the New York case on which

Alden had relied forthis generalrule acknowledged that

abrogation would not apply if the contract contained

a mechanism to reset the date from which liquidated

damages would run if the delay was not caused by the

contractor. See Mosler Safe Co. v. Maiden Lane Safe

Deposit Co., 199 N.Y. 479, 486–87, 93 N.E. 81 (1910).

The liquidated damages provision in the present case

provided such mechanisms, but Old Colony had not

followed the procedures required by the contract, and

the town had not granted extensions beyond June 14,

2005. As such, the court concluded that Old Colony

should not be permitted to avoid liquidated damages

without strict compliance with the delay provisions.

Finally, the court rejected Old Colony’s defenses that

the town had waived, or was estopped from asserting,

a claim for liquidated damages by virtue of the change

orders acknowledging that additional time would be

warranted. The court concluded that the town’s conduct may have been an acknowledgment of Old Colony’s right to seek additional compensation but did not

express the town’s intention to waive the town’s right

to liquidated damages for delay or dispense with Old

Colony’s obligations to comply with procedures for

delay claims.

Ultimately, the court concluded that the town was

entitled to $315,000 in liquidated damages on its counterclaim. The court granted the town’s request to set

off the $164,440.64 in damages it owed Old Colony for

terminating the contract for convenience, and rendered

judgment in favor of the town in the amount of

$150,559.36. This appeal followed.4

I

We begin with Old Colony’s claims in support of its

contention that the town is not entitled to liquidated

damages.

A

Old Colony first claims that default based remedies,

including liquidated damages, are not available if a property owner elects to terminate a construction contract

for convenience, or ‘‘without cause.’’ Old Colony contends that, because a property owner terminating a

contract for convenience avoids liability for the other

party’s expectation damages as well as the risks atten-
dant to proving a proper termination for cause, the

consideration supporting that unilateral right is the loss

of default based remedies available for termination for

cause. We conclude that, irrespective of the merits of

Old Colony’s position as an abstract proposition, the

present case is governed by the express terms of the

parties’ contract, under which the town may recover

liquidated damages.

It is well settled that, ‘‘[w]hen construing a contract,

we seek to determine the intent of the parties from the

language used interpreted in the light of the situation

of the parties and the circumstances connected with

the transaction. . . . [T]he intent of the parties is to

be ascertained by a fair and reasonable construction

of the written words and . . . the language used must

be accorded its common, natural, and ordinary meaning

and usage where it can be sensibly applied to the subject

matter of the contract. . . . When the language of a

contract is ambiguous, the determination of the parties’

intent is a question of fact. . . . When the language is

clear and unambiguous, however, the contract must be

given effect according to its terms, and the determination of the parties’ intent is a question of law.’’(Citations

omitted; emphasis omitted; internal quotation marks

omitted.) Isham v. Isham, 292 Conn. 170, 180–81, 972

A.2d 228 (2009). Old Colony concedes that this issue

is a question of law to be resolved by resort to the

contract terms.

Article 3 of the parties’ contract addresses ‘‘Contract

Times.’’ Paragraph 3.1 sets forth the period by which

substantial completion of the project is due. Paragraph

3.2, entitled ‘‘Liquidated Damages,’’ provides in relevant

part: ‘‘[The town] and [Old Colony] recognize that time

is of the essence of this [a]greement and that [the town]

will suffer financial loss if the [w]ork is not completed

within the times specified in paragraph 3.1 . . . plus

any extensions [of time] thereof allowed in accordance

with [a]rticle 12 of the [g]eneral [c]onditions. They also

recognize the delays, expense, and difficulties involved

in proving the actual loss suffered by [the town] if the

[w]ork is not completed on time. Accordingly, instead

ofrequiring any such proof, [the town] and [Old Colony]

agree that as liquidated damages for delay (but not as

a penalty) [Old Colony] shall pay [the town $400] for

each day that expires after the time specified in paragraph 3.1 for [s]ubstantial [c]ompletion until the [w]ork

is substantially complete. . . .’’

Article 15 of the general conditions of the contract

addresses ‘‘Suspension of Work and Termination.’’

