Source: https://www.ctconstructionlaw.com/category/construction-manager/
Timestamp: 2019-04-23 22:57:44+00:00

Document:
The Connecticut Appellate Court recently issued a decision that should cause every contractor some concern. In J. WM. Foley Inc. v. United Illuminating Co., 158 Conn. App. 27 (Conn.App. 2015), the Appellate Court upheld a decision that denied a contractor’s $4.7 million delay claim because the contractor did not provide proper notice of the claim within the 10 days required by the contract. The case is disconcerting because the court’s decision appears to be based upon the contractor’s failure to strictly comply with the contract’s notice provision. There is no discussion indicating that the owner was harmed or prejudiced by the delay in receiving notice of the claim. Moreover, the decision acknowledges that the contractor had provided the owner with notice of events giving rise to the claim. In fact, despite denying the delay claim, the trial court awarded the plaintiff over one million dollars for its direct costs, which arose out of the same facts as the delay claim.
The project underlying the dispute in J. WM. Foley Inc. was the construction of a utility pipeline. The parties’ agreement stated that the contractor was expected to encounter subsurface obstructions and that the contractor would be entitled to additional compensation associated with same.
It is no secret that public works construction is a difficult business. On any given project there are innumerable ways that things can go wrong. With any project involving excavation and underground utilities, encountering changed conditions should not be a surprise. Of course, such changed conditions are not the contractor’s responsibility. What is the contractor’s responsibility, however, is providing the public owner with proper notice of its claims in accordance with the subject agreement.
One of the reasons public works construction projects are more onerous than their private counterparts is because public owners rarely negotiate contract terms. Contracts that are slanted significantly in the public owner’s favor are the norm. Thus, as the contractor in a recent state Supreme Court decision learned, it is vitally important to read the contract and abide by its terms.
One of the lessons from Old Colony Cosntr., LLC v. Town of Southington, 316 Conn. 202 (Conn. April 21, 2015) is that general assertions of entitlement to damages and/or additional contract time is not sufficient when the contract requires more detail. During the long duration of the project, the contractor in Old Colony repeatedly indicated that each problem that occurred impacted its schedule and costs.
Despite what might appear to be the parties’ intentions, courts sometimes find contracts unenforceable. Courts may find contracts unenforceable for any number of reasons including, but not limited to, the contract omitting a material term; the contract having vague or indeterminate terms; the contract violating the statute of frauds; the contract lacking consideration; and/or the contract not reflecting the understanding of both parties. In those situations, a party that provides labor, materials, and/or services may still be entitled to receive payment for its work under the legal theories of unjust enrichment or quantum meruit.
It is common for construction contracts to state that, if the project is delayed by the owner, the contractor shall be entitled to an extension of contract time but will not be entitled to any addition compensation. Such a contract provision is known as a “no damages for delay” clause. The Connecticut Supreme Court has held that “‘no damages for delay’ clauses are generally valid and enforceable and are not contrary to public policy. [unless]: (1) [the] delays [are] caused by the [owner’s] bad faith or its willful, malicious, or grossly negligent conduct, (2) [the delays] uncontemplated …, (3) [the] delays so unreasonable that they constitute an intentional abandonment of the contract …, and (4) [the] delays [result] from the [owner’s] breach of a fundamental obligation of the contract. White Oak Corp. v. Department of Transp., 217 Conn. 281, 288-89, 585 A.2d 1199, 1203 (Conn.,1991). The list of exceptions; however, may not actually be that broad. In a recent decision, the Superior Court analyzed the applicability of the aforesaid exceptions to a typical “no damages for delay” clause.
In C & H Elec., Inc. v. Town of Bethel, an electrical contractor was substantially delayed because of the additional asbestos abatement work that was required.
On October 1, 2004, acting through its Department of Administrative Services (“DAS”), the State of Connecticut implemented a prequalification program for all contractors bidding on certain public projects. 2003 Ct. ALS 215, 1. Specifically, “[t]he DAS Contractor Prequalification Program (C.G.S §4a-100) [(the “Program”)] requires all contractors to prequalify before they can bid on a contract or perform work pursuant to a contract for the construction, reconstruction, alteration, remodeling, repair or demolition of any public building or any other public work by the state or a municipality, estimated to cost more than $500,000 and which is funded in whole or in part with state funds, except a public highway or bridge project or any other construction project administered by the Department of Transportation.” DAS website, http://www.das.state.ct.us/cr1.aspx?page=10. On October 1, 2007, the Program was expanded to apply to subcontractors whose contract exceeded $500,000. http://www.das.state.ct.us/fp1.aspx?page=111. Still, questions remain as to whether an apparent low bid submitted by a DAS prequalified contractor may be rejected by a public owner and/or its construction manager and the information that a bidder may have to submit to be awarded a project can be unduly burdensome and repetitive.
In recent years, Owner Controlled Insurance Programs (“OCIP”) have become more prevalent in public and private construction projects. An OCIP “is a class of ‘wrap-up’ insurance that provides coverage for many construction project participants under one program.” Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 308 Conn. 760, 767 (Conn. 2013). Such programs typically include commercial general liability insurance and worker’s compensation insurance. In general, OCIPs reduce a project’s overall cost because the owner does not have to pay the multiple layers of duplicative administration associated with the general contractor and each subcontractor having its own insurance coverage. The general understanding is that the project owner benefits from the savings but a recent Superior Decision reminds us that contractual duties and obligations are derived from the plain language of the contract and not what may reasonably inferred.
In Elevator Serv. Co. v. Reg’l Scaffolding & Hoisting Co., 2013 Conn. Super. LEXIS 687 (Conn. Super. Ct. Mar. 27, 2013), Elevator Service Co., Inc. (“Elevator Service”) and Regional Saffolding & Hosting, Inc. (“Regional Scaffolding”) entered into an agreement pertaining to a project known as the Royal Bank of Scotland (the “Project”). The issue before the court was whether Elevator Service had to pass along to Regional Scaffolding a discount that it received through the subject project’s OCIP.

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