Paragraph 15.02 provides for termination for cause, setting forth the events that constitute such cause and the

town’s right to recover from Old Colony should the

town’s damages and costs for completing the project

exceed the unpaid balance of the contract price. Paragraph 15.03 provides for termination for convenience,
providing in relevant part: ‘‘Upon seven days written

notice to [Old Colony] and [the project engineer], [the

town] may, without cause and without prejudice to

any other right or remedy of [the town], elect to terminate the [c]ontract. . . .’’ (Emphasis added.) This paragraph then prescribes Old Colony’s right to be paid for:

(1) completed, acceptable work, including reasonable

sums for overhead and profit on such work; (2)

expenses sustained prior to the effective date of termination in connection with uncompleted work, including

reasonable sums for overhead and profit on such

expenses; (3) losses incurred in settlement of terminated contracts with subcontractors, suppliers, and others; and (4) reasonable expenses directly attributable

to termination.

We begin with the observation that the reservation

of ‘‘any other right or remedy’’ appears exceedingly

broad. (Emphasis added.) Had the parties intended to

limit the town to nondefault remedies, as Old Colony

suggests,5 one would expect some sort of limiting language rather than such expansive terms. Cf. Litton

Industries Credit Corp. v. Catanuto, 175 Conn. 69, 70–

71, 394 A.2d 191 (1978) (agreement providing that, in

event of default, lessor shall have right to exercise ‘‘ ‘any

one or more of the following remedies’ ’’ but then providing that ‘‘ ‘[t]he remedies provided under [B] and [C]

may be exercised only in the alternative’ ’’). When a

contract expressly preserves remedies following termination, such a reservation must be given full effect

absent evidence of a more limited intent. See Armour &

Co. v. Nard, 463 F.2d 8, 10 (8th Cir. 1972) (rejecting

contractor’s argument that owner was barred from

seeking damages for delay after exercising right to terminate ‘‘without cause’’ in light of contractual provision

stating that‘‘ ‘failure by [the owner] to exercise any right

under the [c]ontract [d]ocuments shall not constitute a

waiver of that or any other right or subsequent right

hereunder’ ’’);6 EPC Corp. v. Travelers Casualty &

Surety Co. of America, 423 F. Supp. 2d 1016, 1026 (D.

Ariz. 2006) (concluding that court must give effect both

to termination for convenience clause providing for

payment of subcontractor for work actually performed

in amount proportionate to sum payable under

agreement and to provision allowing contractor to offset any sums due subcontractor by amount of any

‘‘backcharges’’ for defective work, absent evidence that

parties intended provisions to have meaning other than

what is contained in contract itself).

In the absence of any express limitation on the reservation of rights in the termination for convenience

clause, we consider whether any limitation is implied

by other provisions in the contract. See, e.g., Plainfield

v. Paden Engineering Co., 943 N.E.2d 904, 913 (Ind.

App. 2011) (termination-on-certificate clause providing

that termination procedure therein prescribed is ‘‘without prejudice to any other rights or remedies of the
[o]wner’’ preserves owner’s common-law rights to

extent that exercise of those rights is not in conflict

with duties specified in contract). The only potential

limitation on the termination for convenience provision

that may be gleaned is one yielded by a comparison to

the provision setting forth a reservation of rights when

terminating for cause. That provision, paragraph 15.02

(C) of the general conditions, provides in relevant part

that ‘‘termination [for cause] will not affect any rights

or remedies of [the town] against [Old Colony] then

existing or which may thereafter accrue. . . .’’ The

absence of similar temporal language in the termination

for convenience provision arguably could imply that

rights and remedies cannot accrue after termination.

Cf. Armour & Co. v. Nard, supra, 463 F.2d 11 (‘‘generally, the exercise of a power of termination will have

prospective operation only; discharging both parties

from their contractual duty to perform promises that

are still wholly executory, but not discharging liability

for breaches that have already occurred’’). Even if we

were to assume, however, that such a limitation exists

following a termination for convenience, the town’s

claim for liquidated damages in the present case would

not be impaired because its right to such damages arose

as soon as the substantial completion date passed and

continued to accrue until termination of the contract.

The case law on which Old Colony relies for the

proposition that all default based remedies are unavailable if an owner terminates for convenience, neither

stands for such a sweeping proposition noris applicable

under the facts of the present case. None of the cases

involved a liquidated damages provision. Only one of

the cases involved a similar reservation of rights and

remedies in the termination for convenience provision

itself. See Shelter Products, Inc. v. Steelwood Construction, Inc., 257 Or. App. 382, 385, 307 P.3d 449 (2013)

(citing clause providing that ‘‘ ‘[t]he [c]ontractor may,

upon seven . . . days written notice to the [s]ubcontractor, without cause and without prejudice to any

other right or remedy, terminate this [s]ubcontract, in

whole or in part, for its convenience’ ’’). In that case,

the court recognized the significance of this reservation

and limited its holding to the particular circumstances

of the case. See id., 399 (‘‘we agree with the trial court

that . . . the text of the termination for convenience

clause, in context, does not under the circumstances

of this case permit [the contractor] to both terminate

[the subcontractor] without cause and subsequently

proceed against [the subcontractor] as if it had terminated the agreement for cause’’ [emphasis added]). The

contractorin Shelter Products,Inc. had sought damages

for curing a subcontractor’s defective work after it had

terminated the subcontract for convenience. In

rejecting that claim, the court emphasized the fact that,

had the subcontractor been terminated for cause, the

contractor would have been required to provide the
subcontractor with notice and an opportunity to cure

the defective work. See id., 400 (noting no ‘‘generally

applicable legal rule or provision of the contract that

. . . would permit [the contractor] to both terminate

without cause, fail to provide an opportunity to cure,

and, at the same time, proceed against [the subcontractor] as if it had terminated the agreement for cause and

given an opportunity to cure’’); id., 402 (‘‘at least in the

absence of an opportunity to correct allegedly defective

work . . . where a party has terminated a contract for

convenience, that party may not then counterclaim for

the cost of curing any alleged default’’). Indeed, all of

the cases relied on by Old Colony share this general

concern about a party seeking to recover the costs of

curing defective or incomplete work after terminating

for convenience,7 a matter on which the law is not fully

settled. See TRG Construction, Inc. v. Water & Sewer

Authority, 70 A.3d 1164, 1168 (D.C. 2013) (‘‘[w]e recognize that the Federal Circuit, in [Lisbon Contractors,

Inc. v. United States, 828 F.2d 759, 769 (Fed. Cir. 1987)],

specifically refused to rule on the question of whether

the government may deduct the cost of replacing defective work from a termination for convenience

recovery’’).

In the present case, the town’s pursuit of liquidated

damages does not deprive Old Colony of any rights that

it would have been afforded had it been terminated for

cause. Similarly, it does not expose Old Colony to the

costs of completing the project, as would be the case

had it been terminated for cause. We disagree, therefore, with Old Colony that permitting liquidated damages in the present case renders the distinction between

terminating for convenience and for cause illusory.

Accordingly, we conclude that the trial court properly

determined that, in light of the express terms of the

parties’ contract, the town’s election to terminate the

contract for convenience did not preclude it from recovering liquidated damages.8

B

We next turn to the question of whether, in light

of findings by the trial court indicating that certain

misinformation by the town had contributed to some

of the delay, the liquidated damages clause was unenforceable as a matter of law under Hartford Electric

Applicators of Thermalux, Inc. v. Alden, supra, 169

Conn. 177. In Alden, this court stated: ‘‘The majority of

jurisdictions in this country hold that where there are

delays attributable to both parties, as in the present

case, the liquidated damages clause based upon the

contract date is entirely abrogated; the contract is to

be performed within a reasonable time. . . . In a leading case, Mosler Safe Co. v. Maiden Lane Safe Deposit

Co., [supra, 199 N.Y. 486], the court explained . . .

‘While such an agreement has not the harshness of a

penalty, it is, nevertheless, in its nature, such that its
enforcement, where the party claiming the right to

enforce has, in part, been the cause of delay, would be

unjust. It is a reasonable view of the situation that

denies, in such a case, the right to strict enforcement

and, where both parties are at fault with respect to the

delay, remits the injured party to the remedy of an

action at law; in which he can recover his actual loss

from the contractor’s failure to complete within what

was a reasonable time.’ Thus, the party injured by the

delay ‘must be content to recover such damages as it

is able to prove were actually suffered.’ ’’ (Citations

omitted.) Hartford Electric Applicators of Thermalux,

Inc. v. Alden, supra, 184–85.

In the case on which Alden relied, however, the New

York court had acknowledged that the parties could by

contract avoid abrogation: ‘‘It was competent for the

parties, anticipating mutations of mind and of conditions, to have provided against a forfeiture of the right

to liquidated damages by, further, agreeing that the

architect was empowered to certify an extension of the

time for completion, if the contractor was delayed in his

work in certain specified events, or by causes specified.

With such a provision, the obligation to pay liquidated

damages might be preserved and its commencement

deferred to a substituted date.’’ Mosler Safe Co. v.

Maiden Lane Safe Deposit Co., supra, 199 N.Y. 486–87.

Alden did not address this aspect of the decision in

Mosler Safe Co.

We note that the modern trend has been for jurisdictions to abandon the strict abrogation rule in favor of

one that apportions liquidated damages between at fault

parties. D. Rosengren, 13 Connecticut Practice Series:

Construction Law (2005) § 1:8, p. 11 and n.9. In the

present case, however, we need not consider whether

the default rule set forth in Alden should be abandoned.

We agree with the town that the trial court was not

bound to blindly follow the holding in Alden without

considering whether it applies in different circumstances than those implicated in that case, namely,

when the liquidated damages clause provides a mechanism to reduce damages for delays not attributable to

the contractor. Although the court in Alden relied on

Mosler Safe Co. without addressing the court’s recognition in that case of the parties’ ability to craft a liquidated damages provision that could be enforced despite

delay on the part of the property owner, we are not

persuaded that Alden implicitly rejected such a limitation on its general rule. We further agree with the trial

court that the exception to the abrogation rule in Mosler

Safe Co. should govern the present circumstances.

Accordingly, because the liquidated damages provision

in the present case satisfied this exception, abrogation

under Alden is inapplicable.

C

Finally, we briefly address Old Colony’s claim that
the town could not prevail on its claim for liquidated

damages in the absence of a specific finding, or proof, of

actual loss. As support for this contention, Old Colony

relies on Hartford Electric Applicators of Thermalux,

Inc. v. Alden, supra, 169 Conn. 177, and Norwalk Door

Closer Co. v. Eagle Lock & Screw Co., 153 Conn. 681,

689–90, 220 A.2d 263 (1966). We disagree.

For the reasons discussed in part I B of this opinion,

Alden is inapplicable. We also are not persuaded that

Norwalk Door Closer Co. v. Eagle Lock & Screw Co.,

supra, 153 Conn. 681, supports Old Colony’s position.

In that case, the court noted that it previously had

approved the general proposition that ‘‘no provision in

a contract for the payment of a fixed sum as damages,

whether stipulated for as a penalty or as liquidated

damages, will be enforced in a case where the court sees

that no damage has been sustained.’’(Internal quotation

marks omitted.) Id., 688. Notably, the court went on to

state: ‘‘This is not to say that any burden is placed on

a plaintiff to prove actual damage in order to recover

under a valid contract forliquidated damages. The proposition is only that equitable principles will be invoked

to deny recovery when the facts make it apparent that

no damage has been suffered.’’ Id., 688–89. In that case,

the trial court had made a specific determination that

the party seeking liquidated damages suffered no damage as a result of the opposing party’s breach of contract. Id., 688.

In the present case, there is no such finding in the

record. Nor is it apparent from the facts found that

the town suffered no damages. Moreover, we note that

requiring proof of actual damages is in direct tension

with the rationale for permitting liquidated damages.

Cf. Hanson Development Co. v. East Great Plains Shopping Center, Inc., 195 Conn. 60, 64–65, 485 A.2d 1296

(1985) (noting three conditions for recovering liquidated damages, including that ‘‘the damage which was

to be expected as a result of a breach of a contract

was uncertain in amount or difficult to prove,’’ and

concluding that party may not recover both liquidated

damages and actual damages). Therefore, this argument

also fails.

II

Having concluded that the trial court properly

awarded liquidated damages, we turn to Old Colony’s

claim that the trial court improperly denied its request

for an equitable adjustment in the contract. Specifically,

Old Colony contends that the court improperly relied

on OldColony’s failure to strictly comply with the notice

and claim requirements for obtaining adjustments due

to delay when rejecting its claim. Old Colony contends

that such compliance was unnecessary in light of the

change orders, which ‘‘modified the contract and

acknowledged that time extensions were due [Old Colony].’’ We disagree with the import that Old Colony
ascribes to the change orders.

‘‘The term equitable adjustment is a legal term of

art’’ and it signifies a principle designed ‘‘to keep a

contractor whole when the [g]overnment modifies a

contract.’’ (Internal quotation marks omitted.) M.J.

Paquet, Inc. v. Dept. of Transportation, 171 N.J. 378,

392, 794 A.2d 141 (2002); see also Southern Seeding

Service, Inc. v. W.C. English, Inc., 735 S.E.2d 829, 833

(N.C. App. 2012) (citing treatise that ‘‘defines ‘equitable

adjustment’ as ‘the difference between the cost of the

work required by the contract and the cost of the

changed work, plus profit, whether or not the fair market value is the same’ ’’). ‘‘ ‘Equitable adjustment’ can be

defined by the parties to a contract. Normally, standard

form contracts or government contracts allocate the

risks of an equitable adjustment to the parties by providing an accounting methodology by which the parties

can calculate the amount of any adjustment.’’ Southern

Seeding Service, Inc. v. W.C. English, Inc., supra,

832–33; see also Washington Metropolitan Area Transit Authority v. Nello L. Teer Co., 618 A.2d 128, 131 (D.C.

1992) (when contract makes provision for equitable

adjustment of particular claims, nature and scope of

relief are controlled by contract itself). When the contract, or other governing law, sets forth conditions

under which an equitable adjustment may be obtained,

the failure to strictly satisfy those conditions will preclude relief. See Sutton Corp. v. Metropolitan District

Commission, 423 Mass. 200, 207, 667 N.E.2d 838 (1996);

see, e.g., Skopek Bros., Inc. v. Housing Authority, 11

Mass. App. 947, 416 N.E.2d 1006 (1981) (contractor was

not entitled to equitable adjustment in contract price

by reason of contractor’s encountering conditions materially different from those anticipated because contractor failed to meet statutory requirements of submitting

written request for adjustment as soon as possible after

such conditions are discovered); J & H Reinforcing &

Structural Erectors,Inc. v. Ohio School Facilities Commission, Docket No. 12AP-588, 2013 WL 4779008, *17

(Ohio App. September 5, 2013)(failure to provide timely

written request for extension of time as required under

contract precluded claim for equitable adjustment, even

if opposing party had actual notice of conditions necessitating extension); see also CAS Construction Co. v.

East Hartford, 82 Conn. App. 543, 550, 845 A.2d 466

(2004) (failure to file timely written request for contract

adjustment precluded plaintiff’s claim for remobilization costs). A party may, however, by subsequent,

unequivocal conduct waive conditions precedent to an

equitable adjustment, such as timely written notice. See

Glynn v. Gloucester, 9 Mass. App. 454, 462, 401 N.E.2d

886 (1980); Tupelo Redevelopment Agency v. Gray

Corp., 972 So. 2d 495, 507 (Miss. 2007); Niagara Frontier Transportation Authority v. Computer Sciences

Corp., 209 App. Div. 2d 1009, 1009–10, 619 N.Y.S.2d 449

(1994), appeal denied, 85 N.Y.2d 804, 650 N.E.2d 414,
626 N.Y.S.2d 755 (1995).

In the present case, Old Colony does not dispute

that the contract provides means by which to obtain

equitable adjustments in time or costs due to delays

beyond its control and requires specific procedures to

be followed in order to obtain such relief. Old Colony

also does not dispute that it did not adhere to those

requirements: written notice stating the general nature

of the claim within thirty days of the event giving rise

to the claim; and notice of the amount or extent of the

claim with supporting data prepared in accordance with

contract requirements within sixty days of the event.

Old Colony does not contend that the town waived

these requirements. Rather, it contends that the town

modified the contract through its approval of the

change orders.

‘‘Whether the parties to a contract intended to modify

the contract is a question of fact. . . . The resolution

of conflicting factual claims falls within the province

of the trial court. . . . The trial court’s findings are

binding upon this court unless they are clearly erroneous in light of the evidence and the pleadings in the

record as a whole.’’ (Citations omitted; internal quotation marks omitted.) Herbert S. Newman & Partners,

P.C. v. CFC Construction Ltd. Partnership, 236 Conn.

750, 762, 674 A.2d 1313 (1996). We conclude that the

trial court’s finding that there was no contract modification was not clearly erroneous.

The record reveals the following relevant facts. As

we previously indicated, in three instances in which

Old Colony encountered unanticipated conditions, the

project engineer signed off on change orders drafted

by Old Colony. Those change orders itemized unit costs

for additional work. Above those details, under the

heading of description of change or proposal, Old Colony had noted in each order that the impact to the

schedule had not been determined and that additional

time was warranted or would be incorporated into the

schedule. Nothing in the change orders addressed the

contractual provisions for notice or the subject of

notice. Nothing in the change orders indicated how

much additional time would be warranted or whether

further documentation would be necessary. ‘‘For a valid

modification to exist, there must be mutual assent to

the meaning and conditions of the modification and the

parties must assentto the same thing in the same sense.’’

(Internal quotation marks omitted.) Torgerson v.

Kenny, 97 Conn. App. 609, 616, 905 A.2d 715 (2006),

cert. denied, 281 Conn. 913, 916 A.2d 54 (2007). There

is no such evidence in the present case.

The judgment is affirmed.

In this opinion the other justices concurred.

1 Although our appellate courts have not previously examined termination

for convenience clauses, they are a common feature in government and

private construction contracts. See D. Rosengren, 13 Connecticut Practice
Series: Construction Law (2005) § 1:18, p. 24. Termination for convenience

clauses originated in federal military contracts in order to avoid contractual

procurement requirements after the cessation of hostilities, but have

‘‘evolved into a principle for [g]overnment contracts of far-ranging varieties,

both civilian and military.’’ Krygoski Construction Co. v. United States, 94

F.3d 1537, 1540–41 (Fed. Cir. 1996), cert. denied, 520 U.S. 1210, 117 S. Ct.

1691, 137 L. Ed. 2d 819 (1997). Unlike federal contracts, no state regulations

dictate the requirements and obligations attendant to termination for convenience in municipal contracts. As in the present case, such obligations are

generally dictated by the terms of the contract.

2 The complaint also soughtrecovery underthe theories of quantum meruit

and breach of the duty of good faith and fair dealing. The trial court deemed

the former unavailable to Old Colony after determining that it had a remedy

under a valid, enforceable contract. The trial court dismissed the latter for

failure to make out a prima facie case. Those determinations are not at

issue in this appeal.

3 The town also asserted counterclaims relating to allegedly defective

work performed by Old Colony, but it abandoned those claims.

4 The plaintiff appealed from the judgment of the trial courtto theAppellate

Court, and we transferred the appeal to this court pursuant to General

Statutes § 51-199 (c) and Practice Book § 65-1.

5 As examples of remedies not premised on default, Old Colony suggests

that the town could seek relief for noncompliance with laws and regulations,

the correction and removal of defective work, and insurance and indemnification obligations that survived the default. We note, however, that conduct

relating to several of these concerns also constitutes events that justify

termination for cause under the contract.

6

In Tishman Construction Corp. v. New York, 228 App. Div. 2d 292, 293,

643 N.Y.S.2d 589 (1996), a case cited by Old Colony, the court reached a

contrary result in the context of counterclaims for damages incurred to

cure the contractor’s alleged breach as well as for alleged overpayments.

In that case, the city had contended that it was permitted to assert claims

that otherwise would have been available had it terminated for cause by

virtue of certain generic contract provisions reserving defenses. The New

York court rejected the city’s position, noting: ‘‘[T]he [c]ity cannot prevail

by citing [§§] 20.4 (‘All Defenses Reserved’) and 21.2 (‘No Waivers’) for the

proposition that the [c]ity’s rights in any and all circumstances were without

limitation. Such a sweeping claim—or,rather, disclaimer—defeats the principle that a contract sets forth the respective rights and liabilities between

the parties.’’ Id. In the present case, by contrast, the town is not relying on

such generic reservations, which also are included in the parties’ contract,

but, rather, a broad reservation of rights and remedies in the termination

for convenience provision itself.

7 See United Partition Systems, Inc. v. United States, 90 Fed. Cl. 74, 95

(2009) (after terminating contract for convenience, ‘‘the government may

not obtain reprocurement costs for work that it prevented [the contractor]

from performing’’); TRG Construction, Inc. v. Water & Sewer Authority,

70 A.3d 1164, 1167–68 (D.C. 2013) (‘‘[u]pon terminating a contract for convenience, the government loses whatever right it has to hold the contractor

responsible for correcting deficiencies in the work included in the terminated

portion of the contract’’ [internal quotation marks omitted]); Paragon Restoration Group, Inc. v. Cambridge Square Condominiums, 42 App. Div. 3d

905, 906, 839 N.Y.S.2d 658 (2007) (‘‘[w]e conclude that the first counterclaim

should have been dismissed against [the] plaintiff to the extent that it sought

an offset for the costs of completing the project because, [w]here [the

defendant] elects to terminate for convenience . . . whether with or without cause, it cannot counterclaim for the cost of curing any alleged default’’

[internal quotation marks omitted]); Tishman Construction Corp. v. New

York, 228 App. Div. 2d 292, 293, 643 N.Y.S.2d 589 (1996) (‘‘Had the [c]ity

wished to pursue these claims, [the] plaintiff should have been terminated

under [§] 16 of the agreement, which provides for recouping the expense

of curing [the] plaintiff’s default. Where the [c]ity elects to terminate for

convenience, as provided in [§] 15, whether with or without cause, it cannot

counterclaim for the cost of curing any alleged default . . . .’’).

8

In light of this conclusion, we need not reach Old Colony’s claim that

Judge Tanzer improperly adopted Judge Young’s decision on this issue as

the law of the case.